How to work out total cost of ownership of a Windows server
Total cost of ownership (TCO) can be defined in the context of IT as the total price in money, time, and resources for owning and using software.
It is considered to be an essential part of the IT decision-making process and a useful metric for assessing the overall cost impact of investing in a Windows server.
To properly assess TCO, companies must look at the broad set of expenditures that contribute to total costs — expenditures that extend beyond hardware leases and software licensing to include more intangible items such as ongoing maintenance and administration, end user productivity and the cost of system downtime.
At a high level, TCO can be broken down into six cost categories: hardware, software, training, downtime, staffing and outsourcing.
Organisations that want to minimise TCO should focus on ways to make IT staff more productive and systems more reliable.
Companies should also consider that TCO varies by workload. For example, the TCO for business applications such as ERP and CRM will be higher than for infrastructure workloads such as file and print or networking services.
In addition, the timeframe over which TCO is calculated will change the relative proportion of its various cost components. Ongoing costs, such as those for staffing and downtime, will become a larger percentage of TCO as the time period is extended. In contrast, the percentage of TCO attributed to acquisition costs decreases as the time horizon is extended.
Although TCO is an important decision-making metric, it should not be the sole criterion for making IT investment decisions, because it does not capture the business value, or return, provided by such an investment.
Other metrics, such as overall Return on Investment (ROI), can help organisations evaluate the overall benefits, such as productivity improvements or competitive advantage, that are provided by an investment in information technology.
For example, a study by the Yankee Group found that a total switch from Windows server to Linux would be four times more expensive and longer to deploy as an upgrade from one version of Windows to a newer release.
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