Developments in Practice XXXVII: Total Cost of Ownership

Abstract

Total Cost of Ownership (TCO) advocates for a holistic view of IT costs across the enterprise over time, grouped into a series of direct and indirect cost elements. Knowing the full costs allows organizations to make optimal decisions regarding the enhancement, retirement, renewal, and/or replacement of critical IT assets. The authors convened a focus group of senior IT managers who were asked to describe their firm's adoption of TCO, TCO processes, tools to assist with TCO implementations, the effectiveness of these tools, and the governance practices which guide their TCO processes. The group concluded that TCO, despite facing significant implementation challenges, remains a concept worth pursuing. This article reviews current literature, summarizes the focus group discussion, and offers practical guidance for those IT managers considering adopting TCO. [ABSTRACT FROM AUTHOR]