26 July 2005

Total Cost of Ownership

TCO is one of a number of things to consider when considering purchasing equipment.

Try this quick quiz:

How much does a dog cost?

  1. Nothing: you get them free from the pound
  2. $150-$1,000 depending on the breed.
  3. $10,000

According to HP, the cost of owning a dog for its lifetime of around 10 years is over US$8,300 (http://h71032.www7.hp.com/tco/). So why is this important? The same HP article goes on to quote a Gartner Group study that gives the five year Total Cost of Ownership (TCO) of a US$2,000 PC at around US$21,000 when administration and management costs are taken into account.

Recent presentations to the University from the Commonwealth and Macquarie banks quote research that shows costs actually increase as equipment gets older: with more support and maintenance required as equipment gets older, and the higher costs associated with supporting increasingly complex environments as items of equipment of differing ages and capabilities are mixed together. What the banks propose is replacing the equipment every two to three years to eliminate the increasing costs, and of course the banks will be pleased to provide the finance through leasing plans to help the University manage their equipment (including media equipment) to keep it all current.