For vehicles driven 15,000 miles a year, average ownership costs added up to about $706 a month or $8,469 a year in 2017, according to AAA. This study didn’t include fuel or the monthly car payment, only the cost of interest on that loan. If you’re a business owning five or more vehicles, that’s closer to $43,000 a year.
Just like the cost of transportation includes more than the sum of each SUV’s sticker price, the cost of business technology includes much more than the cost of new machines. There are initial, ongoing, direct and indirect costs. Gartner, Inc. defines the total cost of ownership (TCO) as the total cost of using and maintaining an IT investment over time. Whether your business needs PCs, notebooks, tablets, servers or other network hardware, you will need to consider that a computer’s base price typically represents less than 20% of its TCO. Technical support, maintenance, and labor costs account for the remaining 80%.
How is that possible?
A server or employee workstation is at least as complex as the average vehicle. Just like cars require regular oil changes, tire rotations, filter changes, etc. Computers require constant configuring and maintenance. Ongoing costs related to security measures, software updates, computer repair and general support are unavoidable. Consider the case of an architecture firm hiring a new employee:
The initial investment in the desktop, monitor, and MS Office might start around $3,000. If the employee stays with the company for four years, that firm will need to budget approximately $3,700 a year for software subscriptions to Autodesk, Sketchup, and Bluebeam plus a Cloud Storage solution at $80 per user per month, or $900 a year. That employee’s workstation and first year of productivity costs approximately 7,600. Years two thru four cost closer to $3,700 per year since the company renews its software licenses and stores its data in the cloud. That still doesn’t account for the cost of maintaining the computer, or teaching the employee how to use it! We can estimate the cost of just maintenance at around one hour per machine per month, or an additional $1200 assuming $100/hr. for computer service.
A typical hardware lifecycle is about four years, the total cost of ownership (so far) for one employee workstation is $23,500 conservatively. Now imagine this firm has 5 architects with the same setup. That’s an investment of $117,500. We haven’t accounted for any servers, printers, or other accessories yet. It’s easy to see why this firm includes technology maintenance in its yearly IT budget.
In the above case, five workstations are being maintained proactively with patches, backups, and security checks, and a 24/7 helpdesk at a yearly cost of $9000. This same company used to pay between $150 and $200 per hour every time something needed attention and spent more than $9000 in the first 6 months of the year.
Don’t let tight budgets and limited expertise keep your organization from making effective IT decisions. Understanding hidden technology costs can actually help you reduce unnecessary expenditures and allocate resources to more important business functions.
ZenIT helps businesses simplify IT infrastructure and management processes, which will increase efficiency, expand productivity and significantly reduce the total cost of ownership for any business network. For more information about what we do, contact us.