Why Invest in Cisco Technology For Your Business,
Part 3: TCO
When purchasing technology, most businesses consider the purchase price or upfront cost of the technology and not its total cost of ownership. This is mistake especially if the business expects to own the technology for a long period.
What is TCO?
In simple terms, total cost of ownership or TCO refers to the lifetime costs of owning an asset. There are many costs of owning an asset including the purchase cost, the installation cost, the deployment cost, the cost of usage, the cost of maintenance, and the upgrade cost. Often, the after-purchase costs are substantial. The result of this is a high total cost of ownership or TCO.
Understanding the true cost of investing in a technology will help you to decide whether or not you should make the technology investment
The 3 Factors that make up TCO
When it comes to investing in technology, one of the first things that businesses consider is cost constraints. Generally, technology investments involve building or purchasing something tangible. Examples of tangible technology investments are laptops, servers, and software to install. But, the TCO of technology includes not just the acquisition of software and hardware, but also the end-user expenses, communications, and the opportunity cost of training, downtime and other losses related to productivity.
The upfront costs of the tangible technology investments are pretty apparent. However, the upfront costs do not tell the whole story. Upfront costs do not include the costs of maintenance and support as well as the costs of user adoption, training, and efficiency that the business making the technology purchase is likely to incur at some point in the future. You will able to find out the TCO of a technology only after you consider these costs.
Basically, a technology’s TCO includes three main elements which are the cost of acquisition, the cost of implementation and the cost of support maintenance.
Before You Buy, Consider the TCO
Many people believe that they need to pay a high price to get access to leading technology. However, a recent Analysis Mason research proves that this is not true. According to the research, an organization with about five hundred technology users can adopt Cisco’s scalable and feature-rich unified communications (UC) solution without spending excessively.
A unified communications solution designed for midsize companies, the Business Edition 6000 (BE 6000) solution of Cisco costs $100,000 less than the comparable solution from Siemens over a five year period. Moreover, the TCO of Cisco’s BE 6000 solution over a five year period was $163,000 less than the TCO of a similar technology from Mitel and $15,000 less than the comparable technology from Avaya.
Understanding the true cost of investing in a technology will help you to decide whether or not you should make the technology investment.
Most small and mid-size businesses focus on utilizing each dollar to the maximum. Generally, this is a good strategy. However, when it comes to technology investments, saving money on the purchase price may not be such a good thing. Saving money on the purchase price of technology generally means that you’re compromising on quality. Compromising on the quality of technology generally results in a high TCO which is something you don’t want. For this reason, when purchasing technology, businesses should focus more on the TCO of the technology and less on its upfront cost. Since this can help you to achieve a lower TCO, investing in Cisco technology for your business is a sensible thing to do.
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