Source History
The introduction of the concept of "Overall Cost" originates from a study of Gartner, 1980. Gartner wants to know to buy and configure, use a PC to invest in How much cost. Their research shows that the company has annual cost per PC close to 10,000 $. This data not only helps PC owners recognize the total cost of the PC's entire service life cycle, causing financial staff and IT managers. Not small turmoil. Thereafter, the overall ownership cost is defined as a concept or a series of techniques to continuously define and metric cost to provide more efficient management and decision support.
Calculating Formula
In practice, there is no universally accepted calculation of TCO formula, you need to remember that when you calculate TCO, you must consider assets. All associated costs. The following is a typical items included in TCO: purchase costs, installation costs, financial costs, commissions, energy costs, maintenance costs, upgrade costs, conversion costs, training costs, support costs, service costs, maintenance costs, comprehension Cost, safe cost, productivity cost, risk cost, processing cost. So, what do you have to take into account your TCO? This depends on the industry use of the asset and its own properties of the asset. (Software, Computers, Buildings, Cars, Equipment, Plants, etc.)
Application Application
For any major assets purchased, it is necessary to carry out its long-term real cost Comprehensive analysis and discovery of potential costs outside the purchase cost.
Advantages of Advantages
TCO carefully measures all costs associated with assets.
TCO is a long-term measurement method, which is committed to reducing the total cost of the asset service cycle and increasing return on investment.
Limitations Disadvantages
Need to do TCO analysis.
Execute the TCO analysis itself will cost.
No universal formula.
It is sometimes difficult to determine the correlation cost of an asset.
Cost through TCO is a long-term process, so if the company intends to reduce costs in the short term, the TCO help is not big.
Usually, TCO does not evaluate the risk of purchasing an asset.
From the perspective of playing the strategic policy of asset investment and corporate goals, TCO help is not large.