Let face it, most IT people are not finance savvy, however they unknowingly have to deal with finance issues on a day to day bases.
So to help out everyone lets discus Total Cost of Ownership (TCO).
The TCO of a PC is not just the cost of the PC itself it is much more than that.
- Service Desk cost
- Infrastructure cost
- Application Testing cost
- Out of Warranty Support costs
In a recent WIPRO study “Using Total Cost of Ownership to Determine Optimal PC Refresh Lifecycles” (available on the Intel web site), they listed various cost associated with TCO for a PCs.
What you might be asking yourself is why not keep the PCs until it breaks. Well this is when the more hidden cost come into play.
- Application testing
- Service desk cost
- Client performance costs
- Increase of operation cost vs newer PCs.
How is TCO affected by application testing?
Application testing affects TCO by increasing the number of workstations needed for any application rollout. If you have a 5 year life cycle and assuming that you replace 1/5 of your workstation each year at a minimum you would have 5 different configureations but more likely you would have 10 (5 Desktops and 5 laptops). If you are a multinational company this number would increase even more with respect to different OS languages and regional procurements. By reducing the refresh cycle to ever three years, you reduce this number significantly.
How is TCO affected by Service Desk Cost?
There are hundreds of way this is affects TCO but some of the more common ways are:
- Increase in bandwidth used by image deployment
- Backup cost for bigger images
- Increase in troubleshooting
- Once a PC is out of warranty, there could be costs with stocking parts such as hard drives, RAM, monitors, etc.
What are some of the client performance costs?
This is a catch-all for anything that affects the client. Costs in this section range from
- Downtime due to hardware failure
- Cost of overtime to recover from data loss
- Increase in cost of out of band PC replacements
- Inability to run needed software
What are some of the increase operating cost vs newer PCs?
For example take these two Intel processors E5410 vs L5410, There is a difference of 30W. If you assume that you have 10000 PCs that were replaced you would see a 30*10000 = 300 000W or 300 KW/H. At $0.10 KWH that is $30 an hour in saving between the two processors. If you assume 7.5 hours a day with 200 working days a year that equates to almost $50K is savings. ($30*7.5*200 =$45 000). From this we can see that you can save money by picking the right processor.
We all know that if you that a PC and lock it away in a closed room that the room will get hot. Now take several hundred or thousands of PCs in a building, this will increase the air conditioning (AC) cost. Yes it will decrease the heating cost but you will find that AC cost will out weight your heating savings. As you look at processor specs you will see that some run hotter than others, there is a trade-off. This is where upgrading to a newer CPU might give you more saving with respect to AC / power consumed, etc. with the same performance. Don’t forget about the capital & operating cost of the AC units and UPSs that you might need to run this equipment.
What this is ultimately meant to show is that there is a lot more to a PC’s cost than just the capital cost of the PC. We need to look at all the costs to determine what is right for our company. These are just example of some of the costs are involved in TCO for a PC.
Attached is a simple spreadsheet that you can used to help determine what is the appropriate TCO and therefore PC replacement cycle for your company.
TCO.xlsx (11.63 kb)