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Total Cost of Ownership (TCO)In today’s cost conscience business world, understanding the complete cost of a technology-based business solution is as critical as selecting the right technology platforms. But assessing the total cost of a project can be tricky. Pilots can mask steep costs required to increase functionality or rollout across the enterprise. Conversely your pilot may require steep initial investment whose true value will come from simple low cost add-ons going forward. Where will your solution costs arise, and how much functionality will each investment yield. Will the costs be in hardware, software, services, training and/or maintenance? What can be deferred and at what cost? Delphi Group's TCO (Total Cost of Ownership) methodology was developed to answer these questions. With TCO there are no hidden costs or surprises. Our years of experience in designing knowledge and information-based solutions allows us to hone in on the key issues in a time effective and complete manner. TCO provides a side by side comparison of the total cost of ownership associated with all valid solution scenarios. In this way, the tradeoffs between different implementation scenarios and the differences in total costs associated with each can be evaluated in context. TCO looks at the entire project plan, from pilot to phased subsequent rollout(s) in stages. TCO illustrates how costs can be minimized after a certain point and yet yield big leaps in deployment and functionality. By taking a holistic view of your solution and enterprise, TCO educates you on how to leverage existing expenses and a plan for strategic rollout. Like all Delphi Group methodologies, your TCO model is delivered as a live document, allowing you to modify its spreadsheets as the project matures and to perform what-if analysis. TCO can be integrated with Delphi Group's Stair-Step methodology, providing a detailed implementation plan that mirrors the assumptions made in TCO. And, while TCO focuses exclusively on cost of ownership and phases of functionality deployment, by integrating TCO with Delphi Group's ROI methodology, you also gain appreciation for the levels of return on investment at each stage of investment. TCO is different from ROI in that TCO does not provide explanation of benefits and the payback associated with them. It is strictly a costing of the functionality needed - over time. |
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