No Surprises: Calculating the Total Cost of Technology Ownership
June 2, 2015 in Blog
A common pitfall in technology projects is the failure to consider the total cost of ownership. In many instances, organizations have available budget up front for project procurement and installation, but neither plan nor budget for the desired system’s complete lifespan. Planning a budget for a project installation is only one portion of project costs that should be considered. The process of identifying and documenting all costs involved over the life of a system is equally important. Project roll-outs are celebrated, but the party is soon over if hardware is not maintained, upgrades are not performed, and system performance degrades. This leaves a wake of perceived project failures when the true failure is that no one budgeted for the long-term technology life cycle costs.
Life Cycle Cost Analysis involves the analysis of the costs of a system over its entire lifespan. This also a useful tool when comparing project alternatives. Typical costs to consider for a technology project include:
- Implementation Costs:
- Design Costs
- Development Costs
- Installation Costs
- Training Costs
- Operating Costs:
- Failure Costs
- Repair Costs
- Inventory (Spare parts) Costs
- Downtime Costs
- Energy Costs
- Maintenance Costs:
- Preventive Maintenance
- Corrective Maintenance
- Predictive Maintenance
- Training (Ongoing) Costs
- Upgrade Costs
- Disposal Costs
Budgeting creates a comprehensive picture of the future. Taking this into consideration, technology project cost analysis is never a “one and done” activity. Each year, the life cycle cost must be reviewed and refreshed.
Failure to plan is planning to fail.
Contact SDI to comprehensively plan for your organization’s next mission-critical technology initiative.
About SDI guest blogger: Erin Manning
Erin is currently a Delivery Executive at SDI Solutions. Erin provides overall program management for a Category X airport’s security technology environment, which includes annual technology budgeting, project portfolio oversight and the overall value delivery of the airport’s SLA-based managed services program.