Analysis Of Gartner Inc. Total Cost Of Ownership

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The cost of using and maintaining an IT investment over time is how Gartner, Inc. (www.gartner.com) Total Cost of Ownership. To calculate the total cost of ownership, the cost estimator must combine both the direct costs (software, hardware, administration and operations) and the indirect costs (downtime and end-user operations). Being that total cost of ownership is often overlooked and unbudgeted in IT cost analyses, most of the IT cost plans and expenditure reports are always incorrect. The belief in most organizations and small businesses that the end of their direct cost is when the transaction of acquiring the equipment ends goes to prove this. According to research, 80% of a computer’s total cost of ownership (TCO) is its labor costs, maintenance and technical support with the base price only representing less than 20%. The …show more content…

The cost increase and total up to more than $8,500 with the associated network costs (which include internet connectivity, routers, servers, firewalls, and storage) considered. Being that the initial cost is but a fraction of the total cost of ownership, assuming that the cost of a computer to be $1,000, an entire $15,000 could be expended to manage the computer in a three-year period. Calculation for an organization with 20 employees, within the same three years they are likely to spend above $250,000 on IT equipment management after their purchase. Similarly, this goes for all IT hardware that the organization will acquire. Most organizations, despite the fact that indirect costs take up more than 50% of the total cost of ownership, are still focused on direct costs and how they can reduce them. Improving end-user operations and working to reduce downtime can save the organizations more in the end than focusing on the direct costs will. Additionally, Gartner, Inc. did a research and found a well-managed computer to be 37% less expensive than an unmanaged

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