Managing the Total Cost of Ownership

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Managing theTotal Cost of Ownership

• Tim Landeck

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Presentation Focus

• TCO Whats in it for me?
• Identifying TCO costs
• Strategies to reduce TCO
• 5 stages of the Tech Life Cycle
• Additional Resources

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The Problem

• When schools invest in computers and networks,
  they often fail to plan for the long-term costs
  of using them effectively and efficiently
• Schools need to evaluate the role of
  technologyand their goals
• Schools need to budget accordinglyThat means,
  planning for Total Cost of Ownership

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This is really nothing new

• If the district buys a bus, they must also budget
  for
• Gasoline
• Maintenance
• Personnel needs (training)
• Repairs
• Increased Insurance Premiums
• Another Driver and training

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Similarly

• If you build a network or purchase computers, you
  must also budget for
• Software
• Maintenance Repairs
• Increased Utility Costs
• Support
• Staff Development
• Replacement Costs

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TCO Definition

• Total cost of ownership (TCO) is a financial
  estimate designed to help consumers and
  enterprise managers assess direct and indirect
  costs related to the purchase of any capital
  investment, such as (but not limited to) computer
  software or hardware
• All of the costs associated with deploying,
  operating and maintaining a computer network
• Analysis tool used by businesses since the late
  1980s
• Used to identify real costs and make good
  decisions, based on that understanding

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What will be gained by addressing TCO?

• Understand all of the costs that will need to be
  covered to support technology adequately
• Understand the potential long-term costs of a
  particular approach
• Understand direct and indirect (hidden) costs
• Help develop a technology vision you can support
  for the long term
• Continue to evaluate the choices youve made

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Why Should Schools Monitor TCO?

• Provide management oversight
• Document direct and indirect costs
• Measure and improve technology initiatives
• Develop budgetary guidelines
• Articulate the business case for technology
  investments
• Reassure policy makers that dollars are being
  used wisely

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When purchasing a computer, which is the most
expensive?

• Administration
• Technical Support
• End-user Operations (Training)
• Capital outlay (Software Hardware)

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Obvious Costs of a computer

• Hardware purchase costs
• Software license purchase costs
• Hardware warranties
• Hardware and Software installation
• Maintenance
• Replacement Costs

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The not-so obvious Costs of a computer

• Training your support personnel
• Training users of the system
• Costs associated with failure or outage (planned
  and unplanned)
• Diminished performance incidents (i.e. if users
  are kept waiting or are inefficient)
• Costs of disaster preparedness and recovery

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More not-so obvious Costs of a computer

• Software license tracking costs
• Infrastructure (floor/desk space) costs
• Network hardware and software costs
• Server hardware and software costs
• IT Personnel Salaries and Benefits
• Theft/fire Insurance Costs

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Strategies to reduce TCO

• Purchase hardware / software from one vendor
• Volume Discounts
• Efficient relationship
• You can always find a cheaper computer
• Standardize on Software licenses
• Easier to support
• From installation to troubleshooting
• Hardware warranties 3 or 4 year extended
• Age of a machine correlation to support needs

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Costs Associated with Older Machines

• Increased costs for maintenance and support
• Bigger inventory of replacement parts to keep
• More models for support staff to master
• Older the machine, the harder to keep it in
  service

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Strategies to reduce TCO

• Perform Regular Maintenance
• Image desktops annually
• Feronics DeepFreeze, Apple Remote Desktop,
  Norton Ghost
• Upgrade OS as appropriate
• Install patches and virus definition files
• Plan for Replacement Costs
• Replace 1/4 of all computers each year
• no computer older than 4 years

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Strategies to reduce TCO

• Planned and unplanned Outages
• Communication with users
• Plan for data recovery
• Backup strategies
• Train IT staff
• Keep up-to-date with latest technologies
• Dont place all your eggs in one technician
• Efficient support is critical to reduce TCO
• Train users of the system
• Staff Development offerings
• Efficient use of soft/hardware Escalator Mov

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Strategies to reduce TCO

• Network hardware and software
• Fast and reliable networks and servers
• IT Personnel Salaries
• Ratio of technician to computer
• 18 Vs. 1500
• Hire them, train them and keep them
• Invest in Energy Saving strategies
• Buy LCD Monitors instead of CRTs
• Energy control panels Sleep mode
• Verdiums Surveyor

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Strategies to reduce TCO

• Inventory
• Keep up-to-date Hardware and Software inventory
  Records
• Spreadsheet Vs Database Vs. Special Programs
• Ram, HD, Processor, CD, Tech Support Issues
• Who will inventory Enter Data

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Donations

• We all get them but

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• Dilbert

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Strategies to reduce TCO

• Donations
• If it isnt viable for you any more, it likely
  will not be of assistance to us
• Exceptions Key Boarding, Word processing
• Set minimum specifications for donations
• Identify Good Donation Sources
• Politely Decline Provide Alternatives

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Strategies to reduce TCO

• Setting the standard! - Software
• Nomenclature
• Bug Fixes Vs Feature Enhancements, Free Vs Fee
• 5.1 or 5.0.1 Office 2007, etc
• Vendor Web Sites, VersionTracker.com
• Avoid 1.0 or maybe even any .0
• Software Suites
• PC Mac, Old new Hardware Compatible
• Funding Issues - Whos going to pay?
• Operating Systems
• Make sure it is worth the expense and support
• Standardizing on one version creates consistency
• Terry Tate Enforcing the standard Movie ?

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Enforcing the Standard
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Strategies to reduce TCO

• Setting the standard! - Hardware
• Platforms - Mac vs. PC vs. Unix, etc
• Specifications for new purchases
• How far do you plan into the future?
• Life of the machine3 yrs?.com 6 yrs?k-12
• Manufacturer

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Standardization vs. Diverse Operating Systems

• Extreme diversity drives other costs
• Loss of economies of scale
• Staff development issues more complex
• Hard for tech support to be expert on everything
• Moves tech support personnel to niche experts
• Diversity makes security more difficult
• 60 of computers in district lacked virus
  protection
• Imaging of computers more difficult

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Sometimes you have to keep moving forward even
though you dont have it all in place.
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Equipment Disposal

• Locate a User friendly Recycling center
• Easy Pickup/dropoff
• Take it all
• Reuse Vs Recycle
• Recycle Grind and melt
• Political/Enviro Issue with Night Dumpster
  Dumping
• Remove inventory tags and delete from inventory
• Dont recycle other peoples stuff (i.e.
  donations)

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Technology Life Cycle Stages

• Bleeding edge - any technology that shows high
  potential but hasn't demonstrated its value or
  settled down into any kind of consensus. Early
  adopters may win big, or may be stuck with a
  white elephant. (i.e. WiMax, modular robotics)
• Leading edge - a technology that has proven
  itself in the marketplace but is still new enough
  that it may be difficult to find knowledgeable
  personnel to implement or support it. (i.e.
  iPhone, Vista, Leopard)

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Technology Life Cycle Stages

• State of the art - when everyone agrees that a
  particular technology is the right solution.
  (i.e. WinXP, Tiger, 802.11g, Blackberries, VoIP
  Telephones)
• Dated - still useful, still sometimes
  implemented, but a replacement leading edge
  technology is readily available. (i.e. Win2K, OS
  X.3, radios)
• Obsolete - has been superseded by
  state-of-the-art technology, maintained but no
  longer implemented. (i.e. Coax cable, Win98, OS9,
  dialup modems)

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The Bottom line

• Educational institutions and agencies should
  routinely conduct TCO evaluations to
• Manage and assess technology investments and
  initiatives in the context of organizational
  goals.
• Use TCO to assist in developing budgetary
  guidelines.
• Identify and document spending for individual
  technology services.
• Inform stakeholders of the solid analytical
  management practices being followed when making
  funding requests.

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Additional Resources

• Taking TCO to the Classroom
• http//www.classroomtco.org
• TCO_Overview.pdf
• https//k12tco.gartner.com/home/homepagepromo/file
  s/TCO_Overview.pdf
• K12 TCO Calculator
• http//129.71.174.252/tcov2/
• Optional The Evolution of Tech Support movie

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Thank you for your attention

• Tim Landeck
• tim_landeck_at_pvusd.net