| The Total Cost of Ownership model developed by the GartnerGroup can help enterprises both in their strategic management of IT costs and in their daily efforts to contain the operating costs of their IT environment. Late in 1998, Toshiba Europe commissioned GartnerConsulting to investigate two Toshiba products offerings - the Tecra series and the Equium series - using the GartnerGroup TCO model.
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The GartnerGroup TCO model breaks down all IT costs into two categories - direct and indirect. Direct costs include those that arise from hardware and software, management, support, development and communications fees. Indirect costs originate from less concrete aspects, such as end-user operations and costs of downtimes.
Direct (i.e. budgeted) costs are the capital, fees and labour costs spent by the IS department, business unit IS groups or IS-related personal in delivering IT services and solutions to the organisation. Costs include capital expenses, IS management, support and development labour costs, outsourcing fees, procurement, training, travel, maintenance, support and communication fees. The direct costs seek to model and capture all direct expenses related to the clients, servers, peripherals and network in a distributed-computing environment.
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Indirect (i.e. unbudgeted) costs measure the capital and management efficiency of IT in delivering expected services to end-users. If the IS management and solutions are efficient, end users are less likely to be burdened with self and peer support, as well as downtime. If the IS management and solutions are inefficient, end users typically must spend more time on self and peer support, and are affected more by downtime. These costs often are hidden in most organisations and are not measured or tracked. Because of this, many organisations reduce direct costs in a less than efficient manner, transferring the burden of support and unreliability to the end users.
These cost categories are valid for any type of computing device, however the cost distribution varies greatly. The TCO of a notebook, for example, is between 20 and 50 percent higher than for a comparable desktop, and the way a notebook is used also plays a major role. The GartnerGroup has therefore defined three user profiles:
- a desktop user (100 percent desktop use)
- a 'road warrior' (20 percent office use, 80 percent mobile use of notebook)
- a 'day extender' (80 percent office use, 20 percent mobile use of notebook)
The study commissioned by Toshiba Europe is based on the desktop user and the notebook of ´road warrior´ type accordingly, both running under Windows 9x OS.
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