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Understanding TCO
Do you know 80% of total IT costs occur after the initial purchase? (Gartner)
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Importance of TCO Analysis
Re-examining TCO in IT Management
Technology investments have wide impact and must not be considered lightly, especially now when prudence is key. While the components of TCO may vary depending on your industry and business needs, be sure to consider the following while analysing the TCO for your IT management strategy.
Initial hardware and software costs
Cost reduction and agility pressures have made operational expenditures (OPEX) more favourable over capital expenditures (CAPEX). Outsourcing IT to a managed services provider makes IT spending more predictable and manageable with a subscription-based and modular IT approach. This allows for easy scaling up or down of IT, based only on what you need and use.
Backup and recovery costs
Viewed as an insurance policy, backup is a necessary expense. Beyond the backup software cost, TCO includes ongoing maintenance, storage costs, monitoring, and testing. Cost also rises with the demand for rapid recovery. Today, many are turning to cloud backup due to its accessibility and cost effectiveness but it still takes a competent IT team to effectively execute and manage it according to ones backup and disaster recovery objectives, and budget.
Downtime and business continuity costs
The concept of remote work has added extensive complexity to IT management and impact on TCO. Downtime can cause tremendous monetary losses and other collateral damages like data loss, loss of customer trust, and bad customer experience; which all magnifies business loss in the longer term. To fulfil service level agreements, boost customer service reliability and reduce the cost of unplanned disruptions and uncertainties from trial-and–error resolutions, the implementation of proven IT standards and frameworks, and routine preventive maintenance are important.
Regulatory compliance cost
Keeping up with the ever-changing regulatory requirements and monitoring risk is an expensive and resource-draining critical task. TCO analysis here involves understanding and categorising the risks of non-compliance and agreeing on your preferred risk profile. Compliance must be managed as a continuous program, and not as a one-off project where issues are being responded in an ad-hoc manner. Having effective IT standard operating procedures and regular reviews are key for a long-term, proactive adherence approach.
Cybersecurity cost
It is a challenge to internally build and maintain a cybersecurity solution that cost-effectively provides adequate, ongoing protection against sophisticated cyber attacks. The question you should ask is - Do you want to be a security company, or do you want to be a secure company? Having your own SOC is just not viable for most, due to the high costs from talents, maintenance, monitoring, etc. Managed Security provides the prefect affordable solution because you get a single, comprehensive and fully supported service, that is also modular and flexible to your unique protection needs.
IT talent retention cost
Lastly, a common problem that businesses face in maintaining a high-performing IT function is finding and keeping skilled technology professionals. Today, the demand for IT talent far exceeds the supply and the cost of recruitment and continuous training is high. To reduce TCO, many businesses leverage on an Managed IT partner for access to technical domain experts to support when there are unexpected and ad-hoc IT emergencies, and for technology advisory.