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Minimize total cost of ownership --- (TCO)

The total costs of Information Technology (IT) must be calculated throughout the chain of information value, since a change in one area, such as manufacturing, may produce benefits or costs in another, such as accounting.

Just as any IT system may be viewed as simply a subsystem within a larger, more complex system called "the business"; the costs of IT must be considered in the strategic context of IT's lasting impact to overall costs.

Total costs are difficult to determine with precision, but several extended costs beyond the purchase price and initial capital outlay must be considered and reliably estimated in order to determine return on investment (ROI).

Our specialists will show you how to estimate the total cost of ownership (TCO) associated with IT systems by consideration of these extended costs. Some examples of these costs follow:

Example IT Cost Specific Considerations Possible Strategies
Support, Maintenance, and Upgrades
  • As much as 80% of software costs over its life are in maintenance, not in development.
  • Support costs should vary with value and usage, not as a percentage of purchase price.
  • When does the vendor plan to drop support for "legacy" systems?
  • How often and for how long is system maintenance required?
  • How will you operate during repairs or upgrades?
  • Vendor Support Contracts
  • Internal 1st Tier Support
  • Third-party Support
  • Planned downtime schedules
  • Pre-payed options to upgrade
  • Backup and Redundancy
  • Which systems and data are core to the mission?
  • What systems are mission critical versus simply important?
  • What additional hardware, software, media, etc. are required to ensure successful failover?
  • Appropriate disaster recovery and business continuity plans
  • Secure co-location of servers
  • Cross training of employees
  • Cooperative agreements with others using similar technology
  • Training
  • What level of training and re-training is required?
  • Are any certifications needed such as ISO9xxx or Vendor certifications?
  • Who should be trained and how often?
  • Have training materials already been developed?
  • What are full training costs including travel, time "off" from work, etc?
  • What is the cost of not training?
  • Vendor training program
  • Inhouse or onsite training versus 3rd party or Offsite
  • Development of manuals and technical documents
  • Self-paced, computer-based training (CBT)
  • Licensing
  • Licensing method (concurrent users, number of servers, etc.)
  • Number of licenses required over total life vs. inital level
  • Software escrow costs
  • System to monitor and enforce license compliance
  • Costs of non-compliance
  • Enterprise-wide licenses
  • Locked-in options to upgrade licenses
  • Resale, reuse, or upgrade of any existing, unused licenses

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