You can't kill TCO

If you think the manufacturer's sticker gave you a reliable estimate of the city mileage for that new car of yours, you should try negotiating traffic on the hills of San Francisco. You'll discover pretty quickly that in my town, the old adage "Your mileage may vary" has never been truer.

Likewise TCO (total cost of ownership) estimates for enterprise software. Commercial vendors such as Microsoft continue to use TCO as one of the biggest hammers wielded against Linux and open source, despite the fact that it's virtually impossible for a single TCO estimate to match every possible usage case.

Analysts regularly cite TCO figures -- often drawn from studies sponsored by those same commercial vendors -- that seem so blatantly biased, open source advocates recommend ignoring them altogether. But the business world lives and dies by the numbers. When real decisions need to be made, plugging your ears and singing "la, la, la" simply isn't an option.

It's true; there are no hard and fast numbers for TCO. Discussion of TCO, on the other hand, brings to the table the topic of the so-called hidden costs that factor into any IT purchasing decision. It acknowledges the fact that sticker price is never the whole story. The problem is, no matter how honest they try to be, neither vendor nor analyst can ever fill in all of the variables of the TCO formula.

What they can tell you is what's for sale. Whether it's IBM, Microsoft, Oracle, or Red Hat, a software vendor will always offer a certain amount of software plus a certain level of customer support for a certain length of time at a certain price.

Most TCO studies also try to factor in the probability of additional, unknown costs. For example, there have been 19 incremental patch releases to the Linux 2.6 kernel in 2005, and each one would mean downtime for a Linux server. Similarly, hundreds of new Windows viruses appear each year.

What this kind of TCO analysis can't give you is the remaining piece of the puzzle -- namely, your piece. The unique combination of resources, both machine and human, at work within your organization is something only you can fully understand.

Whenever you need to buy hardware to operate a solution at peak efficiency, that's additional cost. Whenever that hardware means an upgrade to your datacenter's power and cooling facilities, that's additional cost. Whenever your staff isn't well-versed on a new software platform and needs training, that's additional cost. Whenever you have to hire new IT personnel, that's additional cost. And so on.

The upshot is that although you may not be able to convince your CFO to stop asking for TCO figures -- and you certainly won't stop the analysts and the software industry from serving them up -- you can learn to live with TCO as a tool for justifying IT purchasing decisions. The key is to make sure that the TCO figures under consideration in your organization are your own, and not the vendors', because only you can see the whole picture.

Just be honest with yourself. As with driving the San Francisco streets, you have lots of options. Sometimes you need a Hummer and sometimes you need a Honda. And sometimes, when you weigh all the options, what you really need might just be a bicycle.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about Honda AustraliaIBM AustraliaMicrosoftOraclePLUSRed Hat

Show Comments