Total
Cost of Ownership (TCO) of a PC
By
Raymond Poon
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When we talk about
the cost of a PC on campus, it is common that only the price
of the PC is considered. In fact, this amount alone is far
less than the Total Cost of Ownership (TCO) of the
PC as other types of costs associated such as installation,
software, networking, communications, applications and services
provided on the campus network, maintenance and technical
support etc. will inevitably be incurred when the PC is put
into use.
Without the TCO in mind, most
departments or end users tend to purchase their PCs individually
and make the purchase decision based simply on the initial
price tag or on their individual preferences without considering
either the additional associated costs incurred to the University
or the impact brought about to the central as well as departmental
IT servicing units. Without their understanding of the TCO
and full cooperation, it will be very difficult for the
University to fully leverage the economies of scale, and
for the IT servicing units to develop the necessary expertise,
to perform any kind of capacity planning, and to provide
acceptable service level for the support. Consequently such
purchase practice will unnecessarily incur higher cost to
the University in the long run.
The intent of this article
is therefore to help departments and end users understand
the meaning of the TCO of PCs so that they can all work
together to save the University's money and at the same
time be benefited by the much improved service and support
from their IT units. In fact, the CSC already made a start
in reducing the TCO of the central computing facilities
years ago with the aim of cutting cost and focusing the
already limited manpower on value-added services. To learn
about the CSC's approach, please refer to the section on
Challenges for Reducing the TCO
below.
The TCO of PC
So what exactly is the TCO
of a PC? It is defined as the costs for acquiring, activating,
using and keeping the PC running. It consists of costs directly
and indirectly associated with owning and using the PC throughout
its life cycle. The TCO of a PC, as detailed below, can
be thought to be the sum of all large and small costs associated.
A) Initial
Costs
C) Networking
Costs
These costs are incurred from providing network services
to client PCs, namely, the cost of connection to the network,
servers and the Internet, maintenance and support etc.
Challenges
for Reducing the TCO
The Computing Services Centre
(CSC) has been drained in the last few years to reduce the
TCO of central computing facilities with the aim of cutting
cost and enabling the scarce manpower resource in the CSC
and departments to be freed from mundane and non-productive
work. The following explains CSC's approach in reducing
the TCO of computer facilities in the University so far
and, at the same time, allowing our IT support staff to
focus more on value-added services to our users:
A) The establishment of the
server farm, network storage and back up system has successfully
achieved the consolidation of platforms for servers, software
and storage. The standardised environment has greatly enhanced
the effectiveness of our management and operations. It also
increases the capacity of central computing for meeting
the envisaged increasing needs of departments.
B) It is commonly recognised that the key factor for success
in TCO is the standardisation of PCs as the provision of
services and support to a PC consists of more than 80% of
its TCO. The benefits of standardisation of PCs are manifold:
1. Central tendering is possible.
Apart from lowering the purchase price through volume discount,
it can reduce costs for repeated procurement administration,
testing and evaluation, imaging (for quick recovery without
re-installation of operating system and application software),
training for users and support staff etc.
2. Central maintenance and
support scheme become possible. With a sheer volume, we
can get much better maintenance terms such as:
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On-site engineers
to provide speedy services
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Simplified
management of maintenance contracts
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Easier to
prepare management statistics and analysis on problems,
repairs, service and inventory
3. Campus or site software licenses
become negotiable.
4. Value-added services from vendors
(courses for obtaining professional certification, technology
transfer, special ownership programmes, seminars, tailor-made
disk image, free PC system management tools, etc.) can be arranged
through Vendor Partnership Program.
Despite the lack of a standardisation
policy in the University, the CSC had been trying hard in the
past few years to minimise the proliferation of differently branded
PCs and had succeeded in benefiting from standardisation. Given
the support from the CIO, we are now working on a policy paper
in the hope that the issue can be addressed very soon so that
we will be ready for the challenges of the rainy days ahead.
Conclusion
In today's distributed IT environment,
understanding the TCO can undoubtedly help us effectively evaluate
alternatives for acquisition, deployment, maintainence and support
of PC. Many studies of the TCO have already shown that indirect
costs are always far more than the direct costs. At City University,
we have been enjoying first-class, state-of-the-art network and
central services. It is estimated that the TCO of a PC on campus
will be over $20,000 per year. Therefore, any uncontrolled or
un-coordinated purchase of new PCs or even simple requests of
connecting redundant or seldomly-used PCs to network without paying
special attention to the organisation, process, technology, and
support issues will definitely drive the TCO out of control. With
limited manpower and further budget cut looming ahead, we must
try to reduce the TCO of PCs university-wide in order to ensure
that they are affordable, serviceable, and always available for
our good use. Hence, the key to successfully reduce the TCO of
PCs is not merely to understand the concept but to have departments
and end users to fully cooperate with us to realise it.
Go
to Top
Sourcing and
Tendering
Cost is incurred from searching the
possible products to buy; short-listing; hardware and software
compatibility and performance testing; negotiating, evaluating
and selecting the best buy (may not be the cheapest) based on
a pre-defined set of criteria, and writing the evaluation report.
This also covers the study of documentations and the preparation
work for the subsequent technical support and, of course, the
considerable time and work for going through the tendering procedures.
Perchance Cost
of the PC
It is the payment, based on the PC
hardware configuration, to the vendor in return for a new computer.
Unless "requested" otherwise, the purchase price normally
will bundle with the installed operating system.
Initial Installation
of the PC Hardware
Usually bundled with hardware purchase
by the supplier, and sometimes it is excluded in order to reduce
the apparent initial cost for maintaining competitiveness.
Initial Operating
System License
This is the purchase price of the
operating system for a new PC, usually an OEM version. We need
to cover this separately as in our campus we have to use the version
licensed by CityU.
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PC Application
Software
This covers the license(s)
of application software to be run on the PC. Some of these
are centrally provided and some funded by departments. Many
of them need annual payment.
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Initial Installation
and Porting of Existing Application Software
This covers the manpower required
to do the installation or re-installation of application software
on a new PC.
Customisation
and Transferring Data
This cost arises from developing
and customising batch, script, disk imaging file (for recovery
use) on the new PC and servers as well as from migrating data
from the old PC to the new one.
Deployment Cost
The time for learning the new features
of the new PC by the end user as well as by the support staff.
Hardware Maintenance
This covers the hardware maintenance
charges, usually including parts and labour.
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Software
Maintenance and Upgrade
This cost refers to renewal
or upgrade of operating system as well as application software,
both license and work required.
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UTP Cabling
and LAN Port Cost
If the PC is a newly added machine,
it will need to cover the labour and material cost of laying the
UTP cable, and the port cost of the access-layer switch to which
the PC is directly connected.
The Departmental
Servers
This cost covers the hardware and
software (including development costs of application software
and/or the related software license costs, if any) of servers
in departments (e.g., file servers, FTP servers, application servers,
Web servers, etc.), of their backup devices, and of their local
and network storage equipment. These servers provide departmental
Local Area Network services to PC clients.
The Operation and Maintenance of Departmental
Servers
The cost arises from operating the
departmental servers. The operation work carried out by computer
operators or technicians includes activation and shutdown, job
control, backup, computer account management, device input/output
management, disk allocation and changes, change of system configuration,
performance tuning, etc. Of course we will also need to pay for
the hardware and software maintenance charges for file servers,
printer servers, routers, access-layer switches, etc. installed
on LAN serving PC clients.
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LAN Management
Cost
The cost for managing the problems
of LAN, enforcing departmental security policy, managing
LAN servers and access layer switches, managing print queues
for shared printers, making shared disk accessible, performance
tuning, etc.
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Backbone Network
Equipment
The cost covers the hardware and
software of the devices on the backbone network including core
routers, core and distribution layer switches, wireless access
points, firewalls, VPN gateways, traffic shaper, etc. This backbone
equipment allows all PC clients to exchange data with one another
or those on the Internet.
Backbone Network
Equipment Maintenance
This cost covers the hardware and
software maintenance charges for backbone network equipment.
Backbone Network
Management Cost
This is for managing the backbone
network equipment (including the Internet and Internet2), performing
traffic monitoring , trouble-shooting, changing router and switch
configuration, conducting performance tuning, etc.
Rental Cost
of Communication Lines
This includes the rental costs of
local and international Internet links, modem pool, ISDN lines,
ATM links, lease lines, etc.
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Central
Servers and Storage Systems
The cost covers the hardware
and software (including development costs of application
software and/or the related software license costs, if any)
of central servers (e.g., email server, file servers, FTP
servers, database servers, application servers, Web servers,
video servers etc.) and their storage and backup systems
(SAN, NAS and Tape Library). These servers provide central
applications and services to all networked PC clients.
The costs of central servers
are huge investments as sufficient capacity must be provided
to support all central activities including teaching, learning,
administration, research, communication, email and many
public services etc.
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The Maintenance
of Central Servers
The cost covers the hardware and
software (systems and applications) maintenance charges for central
servers mentioned above.
The Operation
and Management Cost of Central Servers
The cost arises from operating the
central servers. The operation work carried out by computer operators
includes activation and shutdown, job control, backup, computer
account management, device input/output management, disk allocation
and changes, etc. The management work normally carried out by
system administrators include managing problems of server equipment,
enforcing security, change of system configuration, performance
tuning, etc.
End-user Support
Cost
The cost arises from the manpower
costs for on-going user training, regular meeting with users,
managing and running the Help Desk, etc.
End-user Self-Support
Cost
The cost arises from the end users
doing their own self-support and self-learning such as installation
of personal software, tailoring their own desktop environment,
doing local backup, experimenting with different fonts, re-installing
system when being hacked or infected with virus, resolving user
self-inflicted problems, acquiring and developing computer skills,
etc.
Environmental
Cost
The cost covers the
air-conditioning, electrical power, floor space, etc.
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