What Is TCO?
TCO stands for Total Cost of Ownership. In terms of data storage, it’s an assessment of all the costs your organisation incurs while procuring, installing, running, and maintaining your IT infrastructure. TCO may include hardware and software, management and labor, storage capacity and compute resources, and any opportunity costs incurred during downtime.
Why Perform a TCO Analysis?
A TCO analysis is usually performed before making a major capital purchase such as a new server, storage area network (SAN), or network-attached storage (NAS) device. If the value added from a new asset outweighs its TCO for a given time span or life cycle, you can acquire the asset with confidence in the economics of your purchasing decision.
How to Calculate the TCO of Your Data Storage
Calculating the TCO of your IT infrastructure requires a systems-wide understanding of the costs you’re likely to incur throughout the life cycle of owning that IT asset. Use this four-step process to perform your own TCO analysis:
- Describe the acquisition. What are you trying to purchase?
- Define the life cycle or time span for your analysis.
- Identify costs associated with ownership.
- Model your costs over the desired time span you plan to have the new asset.
With a cost model in hand, you’ll be able to see your capital and operating costs and determine how long it would take before you can expect to make a return on your investment.