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Make Informed Budget Decisions for IT Infrastructure Using TCO Analysis

One of the most common mistakes companies make when purchasing IT infrastructure is not analyzing the total cost of the solution. The cost of an investment is often looked at only in terms of the capital expenditure and licensing and support costs. These are typically included in vendor quotes and are readily apparent but these are only a part of the overall cost of the solution. Total cost of ownership (TCO) is a way of looking at all of the costs associated with an investment. 

To make a truly informed decision and budget correctly for a new solution, TCO analysis is vital to understanding all of the associated costs and their impact. Here are some of the costs that don’t get as much attention as they should.

Implementation

Installing, configuring, and making your new solution live might involve a well thought out plan involving multiple experts and departments and even some professional services or consultants to achieve, or it may just fall on a lone sysadmin or network admin to “get it done.” In either case, much of the work and cost associated with the implementation may not be fully understood until after the solution has been purchased and all of the related parties are brought in to plan for the implementation. 

Depending on the size of the implementation, it might take weeks or months to complete. Tallying up all the work hours alone can be difficult, not to mention potential downtime and interruptions to other projects and production along the way. Still, it is important to diligently consider the potential costs upfront, before making the purchasing decision to mitigate unexpected costs later on.

Downtime

No system has a 100% uptime but during business hours, expectations are close. Five nines (99.999%) is often an expectation for IT departments to maintain uptime. Downtime can have serious financial costs when commerce, production, and services are put on hold. What is even harder to calculate are impacts to brand reputation when downtime strikes. 

It is important to understand the reliability and availability features of an IT infrastructure solutions. When, not if, a system goes down, what will be required to bring it back online quickly to reduce downtime? If you have a plan in place to recover systems within minutes rather than hours, what impact will that have to your cost of doing business? Disaster recovery and high availability planning should be part of any infrastructure purchase and budget decision and the cost of downtime can be a big factor in TCO.

Management Time

The time spent managing a system may be the single most overlooked cost of a solution. How many hours a day are spent by IT professionals just to keep the wheels from coming off your infrastructure. How much time is spent monitoring performance, disk usage, error conditions? How much time is spent mitigating problems before they happen through maintenance tasks and doing system updates for both hardware and software?

A better way to look at this might be, “How much time are our IT professionals spending maintaining current systems versus researching new technologies and implementing improvements to make our systems work better?”  All of the time IT professionals spend maintaining a system is part of the cost of that system. You’d very likely want to shift that cost toward researching and planning for improvements and better systems for the future than sinking it into maintaining what you already have. Management time can often be a very large chunk of TCO and some companies like the one in this linked case study switch infrastructure specifically to lower TCO.

Those were three of the most commonly overlooked costs in TCO. Some call these “soft” costs as opposed to “hard” costs which are more readily apparent. Let’s be real. They are all hard costs when they are taking money out of the budget and away from the bottom line. These costs take more time and effort to calculate and realize, but they are just as important and sometimes even bigger than the capital expenditures for purchasing a new solution. Some companies like this one who left a TrustRadius review have realized benefits in a wide range of areas from lower server footprint to dealing with fewer vendors by switching to new infrastructure.

Getting a good deal on the capital expense for a solution just isn’t worth it if that solution is going to rack up lots of other costs for implementation, management, and potential downtime. Look for a solution that is going to minimize those long-term, ongoing costs to free up your budget for other solutions in the future.

At Scale Computing, we offer free TCO analysis comparing our HC3 solution to traditional virtualization architecture. We find that our customers get on average a 40% savings versus traditional virtualization infrastructures by choosing to go with HC3. Below is an actual TCO analysis we did recently demonstrating savings close to that 40% sweet spot we see so often. 

It takes effort but TCO analysis should be an important part of any IT infrastructure budget and purchasing decision. Every organization is different and only you will know the real costs for your organization, but our Scale Computing experts can help guide you. Let us know if you would like to set up a meeting to help analyze your total cost of ownership and how HC3 might help lower your costs.