By Hank Stringer
As a channel partner, you know that total cost of ownership (TCO) analysis can be an effective tool for selling hosted solutions by showing their value in comparison to on-premises solutions. What you might not know is that many TCO analyses are ineffective because they are incomplete
TCO analysis originated with the Gartner Group in 1987. It is defined as the systematic quantification of all costs generated over the lifetime of a project. The goal of TCO analysis is to determine a figure that reflects the total cost of the investment, including one-time purchases and recurring costs, not just the initial startup costs.
Today, most providers of on-premises solutions give buyers the costs for their PBX and possibly ongoing maintenance. When buyers compare these costs with those of a hosted solution, the on-premises PBX will appear to be more attractive from a financial perspective. However, this is not an objective comparison because the on-premises solution does not include all the components of most hosted solutions. A detailed accounting of all the components of a business communications solution will afford an accurate TCO analysis.
There are seven key categories that need to be detailed when completing a TCO analysis. Each can include as many as three to five components that need to be addressed during the review:
- Hardware/infrastructure, including PBX purchase price, switches, routers/firewalls, handsets and soft clients
- Network, including bandwith and lines, with local access, Internet access, and fees and surcharges
- Usage, including local, long-distance, toll-free/inbound and international
- Licensing, including subscription fees and feature licensing
- Implementation, including installation, training, consulting and other fees
- Management/maintenance, including monthly or annual maintenance, software assurance fees and moves/adds/changes
- Support, including IT resources, implementation project management, ongoing project management costs and other staff resources (receptionist/MAC resources).