Posted: October 15th, 2022

Total Ownership Costs (TCO)

Computer Sciences and Information Technology
Total Ownership Costs (TCO) Associated with Creating and Supporting an Organization’s Information Systems
List and briefly discuss the types of total ownership costs (TCO) associated with creating and supporting an organization’s information systems and address a sufficient number of TCO items, at least 8.
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Total Ownership Costs (TCO) Associated with Creating and Supporting an Organization’s Information Systems
The total cost of ownership allows organizations to estimate the cost of content over a certain period, for instance, one year or after two years. The measurement is done to identify direct and indirect costs incurred, for example, in custom software or cloud software. The paper describes the total ownership cost associated with creating and supporting an organization’s information systems.
Acquisition cost is the original price incured, which includes the value in purchasing the system. The acquisition consists of various factors such as installation expenses, where installation includes connectivity and technical needs. System design, which involves all components needed for the system to operate and a suitable location for the system.
The development of systems entails applications of software and hardware required for the information systems to work. Lastly, training on how to use the systems where some methods are complex to use. The cost of customization which is vital to some organizations. An organization may decide to customize software and control how they work. Data migration cost is included in the total value where transferring data from old systems to new systems which may add system formatting. Some organizations prefer archiving the old methods in read-only mode.
The cost of support covers system management costs, which is essential in every organization. System management cost maintains a regular operation of the systems, such as enabling recovery of information, backup as well as management of output. System management entails risk prevention through the installation of security tools in the systems to enhance a smooth operation away from threats. User support is crucial, which implies an active help desk facilities, problem support together with ongoing training.
A help desk facility and problem support deal with all issues with information systems hardware or software as well as in case of technical and network issues in the organization. Environmental factors incur costs such as a reliable power supply and backup in case of power shortages, air conditioning, and enough space for the systems. Information systems require enough spacing to avoid congestion, a well-ventilated and conditioned room as well as a constant power supply to enhance continuous and effective operation. Organizations are expected to have a planned budget of costs and monitor expenses incurred within the specified period.
The total cost of ownership in the organization’s computer systems includes the system value, which is vital in identifying investment requirements and risks. For instance, an expensive system demands a higher supporting cost. System content is a tool consisting of all content in the arrangements; for example, in a computer system, control systems are available, including a mouse that needs extra maintenance. System content is essential in measuring the system’s operational cost.
Method of system delivery, for instance, after purchase how the order will be delivered to the organization and which way to use. For example, shipping or use of flight delivery method determines the safety of the product and reduces cost in case of damages — Source of supply, including the service level agreement(SLA). System durability, as well as the attached warrant, System program management cost, physical characteristics of the system, how strong or fragile the system is, will determine the maintenance cost. Lastly, order management cost, which includes time, resources used during the order process as well as communication between the organization and the system supplier.
The total cost of ownership (TCO) in the organization’s information systems involves total cost involved in creating, supporting/maintaining the information systems. There are more costs involved with information systems apart from the purchasing value of hardware and software. Maintenance and system support incurs a higher price than expected by most organizations. TCO tools are essential which consists of system value, delivery method, order management, and many others.

Reference
Open Textbooks. (n.d.). Retrieved from https://open.lib.umn.edu/.