In the article "TCO (Total Cost of Ownership) or the Secret of Meaningful IT Equipment." We introduced you to what is behind the acronym and what is the principle of applying this universal method when planning IT investments. It is no secret that theory provides a good basis for ideas and reflections, but practice and an experienced view can give them an objective appearance, as close as possible to reality.

In order to be of maximum help to you, we decided to share observations and trends from Geletron's practice, especially since our efforts are mainly aimed at small and medium-sized companies. Ill-planned IT spending there can have critical or at least highly tangible consequences.

IT systems require continuous maintenance, improvements, changes and upgrades to keep up with the pace at which new technologies and modern business are evolving. These systems and equipment have a life cycle that is shorter than other assets – typically between 4 and 10 years, depending on the technology.

• Stationary and mobile computer - 3-4 years
• Server – 5-7 years
• Printer - 5 years
• Network equipment - 5-7 years
• Network cables - 20 years
• Telephone system – 10 years
• UPS and generator - between 15 and 25 years

Here are some examples of TCO:

Example 1:

You are purchasing a server to be installed in your office. Specialized software is installed on it and a structure of shared folders is created for employees to access.

The main costs we can think of are:

1. • Hardware
   • OS
   • Specialized software
   • Labor for the initial installation

Here, however, there are fundamental issues that we need to address and without which the system would not work properly:

• In order for the hardware to work smoothly, it is necessary to provide a special environment - a separate room, uninterrupted power supply, stable and fast network connection, cooling and physical security.
• Operating system and software - require regular maintenance and continuous monitoring, as well as updating the software, making changes when necessary, providing good anti-virus protection.
• Data storage and database - for reliable storage, it is mandatory that the system is backed up regularly and in several places (rule 3-2-1). This requires the availability of specialized software and storage space for the archives.
• If this is a critical system, we need to have thought about the risk of its stopping - how this would affect the business from a financial point of view in the event of an incident or accident.

These are costs that we may not have initially thought about, but we must anticipate.

Example 2:

Prioritizing tasks and what misallocation of resources can cost us.

Let's say we've hired an IT support company that we rely on to assist in the event of an incident. It is good to know in advance the response time, the level of support and their priorities. It often happens that users who are not well trained to work with a given system use up all the scheduled support time, instead of this resource being directed to more important processes for the company. Also, we need to define user support levels. It is likely that, in the event of a problem, providing assistance to an employee in a managerial position is more important than to a user with lesser responsibilities in the company.

Example 3:

Investments in security and systems protection are key elements.

Every system needs to be well protected and built with high quality so as not to interrupt or slow down the work of employees. Saving a resource can be costly to the company, even detrimental. Security and defense investments include: anti-virus protection, network protection, backup systems, storage, encryption software, insurance and more.

In most cases, to determine what investment to make in the smooth operation and protection of an IT system, it is taken into account what it would cost to temporarily interrupt the entire process it serves.
How much will it cost the company if the system is down for 2 hours, 4 hours or a whole day until it is fully restored?

In short, when calculating the TCO of the IT infrastructure of a small or medium-sized company, it is important to consider:

• the cost of the purchased equipment (computers, servers, LAN materials, communication equipment, backup equipment, uninterruptible power supply equipment, etc.). Add to these costs the cost of the installation and setup service.
• the price of the software, which you will use - operating systems, anti-virus protection, applications, as well as the costs of installing and setting them up. Don't forget to ask about the price of updating this software too!
• the cost of paying people, which perform hardware and software maintenance
• repair and depreciation costs – provide for such situations by consulting your IT team or the service provider
• facility costs for the equipment (if you use your own servers) and their air conditioning
• IT staff training costs (and to end users)
• costs for communications, materials for office equipment, electricity - internet, toners, paper, etc.
• temporary costs associated with problems in the IT infrastructure - security breach, data loss, server failures, etc.

With this text, we hope you can orient yourself more fully about the amount of expenses you plan to make, and also what requirements you have for the companies you turn to for consultation and implementation.

If you need complete or partial implementation of an IT project, the team of Geletron will assist you in a timely manner.
Look for us on 0882 997 383 or info@geletron.com.