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Friday, September 27, 2002
ORTIZ: Total cost of ownership
By Chito Ortiz
New-Bizph
SAVING. In these hard times, every small realizable cost saving must be explored. I have written about the use of IT as a cost-saving measure; however, as with any other cost-saving tool, IT also has the potential to incur more costs than it was intended to save in the first place.
Some figures point to as few as one in 25 decision makers being aware that the costs incurred after initial deployment comprise up to 80 percent of the cost of ownership of technology. The focus has always been on the capital expenditure as well as migration and initial training costs.
Aside from acquisition costs, what are the other costs that face the typical small and medium enterprise (SME) IT user? Here are some components of the cost of ownership often overlooked by decision makers.
SUPPORT AND ADMINISTRATION. You have to consider how you will tackle hurdles encountered in your regular use of the software and hardware you buy. When you purchase an OS (operating system) or other software, support is often included but this is usually for a single incident. Support calls then are available for a fee.
The more popular software require constant updating through the installation of patches and stuff, so depending on the size of your installation, you should consider hiring a full-time systems administrator. It is also possible to have an employee trained, but take the training costs into consideration.
DOWNTIME, DISASTER PREVENTION AND RECOVERY. Considering the proliferation of viruses, worms, trojans and other malicious code, the time will come when your system gets infected. An SME has to consider the amount of time employees spend trying to ensure security and integrity of the company’s computer systems. When a virus strikes, how much time will you spend trying to recover data? How much business will you lose because of this?
Preventing such disasters is a major concern. You should have sufficient protection by installing a virus scanning program. More importantly, the virus definition files should always be updated. The costs attendant to acquiring and maintaining these programs should likewise be taken into consideration.
LICENSING COSTS. If you use proprietary software, the cost of the license should be considered. Most all proprietary software require you to buy a license for each workstation you run. This not only goes for the operating system but also for most other software you need to make your PC useable for your business.
Microsoft, the predominant supplier of computer operating systems and desktop applications, has just implemented a complicated licensing scheme that effectively ensures you have the latest version of its product at any given time. The downside is you end up renting the software. This translates to a recurring cost for your firm.
In this neck of the woods, the later cost will prove to be the most expensive.
Estimates of piracy rates vary from a low of 65 percent to as high as 90 percent.
The actual figure is hard to pin down as people have come to assess license compliance in various ways. In fact, there is a practice of vendors negotiating with users on the number of licenses an enterprise purchases with the tacit agreement that future purchases will be made as and when the enterprise finds more suitable business conditions.
If you use Open Source Software (OSS), most of these issues become moot.
Licensing costs disappear, and because Linux is versatile, downtime is at a minimum.
Most viruses, trojans and worms are written for Windows, and those targeted at Linux have found little success, so disaster prevention and recovery occur only on rare occasions. Product support is widely available over the Web, and most of the knowledge base needed to configure, run and maintain OSS can be had for the cost of your Internet connection.
These are the reasons why more people are shifting to OSS. In fact, there are IT practitioners who have dipped their fingers into OSS and got hooked in the process.
But since they derive income from pushing proprietary software, they have become “closet OSS advocates.” They too realize that once people see the difference in the total cost of ownership, the migration will be unstoppable.
(Chito welcomes comments at rs_ortiz@yahoo.com.)
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