Total Cost of Ownership

Abstract

It seems to be well known that a computer-based information system is costly to acquire. Less well understood are the costs associated with maintaining and operating a system over time. Several large laboratory information system vendors had no ready answer, even in general terms, to the question “Do you offer any advice to potential clients about the costs of ownership of your system?” This is not very surprising, as even large, computer-dependent industries often have only the vaguest notion of the true costs of ownership of their systems. According to one estimate, each Microsoft NT workstation typically costs an organization $6,515 per desktop per year,¹ of which capital hardware and software costs account for only 25%. Some of the remaining 75% of costs, which may be overt or hidden, are associated with management and technology support.¹ The Gartner Group, a consulting firm, says that the five-year cost of a personal computer is $44,250.² Vendors not are generally expected to provide much information about cost of ownership beyond the services they provide under contract, as costs are mainly related to how owners choose to use and support their system rather than to any particular computer characteristic.