How to work out a Windows server total cost of ownership

Total cost of ownership (TCO) can be defined in the context of IT as the total price in money, time, and resources for owning and using software.

It is considered to be an essential part of the IT decision-making process and a useful metric for assessing the overall cost impact of investing in a Window server.

Companies must look at the broad set of expenditures that contribute to total costs to properly assess TCO. These expenditures that extend beyond hardware leases and software licensing to include more intangible items such as ongoing maintenance and administration, end user productivity, and the cost of system downtime.

TCO can be broken down into six cost categories at a high level: hardware, software, training, downtime, staffing, and outsourcing.

Organisations should focus on ways to make IT staff more productive and systems more reliable if they want to minimise TCO.

TCO varies by workload which is something that companies should consider. For example, the TCO for business applications such as ERP and CRM will be higher than for infrastructure workloads such as file and print or networking services.

In addition, the timeframe over which TCO is calculated will change the relative proportion of its various cost components. As the time period is extended, ongoing costs such as those for staffing and downtime will become a larger percentage.

In contrast, as the time horizon is extended, the percentage of TCO attributed to acquisition costs decreases.

Even though TCO is an important decision-making metric, it should not be the sole criterion for making IT investment decisions, as the business value is not captured, or the return, provided by such investment.

Other metrics, such as overall Return on Investment (ROI), can help organisations understand both the cost implications and the benefits, such as productivity improvements or competitive advantage, that are provided by an investment in information technology.

A study by the Yankee Group found that a total switch from Window server to Linux would be four times more expensive and longer to deploy, as an upgrade from one version of Windows to a newer release.

Find out more about Windows server total cost of ownership or discover the impact of IT on a company.