Total Cost of Ownership
Total Cost of Ownership
Total Cost of Ownership, or TCO, is an approach employed in business and inductry to identify the real costs of running and maintaining an IT infrastructure. The Becta TCO project was designed to see if this approach could be adapted and used in schools to help them identify the real costs of their ICT provision and help them budget for sustaining or developing that provision.
The basic principles of the approach were that costs went beyond the initial procurement costs but would include ongoing costs, incidental costs, elements of depreciation and potential costs of replacement. In addition it was felt that costs for training, maintenance and daily use were also contributory factors in determining the overall total cost. This was especially true when extra staff had to be brought in to deal with such matters and, especially, when highly paid staff, such as teaching staff, were used to tackle them. The daily use costs also included times when the equipment could not be used because of faults, damage etc., this was considered time lost and therefore a cost in addition to any maintenance costs.
The project consisted of two parts; a cost recording process and a staff survey. The cost recording process basically asked schools to record into a predesigned template the costs of equipment at the time of purchase. It also required the anonymous recording a staff salaries. The staff survey sought to record staff responses to the ICT provision in their school, particularly how much use was made of it, how often or how much time was lost due to faults or maintenance and how much time they spent on certain activities to keep the provision working.
A further basic premise of the TCO model was that many of the costs were unknown and that this model would attempt to reveal these. This was done when the results of the two TCO parts were completed and presented to the schools. It was clear that some schools had higher TCO costs than other schools. This in itself was not a problem if the school was able to identify the reasons for their costs being high or low. It also indicated where schools had devoted funds to particular aspects of their ICT provision, say ICT training, and this could be compared with the amounts other schools had devoted to the same aspect. There were obviously some costs that were easier for schools to influence than other costs; the cost of printing, for example, was often one which schools attempted to control by reducing the demand upon paper and inks. However, in the case of printing, it was found that this was a very small proportion of the TCO and reducing these costs, laudable though this might be, would have very little impact upon the total cost.
At the time of carrying out the first TCO exercises, the biggest hidden cost was found to be staff costs, particularly when highly paid staff, such as teachers or deputy heads, were required to oversee and maintain the running of the ICT provision. This issue was subsequently addressed by legislative changes in the teacher’s workload but it did reveal that an ‘amateur’ or ‘enthusiast’ approach to ICT in education would be both expensive and not effective.
There were drawbacks in the initial approaches to the TCO model; the cost gathering exercise was very time-consuming even where schools had ready access to their costs (this was not always the case), also, there were dificulties for many staff in completing the staff surveys particularly where they did not have a clear job function or performed many roles. Nevertheless, as a result of carrying out the TCO work, schools generally felt that they had a much better understanding of the costs of their ICT provision and a better base upon which to plan for future provision.
