Calculating the TCO- Total Cost of Ownership
The criteria for making any business investment are: Is it needed and how can I get “A return on my investment?” The starting point for determining your ROI ( Return on Investment) is understanding your TCO (Total cost of ownership) over an initial five year period. These are the costs that need to be factored in to calculate your total costs over five years.
- Cost of the software either as a Capex expense for server based solutions or monthly cost for a SaaS solution multiplied by 60 months.
- Cost of any custom reports of software required to meet your needs.
- Cost of any hardware upgrades or replacement.
- Implementation costs to include training, conversion of existing data and any 3rd. party integrations
- Cost of annual upgrades and support. This cost are usually included in the month SaaS subscription cost.
- Cost of any upgrades to your current operating system that is required.
- Budget for additional training six to nine months after the system is live to ensure you’re maximizing the use of the system.
- The cost of cyber security software and services. This has become a necessity based on the uptick of cyber criminal activity and mal wear intrusion.
By calculating the TCO you can develop your strategy for getting a Return on your Investment (ROI). The basis of any decision to invest in technology for your retail business is to justify the investment by understanding how you can get a return on your investment. If you can’t determine the ROI before making an investment in new technology don’t do it!