GLOSSARY
Total cost of ownership (TCO)
Total cost of ownership, or TCO, covers a solution's costs over a specified period. Alongside licences and computing, it includes implementation, integration, support, review and potentially replacement. Offers become comparable when their scope and quality requirements are equivalent.
An inexpensive call can create expensive work
Two applications prepare customer meetings. The first costs less per request but needs more correction and manual transfer. The second has a higher direct price yet may deliver a more complete usable workflow. The full chain of work determines which is more economical.
The cost model should show who bears each activity. Otherwise, an apparent IT saving may create extra work in sales or another department. Demand peaks, incidents, training and moving stored information to a future replacement also matter.
Keep assumptions visible and adjustable
A pilot can measure cost per accepted result alongside initial expenditure and realistic usage scenarios. Uncertain quantities should remain ranges. Separating fixed and usage-dependent costs helps explain how adoption changes the calculation. A model router affects only part of it. Establishing economic value also requires a benefit assessment, which is the separate question addressed by ROI.