This article also appears on Windows IT Pro.
It’s different for just about everything you purchase, but anything that you use more than once has a cost of ownership. If you have a car, you could end up paying a lot just to keep it running (this is a category I fall in). You’ve got regular maintenance like oil changes, the occasional break down when your fuel pump takes a dive, the mud stain your dog left after a trip to the dog park—the list is longer than the wait at the repair shop.
There are a variety of things that go into owning something you use regularly, and for some things, it’s natural to think about those costs. But when it comes to software and hardware, businesses don’t always think about the total cost of ownership (TCO). There are hidden costs in purchasing anything, and in the IT world, many of these things are even tougher to peg down than they are elsewhere.
Here are a few things to consider when you’re thinking about total cost of ownership. We’ll use a Microsoft Exchange deployment as an example.
Exchange needs a place to live so you need a server if you’re not using a hosted solution (we’ll get to hosted Exchange in a moment). Cheap hardware almost never pays off—you’ll end up spending time troubleshooting hardware issues, swapping components, and generally being pissed off that you didn’t spend a little more for hardware that functions as it should.
Hardware leasing is a useful way to reduce total cost of ownership for hardware. It seems counterintuitive to pay monthly for a server you’ll never own, but the fact is that leasing can make sure you have the latest equipment, plus you can upgrade to the latest and greatest when the lease is up. This means that rather than paying for repairs or huge upgrade costs every five or so years, you can upgrade every couple of years and have the best technology with the latest features. According to StorageCraft partner Guy Baroan, having the latest tech is a great way for employees to maximize productivity and get a lot more done. Basically, you pay a little more, you make a little more, and your employees get more done—that seems fair, doesn’t it?
In addition to Exchange licenses, you need Outlook on client machines so employees can send messages. This means there’s the additional cost of the MS Office suite for any desktop users hoping to utilize Exchange.
Suppose you’ve got Exchange and Outlook ready to go but decide to virtualize your Exchange server. That might be another licensing fee for VMware or a hypervisor of your choice. But once that’s set up a smart person will likely take backups, and yet another license is introduced.
While some backup solutions make the pricing simple, others make it complicated. Some virtual backup solutions limit the number of recover points you can make and charge you additional money just to make sure you’re meeting your recovery point objectives. The better ones allow you to create as many recovery points as you need, which is beneficial when a business already has to pay for a place to store backups of the Exchange server, a cost that can grow depending on compliance and recovery objectives, which leads us to the next section.
While this could easily fall in the “hardware” section, it’s worthwhile to look at the individual costs of storage. Depending on archiving needs, recovery point objectives, recovery time objectives, compliance needs, and more, storage can be costly. Don’t forget to think about additional storage space for important files any time you’re thinking about network costs. Per GB costs are going down steadily, but it’s still a line-item when it comes to total cost of ownership, especially where MS Exchange is concerned.
Time comes in two flavors when talking about TCO of servers: maintenance/administration and downtime.
Since Exchange is so complex, it’s easy to forget about the cost of Exchange administration and maintenance. These can be major time drains for an administrator, especially one who may not be as experienced. Those that wish to have an outside consultant come in to discuss Exchange might want to plan on paying pretty large fees.
While proper maintenance and administration should keep Exchange running smoothly, downtime is a cost that will affect a business when Exchange takes a dive from hardware failure, user error, or other issue. Downtime should be rolled into total cost of ownership where both software and hardware needs are concerned because as noted in a recent infographic, “Slaying the Downtime Dragon,” downtime can be extremely costly. Whatever you can do to reduce it is beneficial for critical pieces of hardware like MS Exchange.
Also, when thinking about TCO, it’s useful to imagine what will happen if downtime occurs, and what you need to do to minimize that downtime. If you buy cheap hardware and it fails, that’s something that costs your business money, and that’s part of what it costs to have cheap hardware. You may save a little at the beginning, but you’ll lose more money in the long run. Additionally, if you’ve got software taking backups and there’s a failure, you need a backup you can recover without a doubt. A business will lose a lot more than what it initially paid for a backup solution that’s low cost but low quality.
For something like Exchange, on-premise isn’t your only option. There are a variety of pros and cons to both, but it’s useful to weigh everything we discussed above for both on-premise Exchange solutions and hosted solutions like Office 365—some of the costs above aren’t even a part of the equation when it comes to hosted Exchange. But then again, some things not listed come into play, some of which are seldom discussed.
For example, when you use a hosted Exchange solution, you’re putting data in another company’s hands, and you’re also dependent on them to keep uptime at a maximum. While Microsoft often sees several nines of uptime in general for Office 365, how much time will you lose during their scheduled maintenance? That time doesn’t count against their uptime score, but maintenance can take a long time and maintenance doesn’t always happen at a convenient time for you, which means you could be without email while Microsoft fiddles around. In many cases it’s nice to know you’ve got Exchange in-house and can keep it up and running, even if you’ve had a hardware failure. Plus, maintenance happens when you choose and not when your Exchange host does.
How much can employees get done with the option you’re considering? We touched on this a little bit, but productivity is another thing that affects TCO. If you used an Exchange alternative, would you have the same features and abilities? If you use Office 365 you have email access anywhere, which adds a layer of productivity, but are you losing out on some of the robust features you might have in the on-premise versions of Outlook, Word, and so forth? Productivity is another thing to weigh in the balance when you’re thinking about TCO.
There are a lot of factors when it comes to total cost of ownership, whether you’re talking about cars, lawn mowers, servers, or software licenses. Nobody likes spending all their time doing loads of research on what to buy—it takes time and time is money. But ultimately, you will save money if you take the time to identify the true total cost of ownership for any major purchase you make.
Are there other things your business should roll into total cost of ownership? Share with us in the comments.
Photo credit: 401k calculator via Flickr.