Hardly anyone alive possessed the skills demonstrated for hacking into the Gibson<\/em>, a mighty \u201csupercomputer.\u201d Fun fact: the duo got married shortly after filming.<\/em> <\/p>\n\n\n\n Unfortunately, hacking is no longer just an obscure movie plot. Last year, the FBI reported<\/a> more than 847,000 cyber breach complaints \u2014 that\u2019s a 7% increase from 2020. <\/p>\n\n\n\n With the click of a mouse, criminals access sensitive information, commit fraud, and launch attacks that shut down entire networks.<\/p>\n\n\n\n The good news? Organizational leaders are increasingly heightening security expectations to protect their businesses from online threats, seeing them as a priority on par with IT operations. <\/p>\n\n\n\n The not-so-good news? The same executives often fail to consider exactly how much time, finances, and expertise these new security implementations will take. Alternatively, they may feel it\u2019s too expensive to support both <\/em>cybersecurity and operational initiatives and opt for those that \u201cmove the business forward\u201d. <\/p>\n\n\n\n As mentioned in Gartner\u2019s 2022 Report for IT Leaders<\/a>, maintaining acceptable levels of security requires a sustained, predictable, and consistent level of annual spending. The question then lingers: What is the total cost of ownership for cybersecurity initiatives?<\/em><\/p>\n\n\n\n This post will answer that question in detail. We’ll also highlight some typical costs IT admins may incur when implementing software solutions.<\/p>\n\n\n\n Total cost of ownership (TCO)<\/strong> is a measure of a \u201cthing\u2019s\u201d complete cost; that thing<\/em> could be a single tool, complete product solution, professional services, or even whole parts of an IT infrastructure. In other words, it involves adding up all expenses associated with acquisition over time. <\/p>\n\n\n\n TCO includes an item\u2019s initial purchase price, ongoing licensing fees, maintenance\/repairs, and indirect costs such as implementation, training, and support. <\/p>\n\n\n\n Together, these expenses can add up to a significant amount over the lifetime of a product or system. Second fun fact: the Gartner Group<\/a> popularized the concept of TCO in the computer and software industries in 1987 before other industries began to follow suit.<\/p>\n\n\n\n Below is the basic formula for calculating total cost of ownership:<\/strong><\/p>\n\n\n\n TCO = Purchase Price + (Costs of Operations x Time)<\/em><\/p>\n\n\n\n While the formula is simple in principle, application becomes exceedingly complex the more factors are involved. Common variables that increase complexity when determining TCO are period growth, inflation, and end-of-lifecycle costs. <\/p>\n\n\n\n Let\u2019s walk through a quick example to demonstrate TCO’s relevance.<\/p>\n\n\n\n Say you\u2019re in the market for a new car, and you\u2019re deciding between a conventional gas-based vehicle or an electric vehicle (EV). In most instances, the purchase price of an EV would cost more than the gas-powered option. But is that all there is to it? <\/p>\n\n\n\n As a buyer, you must weigh the cost of powering each car over time. Not to mention the cost of maintenance, repair, insurance, and other associated costs of each vehicle.<\/p>\n\n\n\n Adding up these factors provides a much clearer picture of how much each car truly costs. Hence, the term \u201ctotal cost of ownership.\u201d Obviously, purchasing an automobile is a major personal investment for most folks. But TCO analysis is also a powerful tool for making corporate procurement and operational decisions. <\/p>\n\n\n\n Any IT manager who’s ever had to justify an IT project knows numbers matter. But not just any numbers \u2014 the correct numbers. <\/p>\n\n\n\n A well-detailed TCO gives executives a more accurate picture of the actual cost of a project, and managers who can provide concrete TCO numbers<\/a> are more likely to gain organizational support for their proposals.<\/p>\n\n\n\n For IT admins, calculating TCO helps identify opportunities for boosting existing processes. For example, you may find you’re spending too much on support costs or that you could save money by switching from legacy infrastructure to a vendor-managed solution.<\/p>\n\n\n\n With JumpCloud, you can expect benefits like:<\/p>\n\n\n\n Now, let\u2019s take a closer look at some common elements vying for budgetary allocation in the typical IT department.<\/p>\n\n\n\n Money doesn\u2019t grow on trees; the best IT managers are always looking for ways to get the most bang for their buck. As a reminder, TCO considers all costs associated with deploying a product over its life cycle, including software and hardware, training, and support. When purchasing new IT products, expect to ramp up costs in the following three areas:<\/p>\n\n\n\n The cost of the software or application plus the incurred expenses of getting it up and running are known as acquisition costs. Expenses such as the purchase price of the software licenses or subscription and the cost of on-site hardware installation and employee training also belong to this category.<\/p>\n\n\n\n Additional acquisition costs:<\/p>\n\n\n\n Upon acquisition, other expenses are required to keep your software running and functional. That\u2019s what makes the next two categories just as important.<\/p>\n\n\n\n Operating costs represent the totality of the recurring costs<\/a> expended by the organization to maintain the operation and existence of the software throughout its lifespan.<\/p>\n\n\n\n Operating costs include:<\/p>\n\n\n\n Other than these, there is another category which, surprisingly, most people tend to overlook: human resource costs.<\/p>\n\n\n\n In addition to purchasing and operating the software, you also need to factor in the human resource costs<\/a> associated with running it.<\/p>\n\n\n\n To get the most out of your investment, you need knowledgeable personnel or professionals to manage the software on an ongoing basis. This translates into additional costs in training or hiring in-house technicians or third-party consultants.<\/p>\n\n\n\n HR costs include:<\/p>\n\n\n\n Once you understand all three categories of cost \u2014 acquisition, operating, and human resources \u2014 you can assess which software solutions are affordable long term.<\/p>\n\n\n\n Once again, the formula for calculating total cost of ownership is:<\/p>\n\n\n\n Unfortunately, determining every operating cost factor is sometimes like finding every needle in a haystack. The ease of calculating TCO of different software or services<\/a> varies from project to project. <\/p>\n\n\n\n For instance, it would be more challenging to estimate the HR cost of software that requires personnel working in other roles than it would be to calculate the HR cost of software with a dedicated personnel.<\/p>\n\n\n\n If that wasn’t enough, business conditions like growth, inflation, or economic recession also impact TCO calculations. Given the complexity of TCO, we recommend enlisting the help of your organization’s finance department when in doubt. <\/p>\n\n\n\n Doing so will ensure the organization takes all relevant costs into account without any oversights. Furthermore, because operating costs can vary over time, partnering with finance will help ensure your TCO calculation is updated regularly.<\/p>\n\n\n\n TCO is a metric that provides a comprehensive view of all the costs associated with a project over its lifespan. This includes everything from hardware and software costs to support and training expenses. <\/p>\n\n\n\nTotal Cost of Ownership (TCO): More Important Than Ever<\/h2>\n\n\n\n
What Is Total Cost of Ownership (TCO)? <\/h2>\n\n\n\n
General Example of TCO<\/h3>\n\n\n\n
Benefits of Calculating TCO<\/h2>\n\n\n\n
Improve TCO with JumpCloud<\/h3>\n\n\n\n
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Types of IT Expenses<\/h2>\n\n\n\n
1. Acquisition Costs<\/h3>\n\n\n\n
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2. Operating Costs<\/h3>\n\n\n\n
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3. Human Resource Costs<\/h3>\n\n\n\n
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Calculating TCO<\/h2>\n\n\n\n
![\"TCO](\"https:\/\/jumpcloud.com\/\/wp-content\/uploads\/2022\/06\/TCO-calculation.png\")
<\/figure>\n\n\n\nNeed Step-by-Step Guidance on TCO?<\/h2>\n\n\n\n