Total Cost of Ownership—Tech Purchasing Tips for Librarians

Over my career, I have been part of many technology purchasing decisions, and the most important thing I have learned is the value of being able to calculate the total cost of ownership.

“TCO (Total Cost of Ownership) is a calculation method that determines the overall cost of a product or service throughout its life cycle” (Laurent, 2018, para 1). Technology costs a lot more than the initial outlay of funds to purchase the product; that said, I don’t often see all the cost components considered when decisions are made. If purchasing technology is part of your job, I hope you read on.

TCO Elements

In addition to the initial outlay of funds, there are many other elements that must be considered. These include training costs, any needed upgrades to existing infrastructure, staff time to learn the technology, etc. A refresh cycle also should be factored in.

Laurent (2018) identified eight elements that make-up the total cost of ownership. These are:

• Purchase price: cost price and supplier margin.
• Associated costs: transport, packaging, customs duties, payment terms etc.
• Acquisition cost: operation of the purchasing department.
• Cost of ownership: stock management, depreciation costs etc.
• Maintenance costs: spare parts, maintenance etc.
• Usage costs: use value, operation, services etc.
• Non-quality costs: deadline compliance, non-compliance processes etc.
• Disposal costs: recycling, resale, disposal etc. (Laurent, 2018, How to calculate TCO, para. 3). 

These eight elements are important factors that must be considered. However, I do not feel that they always represent all the elements of a library purchase. Recently, I read an article by Marshall Breeding on TCO. He listed ten elements that make up the total cost of ownership in libraries. His list includes:

• Capital expenditures
• Recurring costs
• Direct personnel costs
• System administration
• Prerequisite components
• Database administration
• Content and metadata
• Training
• Indirect costs
• Plan for obsolescence

Breeding’s full article is available online and linked below in the references. While it is 15 years old, it does a good job discussing the necessary elements of technology costs that should be factored in before a final decision is made.  

TCO Resources

If you are interested in calculating the total cost of ownership for your technology purchases I encourage you to review the resources available from COSN (the Consortium of School Networking). While this site is geared towards K-12 schools, the TCO Assessment Tool, Indirect Labor User Survey, and TCO Example Workbook can be modified to meet the needs of special librarians.

References

Breeding, M. (2006). Comprehensive cost planning yields successful tech projects. Computers in Libraries, 26(6), 26-29. https://librarytechnology.org/document/12054

Laurent, X. (2018). Understanding TCO: Origins, definition, calculation, advantages, and so on. Manutan. https://www.manutan.com/blog/en/glossary/understanding-tco-total-cost-of-ownership-origins-definition-calculation-advantages-and-so-on