Server TCO: The Price Tag Is Just The Beginning
The three-year cost of a server may be 10 times the hardware purchase price. Depending on how much time and effort you expend keeping it operational, the lowest price server may not be the least expensive. Here's how to figure out your total cost of ownership.
We've all learned the hard way that the purchase price of an item may be the least expensive part of the transaction. Whether you're buying a car or a server, the sticker price is just the beginning. While you may be aware of the extra costs of a car -- insurance, gasoline, periodic maintenance, registration, safety inspection, tolls, parking, interest on the auto loan, and taxes -- that's only part of the financial burden. What about the cost of your garage? Not to mention depreciation costs.
From a cost perspective, servers have similar issues, but the inputs are often even more subtle and harder to ferret out. While some analysts question the applicability of Total Cost of Ownership (TCO) calculations for business computers, the approach remains a widely recognized tool. You should be aware of what's involved before you sign for the device.
Indeed, despite the limitations of a TCO analysis -- which we'll explore -- it can often serve to demonstrate that the least expensive system is not always the cheapest to own, and therefore not the best deal.
That said, it's interesting to look at the results of a 2007 study by IDC that queried CIOs about their server TCO. Because each CIO did a TCO analysis specific to their enterprise over three years, with no standard method, these figures cannot be considered terribly precise and comparable. However, they are an interesting starting point for a server TCO discussion.
The pie chart clearly shows that the personnel costs involved in managing a server are far higher than the purchase price of the hardware and software.
Obviously, hardware and software, combined, are only about one-sixth of the average IT TCO. The bulk is personnel costs, derived from maintenance and support. The unsurprising implication is that ease-of-use features are important, as they reduce the demands placed on the staff and thus produce a lower TCO.