Tuesday, June 8, 2010

Keep It Simple Using Total Cost of Ownership (TCO)

School leaders and their technology experts take months to decide which technologies to buy and how to integrate them into their curriculum. The first step is always determining the results you expect by integrating the technology. And the second step is determining the best technology for the goals you are trying to reach.

This process doesn't need to take months to decide if a 'total cost of ownership' approach is used. Total Cost of Ownership is a principle that says when you are considering investing in a change, or if you want to adopt a new technology, you should consider all of the costs to adopting that change. Total cost includes not just the purchase of the technology, licenses, and warranties, but also facility upgrades and installation costs. To be thorough, you also need to consider related software, customization and configuration, and integration into data systems. Social and human costs also must be calculated (not as easy but just as important) such as change management, curriculum design, and ongoing technical and professional support. Even public relations and organizational communication activities should be considered.

Once all of the associated costs are calculated, two things need to happen. First, you need to decide if you can really afford the "total" change and second, you need to assess whether you will see a return on your investment.  Decisions can become pretty 'black and white' when TCO is employed.

A good application for TCO is when selecting high end solutions like interactive whiteboards. A series of opinion pieces in  ISTE's Learning and Leading magazine highlights why TCO is so important. Several people make good cases for and against adopting whiteboards, and all of them, on both sides of the argument, point to the adoption process as keys to success or failure. The integration into existing best practices, ongoing training and support, incentives for innovation all are critical and all cost money if done correctly. And more than that they cost emotional and professional capital as well.

The biggest mistake school leaders can make is to invest in new technologies without considering TCO - the financial and human costs of implementing the change. Because of this tens of thousands of scarce dollars are wasted every year. In contrast, considering TCO helps school leaders make solid decisions and wise investments, with corresponding customer results, that is, more engaged and successful students!

2 comments:

Rich said...

CoSN has a Value of Investment methodology and tools to assist districts to determine the costs (including project TCO) and measurable benefits of these proposed projects at www.cosn.org/voi.
Rich Kaestner
CoSN Project Director

Peg said...

Rich, thanks. Yes, when I worked on the Cisco 21S project after Katrina we used your tools to do TCO with our districts. Thanks for the link.