Total Cost of Ownership: Understanding Hard and Soft Costs

Hard&Soft

When choosing to deploy new devices businesses need to consider the implications of Total Cost of Ownership (TCO). TCO is more than just the one off purchase of the hardware, it comprises of hard and soft costs that organisations incur when deploying mobile computing solutions.

Hard costs consist of hardware, accessories, software, implementation and training, whereas the softer operational costs include productivity loss, opportunity loss and maintenance/support costs. VDC’s research revealed that the soft costs associated with mobile computing solutions represent the most significant contribution to overall TCO.

“It’s estimated that hard costs may only account for 10% or less of TCO over five years. That means soft costs can account for 90% of a business’s TCO.”

How to calculate the Total Cost of Ownership of your mobile device

Consumer technology may look like the most cost-effective option but they often introduce unforeseen complexities and hidden costs once the initial purchase has been made. Additional peripheral software or services have to be purchased in order to modify the devices to fit their business requirements. Research from Zebra found that consumer devices increase TCO by up to 50 percent compared to built for business devices, this is due to the potential costs of worker downtime, accelerated replacement cycles and the support needed for a successful implementation are taken into account.

As mentioned in a previous article The Short-Term View Impacting Businesses – Rugged vs Consumer Grade Devices businesses are choosing to deploy consumer grade devices based on their low initial cost compared to their rugged counterparts. However investment goes far beyond the initial purchase price of the device itself.

It is important for organisations to consider both the hard and soft costs in order to ensure that their final decision will deliver the greatest value to their business in the long term.

References:

VDC Research – TOTAL COST OF OWNERSHIP (TCO) MODELS FOR MOBILE COMPUTING AND COMMUNICATIONS PLATFORMS

http://blogs.zebra.com/how-to-calculate-the-total-cost-of-ownership-of-your-mobile-device

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We are a specialist, value added distributor of mobile computing and data capture products. Underpinning all that we do is an understanding that our customers deserve outstandingly executed basic distribution services.

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