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    TCO Workbook

    Uploaded by

    Luis Puris
    The document outlines various potential costs that should be considered as part of a total cost of ownership (TCO) analysis for an acquisition. It includes both initial acquisition costs as well as recurring annual spending across several categories such as license fees, maintenance, training, consulting, hardware, and other services. An example TCO calculation is also provided showing costs over a 5 year period totaling over $17 million. Guidelines are suggested for customizing the TCO elements to specific acquisitions.

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    TCO Workbook

    Uploaded by

    Luis Puris
    97 views3 pages
    The document outlines various potential costs that should be considered as part of a total cost of ownership (TCO) analysis for an acquisition. It includes both initial acquisition costs as well as recurring annual spending across several categories such as license fees, maintenance, training, consulting, hardware, and other services. An example TCO calculation is also provided showing costs over a 5 year period totaling over $17 million. Guidelines are suggested for customizing the TCO elements to specific acquisitions.

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    The document outlines various potential costs that should be considered as part of a total cost of ownership (TCO) analysis for an acquisition. It includes both initial acquisition costs as well as recurring annual spending across several categories such as license fees, maintenance, training, consulting, hardware, and other services. An example TCO calculation is also provided showing costs over a 5 year period totaling over $17 million. Guidelines are suggested for customizing the TCO elements to specific acquisitions.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    97 views3 pages

    TCO Workbook

    Uploaded by

    Luis Puris
    The document outlines various potential costs that should be considered as part of a total cost of ownership (TCO) analysis for an acquisition. It includes both initial acquisition costs as well as recurring annual spending across several categories such as license fees, maintenance, training, consulting, hardware, and other services. An example TCO calculation is also provided showing costs over a 5 year period totaling over $17 million. Guidelines are suggested for customizing the TCO elements to specific acquisitions.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
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    Total Cost of Ownership Elements

    Potential Costs Incurred


    Initial Acquisition Recurring
    Year Spending
    License Acquisition Data
    Initial Acquisition Price X
    % Discount Initial Acquisition X
    Future Purchase Discount % X
    Future Product Purchases X
    Maintenance/Support Data
    Annnual Support Initial Acquisition X X
    Annual Support Escalation % X
    Annual Support Future Purchases X
    Education/Training Spending Data
    % Discount X
    Annual Spending X X
    Consulting Services (CS) Data
    Initial CS Discount % X
    Initial CS Spending X
    Future CS Discount % X
    Future CS Purchases X
    Configuration of COTS Product Data
    Initial Configuration Spending X
    Recurring Configuration Spending X
    Hosting Fees X X
    Hardware Data
    Hardware Product Spending X X
    Hardware Maintenance X X
    Other Vendor Services X X
    Other Costs/Spending (Define Below)* X X

    *The above list provides many common elements of TCO. Since each acquisition is unique,
    you should add additional elements as needed for the specific acquisition.
    Total Cost of Ownership Example
    Initial Acquisition
    Year 2 Year 3 Year 4 Year 5
    Year
    License Acquisition Data
    Initial Acquisition Price $7,500,000
    % Discount Initial Acquisition 62.0%
    Future Purchase Discount % 55.0% 55.0% 55.0% 55.0%
    Future Product Purchases $0 $250,000 $350,000 $450,000
    Maintenance/Support Data
    Support % License Fees 22.0%
    Annnual Support Initial Acquisition $1,650,000 $1,699,500 $1,750,485 $1,803,000 $1,857,090
    Annual Support Escalation % 3.0% 3.0% 3.0% 3.0%
    Annual Support Future Purchases $0 $55,000 $133,650 $236,660
    Education/Training Spending Data
    % Discount 5.0%
    Annual Spending $100,000 $50,000 $25,000 $25,000 $25,000
    Consulting Services (CS) Data
    Initial CS Discount % 5.0%
    Initial CS Spending $100,000
    Future CS Discount % 3.0% 3.0% 3.0% 3.0%
    Future CS Purchases $0 $0 $0 $0
    Configuration of COTS Product Data
    Initial Configuration Spending $250,000
    Recurring Configuration Spending $0 $0 $50,000 $0
    Hosting Fees $0 $0 $0 $0 $0
    Hardware Data
    Hardware Product Spending $50,000 $25,000 $0 $25,000 $0
    Hardware Maintenance $5,000 $7,500 $7,500 $7,500 $7,500
    Other Vendor Services $10,000 $10,000 $10,000 $10,000 $10,000
    Other Costs/Spending (Define Below)* $0 $0 $0 $0 $0
    Total Cost/Year $9,665,000 $1,792,000 $2,097,985 $2,404,150 $2,586,250

    5.0% NPV TCO $17,479,110

    *The above list provides many common elements of TCO. Since each acquisition is unique, you should add additional elements as needed for the
    specific acquisition.
    Total Cost of Ownership BV Range

    Best Value Range


    Least
    Current Offer Most Aggressive
    Aggressive
    License Acquisition Data
    Initial Acquisition Price $7,500,000 $5,500,000 $7,300,000
    % Discount Initial Acquisition 62.0% 73.0% 63.0%
    Future Purchase Discount % 55.0% 73.0% 55.0%
    Maintenance/Support Data
    Support % License Fees 22.0% 18.0% 22.0%
    Annnual Support Initial Acquisition $1,650,000 $990,000 $1,650,000
    Annual Support Escalation % 4.5% 2.0% 4.5%
    Education/Training Discount 5.0% 10.0% 5.0%
    Consulting Services (CS) Data
    Initial CS Discount % 5.0% 10.0% 5.0%
    Future CS Discount % 3.0% 10.0% 3.0%
    Configuration of COTS Product Data
    Initial Configuration Spending $250,000 $150,000 $250,000
    Recurring Configuration Spending $0 - $50,000 $0 - $50,000 $0 - $50,000
    Hosting Fees $0 $0 $0
    Hardware Data
    Hardware Product Spending $50,000 $0 $50,000
    Hardware Maintenance $5,000 $0 $5,000
    Other Vendor Services $10,000 $0 $10,000
    Other Costs/Spending (Define Below)* $0 $0 $0

    *The above list provides many common elements of TCO. Since each acquisition is unique, you should add
    additional elements as needed for the specific acquisition.

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