Total cost of -- brief -- IT ownership

Tyler, Geoff
December 2004
Management Services;Dec2004, Vol. 48 Issue 12, p24
Academic Journal
This article looks at how to calculate the cost of information technology (IT) ownership versus payback when obsolescence is unpredictable--and probably imminent. It tries to take a look at the IT areas with the fast evolutionary rate as of December 2004. Such areas include Windows applications and data communications or broadband services. Costs based on the savings or greater efficiencies the new systems make compared with the old are fairly easily calculated. Costs, though, also involve consequential bottom-line effects on business like a more informed sales force, smarter customer service, prompter deliveries, more accurate invoicing and so on. But cost of technology ownership calculations now had another complication. With IT developments accelerating at an unprecedented rate one could no longer install a system on, say, a five year cost payback justification because there was a strong chance that the system would be overtaken by something much better within that time, something the organization could not afford to ignore even if for no other reason than because competitors were not ignoring it. Today, software producers come out with enhancements and updated versions by the week and because of the ease of downloading them, no longer even pretend that they are new products in their own right often offering them free to existing users.


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