Lowering Total Cost Of Ownership A Healthy Business Strategy

Around the world IT budget is getting curtailed given the world economic condition. This has forced businesses to search for improved ways to reduce their total cost of operation to maximize profit. Embracing cloud computing technology is one such move but it can also become a costly affair if the firms are not careful about their total cost of ownership. As a result there is a growing demand for robust platform that will comply with service level agreement and at the same time will support growth.

What is total cost of ownership?

The total cost of ownership involves expenses including the initial spending towards hardware and software as well as perpetual costs of maintenance and improvements. It may include costs of licensing, monitoring, maintaining, updating software; training new users, acquiring PCs and desktops, investing in R&D and supporting new innovations. There had been lots of deliberation over what exactly constitutes TOC but the basic concept involved determining the total economic value of an investment. The term was popularized by Gartner in 1987.

TOC has taken a new definition with hosted services in offering.  It has become difficult to compute the actual cost of owning a cloud computing because of the complex nature of services available. But since most companies target at lowering their total cost of IT infrastructure through virtualization it is imperative for them to have a clear understanding of how to lower TOC for cloud based applications.

How to lower TOC

Lower software ownership cost: Instead of owning software you can now simply enroll for software-as-a-service solutions. These software solutions are customizable and available in pay-as-you-go models. Opt for a service partner who can comply with your business requirements by offering robust backup and support system.

Minimize cost on hardware: You can minimize cost of hardware by adopting open source solutions. Open source, Linux based software solutions require less hardware support and can be installed with minimum technical expertise.

Compatibility: Search for software solutions that are compatible to your existing IT environment. This will ensure easy integration with your existing business applications and at the same time eliminate requirement for additional hardware support.

Simple software solutions: Based on your requirements you can opt for simple ready-to-use Cloud based service. These are simple to use with no time wasted in installation and implementation.

Flexible service-oriented architecture: By choosing a flexible service-oriented architecture you can ensure interoperability of services. SOA helps with integrating disparate applications in a web environment using various implementation platforms. It defines the interface based on protocols and functionality and do not define the API.