2 Hidden Expenses of TCO That Are Missing from Your Calculation

Content Marketing Manager

After an arduous cycle of research, RFI/RFP exchanges, demos and proof of concepts, you finally arrive at the critical stage where everything comes down to money – Total Cost of Ownership (TCO) calculation. To determine the cost to buy, build, and maintain the solution throughout its lifecycle, you quickly calculate all direct (e.g. hardware, software, infrastructure) and indirect costs (e.g. dev/ops, biz/ops, support) and get a number that seems viable for the business. Green light, and you’re good to go!

Fast forward 6 months into the future – you’re trapped in chaotic budget cycles and project delays. You’re surprised to find that:

  • Your TCO only represents partial spend, as it neglects business costs around analytics, security, business domain expertise, etc., as well as costs associated with the iterative nature of analytics. After, one set of answers raises a whole new set of questions, often requiring new data and queries that were not part of the original implementation.
  • Because of these unbudgeted costs, you suddenly face the risk of project delays or cancellations – therefore, a failure to realize the full potential of your investment.

As a result, there is a growing business perception that your initiative is failing to meet the stated goals.


WHY TCO IS NOT THE BEST WAY TO EVALUATE BI/ANALYTICS INVESTMENTS

These challenges have persisted through the decades of BI/analytics platform implementations. Even the savviest business and IT leaders have found that TCO swamps initial estimates. The individual reasons are as complex as the BI/analytics lifecycle itself, but they generally fall into two categories of hidden expenses:

  1. Cost of next insight – the ongoing and additional resource costs associated with answering new questions, which requires integrating new data sets, use cases, reporting tools, etc.
  2. Cost of insight downtime – the indirect costs associated with the time that analysts and businesspeople spend manually building one-off reports, and the opportunity costs that result from waiting on IT

 
MEET THE TRUER TCO MODEL: TOTAL COST OF INSIGHT (TCI)

TCO estimates often underestimate or exclude such indirect costs that are an integral part of the BI/analytics lifecycle. That is why we have created a new model for calculating a comprehensive cost of ownership, “Total Cost of Insight” (TCI), which takes into account both cost of next insight and insight downtime.   

Download this whitepaper to learn more about:

  • Why the cost of expert staff has been so persistently high and hard to predict with traditional solutions
  • How indirect costs can mask the potentially greater cost of insight downtime
  • How to build a truer picture of total costs with TCI
  • How a modern cloud platform with self-service capabilities can shrink indirect costs

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