(Please be advised that this is as per my experience with  the Software/Services industry components could vary according to product or marketing strategy)

TCO has now become an industry standard for measuring and managing project-related costs over time. It looks beyond a one-year budget cycle. It showcases the  changes as an organization while it finalizes its purchasing contracts, determines feasibility of various components of the project, and adapts to new opportunities (in services or technologies that become available, for example). The “final” TCO therefore evolves as planning and discussions progress.

A thorough TCO analysis engages all stakeholders, not only to gain their support and perspectives
concerning  the service  but also to ensure that the final TCO report accurately reflects all costs, benefits, goals and expectations

The TCO attempts to estimate all costs related to the ownership, management, support and usage of the components comprising the project. The Indirect costs are a key component of the TCO because,
as mentioned, many costs cross organizational boundaries and reside outside of the budget of the project sponsor. 

Direct and indirect costs might include:
  • Capital purchases
  • Hardware
  • Software
  • Implementation
  • System Downtime
  • Management and Administration
  • Research of vendors & contracts
  • Service & System Downtime
  • Support & training
  • Upgrades & related re-training
  • Indirect labor if any
  • Subscriptions
  • System integration
  • Maintenance
If you want some perspective on how you or  your company needs to enhance their Sales/Client Management Capabilities, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it.


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