Is it really “Free” or what is your Total Cost of Ownership?

computer keyboard dollar symbolLast month I got a certain type of phone call I get about once a year from a business owner who decided to use Linux and OpenOffice for their business because that software is “free”. This caller said she was having problems with her computer and couldn’t find free help on the Internet and was now looking for cheap tech support. Linux desktop experts are scarce and hence expensive. Really her problem started by not understanding her Total Cost of Ownership (or TCO) before deciding to use Linux and OpenOffice for her technology.

Total Cost of Ownership is an accounting concept that includes social costs and costs of doing business. For technology, those costs include:

Computer hardware and programs

  • Network hardware and software
  • Server hardware and software
  • Workstation hardware and software
  • Installation and integration of hardware and software
  • Purchasing research
  • Warranties and licenses
  • License tracking – compliance
  • Migration expenses (example going from one operating system to another)
  • Risks: susceptibility to vulnerabilities, availability of upgrades, patches and future licensing policies, etc.

Operation expenses

  • Infrastructure (floor space)
  • Electricity (for related equipment, cooling, backup power)
  • Downtime, outage and failure expenses
  • Diminished performance (i.e. users having to wait, diminished money-making ability)
  • Security (including breaches, loss of reputation, recovery and prevention)
  • Backup and recovery process
  • Training
  • Insurance
  • Tech support
  • Management time

Long term expenses

  • Replacement
  • Future upgrade or scalability expenses
  • Decommissioning

Let’s use OpenOffice as an example. Yes, the upfront cost is zero dollars. But using Total Cost of Ownership, the real price is much higher. I had a client who tried OpenOffice looking to save money. She wasted a lot of time (which is money) trying to learn the suite and with file compatibility issues. No one could open her word processing documents and she couldn’t find out how to save them in a format that everyone could read. Let’s say she bills out at $200 an hour and she spends at least three hours a week working on a word processing document so that everyone can read it. That $600 could easily have bought her Microsoft office and saved her a lot of stress.

Before you rush into getting “free” software/app/operating system, consider what the true cost is. If you need help, call me.