Back in the early 90’s I came across a study by the Gartner group regarding what they referred to as “Total Cost Of Ownership”. The idea was to quantify the cost to put one PC on a desktop for one year. They factored in support costs, hardware replacement, software purchases and other factors.
At that time the TCO was about $2000 per machine per year. That shook up the industry. People could not believe that the costs were that high. A machine cost about $1500 and it would last for five or six years. Where did Gartner come up with the $2000/year number? As people looked into things, they began to realize that Gartner was correct.
At that time I was teaching as an adjunct professor and started incorporating the concept in various classes that I taught giving students assignments based on the concept. I found that the TCO was fairly constant regardless of the size of an office. The TCO for a small office with 5 machines was similar to the TCO for a large office with 200 machines. Economies of scale accounted for the similar TCOs.
I also found that many companies grossly underestimated their budgets for computing.
The current Gartner studies
take the original concept much further. They break the TCO down by how well managed a network is. The basic TCO for a well managed situation is about $3400/machine/year. If the network is unmanaged or poorly managed that cost rises to around $5800/machine/year. Not maintaining a network and not properly managing security related issues adds almost $2800/machine/year. That makes sense when you consider the costs of fixing machines or networks infested with malware. Newer attacks such as Cryptolocker attacks make unprotected systems even more costly to maintain.
To put this in perspective, suppose you have ten machines in your business. If the network is well run and well maintained, you can expect to be spending around $34,000 per year for computer related expenses. Factors such as maintaining specialized software can raise this number significantly. My experience during my 25+ years of consulting is that businesses grossly underestimate their computing costs and budgets.