Friday, November 14, 2014

Total cost of ownership

When it's time to replace your laptop or desktop, we work with our customers to help them order a new system. Typically, we encourage systems get replaced about once every four years, but that's really up to the division or department. Some users just don't push their systems very hard, so they can go a little longer before they need a new laptop or desktop.

But when we do order a new computer for you, we typically do so from a standardized list of pre-configured models. I wanted to share a brief reflection on why we purchase these standardized models of laptops and desktops at Morris.

In short, it's about reducing cost. By purchasing many of the same models, we reduce the variety of laptops and desktops, making it easier for the helpdesk to support you. This means real savings to the University. From a University of Minnesota cost savings report (not linked online, sorry) about strategic sourcing, from June 2010, the institution has saved more than $1.2 million by purchasing standard desktops and laptops from Dell and Apple. That's the largest savings in that report by far, and a little more than the sum of all other savings in that report. So that's very encouraging.

The report also recognizes the work we have made in reducing costs:
"Collegiate IT Directors have established University wide standard models for desktops and laptops. These models are configurable and designed to meet the vast majority of end-user computing needs. Greatly reducing the number of models purchased has two major benefits: negotiated cost savings with Dell and more efficient and cost effective support processes."
This speaks directly to reducing cost—referring to the Total Cost of Ownership. The Total Cost of Ownership (TCO) of a desktop PC is more than the initial purchase price. For example, we currently plan about $800 for a standard Dell desktop computer. (New models usually come out in summer, so we estimate a round number for budget planning purposes.)

The total cost is important to keep in mind. The purchase is a small part of the overall cost. For example, you might find an off-brand desktop computer for around $700. But that $100 purchase savings doesn't necessarily mean a lower overall TCO. According to Gartner (2008), the cost of purchasing a desktop PC may be only $1,200, but over four years, the TCO could be as much as $5,867 per year. Other costs that contribute to TCO are largely staff time, and include imaging the PC, managing & supporting the PC, and general reliability.

Those standard models keep the same configuration, no matter when we purchase them. A Dell model "6789" computer purchased in summer will have the same configuration as a Dell model "6789" computer purchased the following spring. But in off-brand computers, that is rarely the case; specific internal components could differ on models sold in the same year, depending on upstream supplies. This makes it very difficult to support our users, if one computer needs different drivers or different configurations than another computer of the same model, purchased in the same year.

All of this isn't to say that you can't buy a particular computer that isn't on our standard list. We make exceptions for our customers all the time. For example, one user needed a specific laptop for ergonomic reasons (the Dell laptops aggravated her carpal tunnel) so we helped her find something else. But in most cases, people just need "a Windows laptop" and they don't really care what system it is. That's when we turn to the standards list and purchase a default configuration.
photo: 401kcalculator.org

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