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Is Your Total Cost of Ownership Minimised?

Hidden Costs of Ownership

An important factor when designing technology systems is minimising the Total Cost of Ownership (TCO). The biggest costs to a business are the ones associated with employing staffs. These costs includes wages, salaries, recruitment and, often overlooked, the hidden cost of a slow I.T. system.

Slow systems create unnecessary delays. These delays are magnified if your business software does not operate in the same sequence or manner as your business.

Slow Systems Make Us Slow

Sabre IT Total Cost of OwnershipAlthough the delay may only be a few seconds at a time, the stop‐start nature of them creates substantial time loss far greater than the original few seconds.

Think about when you are trying to get to somewhere urgently during busy traffic.  The traffic slows and you become agitated. You see a gap and speed up, only to be slowed again by traffic that appears to be in no hurry. As time goes on you get more stressed but eventually you admit defeat and slow your pace consistent with the other traffic, even if it means not speeding up every time you see a gap.

Slow computer systems are no different.  Staff get stressed when systems are operating slower than the pace to which they are accustomed, or when software requires  ‘double handling’ to get things done.  If they are new to the job, they will start out with the best intentions but each day they begin to feel more stressed and frustrated. Within a week or two, they will have succumbed to the system limitations and slowed the pace of work in order to avoid burnout.

A friend of mine, a motivated admin manager, left her job to move to a competitor at an increased salary. She had been ‘head hunted’ for the role and was excited about the new job.  Within in a few days it became apparent that the computers were very slow and the software complicated.  Her workmates, well acquainted with the poor systems, told her to “get used to it”.  Her recommendations to the local manager were to upgrade the system, but she was told that it was not due for an upgrade for another 18 months.  Used to working fast and efficiently, she quickly found herself getting stressed and frustrated.  Within a month it had become so bad, she handed in her notice and went back to her former employer.

What is the Cost?

Slowing down comes at a cost.  An employee on a salary of $50,000, and losing five minutes in every hour equates to an annual cost of approximately $6,000. This is time your business is paying for but getting nothing back in return.

The initial delays may have only been small, but because the overall pace drops to the lowest speed, the loss is far greater compared to what might have happened had there been no delays.  In some work environments I have observed as much as 20 minutes in the hour are being lost due to poor systems.

Even at 5 minutes per hour, the losses add up to more than $24,000 over the life of the system.

If you have 50 staff, that’s a staggering $1.2M ‐ more than enough to pay for a faster system several times over!

In our next article we’ll discuss some typical losses and provide our recommendations on what you can do to minimise your total cost of ownership.

Author: Eric Donn