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Issue Date: August 2006

Finding the sweet spot in TCO

1 August 2006

The legacy of years of reducing IT budgets is that even though most businesses are forecasting an increase in IT spend for 2006, more thought and time is spent on buying decisions ranging from copiers to network routers to security software than ever before. In the document solutions space this means that decision makers are asking about more than just resolution quality and output speeds. Issues such as the relevance of the technology, the business needs for functionality and total cost of ownership (TCO) are coming to the fore.
Michael Stanley, marketing manager at Gestetner SA
Michael Stanley, marketing manager at Gestetner SA
TCO is more than just a bunch of numbers. It translates into what IT equipment is deployed in a business. It comes down to cost versus functionality versus business need. Behind the numbers there are productivity impacts that affect the bottom line. Take colour for example. It is more expensive than black and white but worthwhile - or is it? Technology has enabled cheaper colour and the research shows that colour documents are a more effective communication tool. But is this enough for companies to take the risk of watching their printing cost escalate out of control should the necessary security measures not be initiated?
Office printing TCO is very complex as all the costs associated with printing are unlikely to be controlled by a single department or budget. The printers may be an IT responsibility, the fax machine will fall to the telecoms division and copiers to the facilities team. In addition, some of the day-to-day maintenance functions such as refilling paper and buying consumables may come down to end users and local departments. For all of these reasons it is vital to take a birds eye view to developing a print strategy that meets all the business needs, supports productivity and delivers excellent TCO.
Gartner predicts that companies can use TCO to reduce office printing and copying costs by up to 30%. To do this, the research company recommends breaking down the TCO elements into three categories:
* Quantifiable and recognisable - those things that show up as external hard expenses such as software, paper and equipment.
* Quantifiable and not recognisable - often called soft costs such as floor space, training and printer servers.
* Not quantifiable and not recognisable - these are costs that remain in limbo such as the cost of purchasing or the cost of faulty documents to a business.
As always the devil is in the detail. The challenge is that each element will be different depending on the business. A hard cost in some companies is a soft cost in others. To get the best results from a print assessment, it is crucial that companies take the time to define where their hard and soft costs lie to get better results in terms of savings over time. Ideally companies should outsource the work of developing and managing a TCO scorecard to external consultancy that specialise in print strategy development.
For more information contact Lesley-Anne Thornton, Gestetner, +27 (0) 11 723 5041,

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