When deciding a purchase, there are many other costs that may arise and need to be factored in. These include installation costs, useful life of assets, energy consumptions, maintenances and downtimes, tiering storage, floor space, and any other hidden costs. The Total Cost of Ownership (TCO) should be taken into account for every aspect of costs attributable, in acquiring and maintaining products or services throughout their life cycle, both directly and indirectly.
Upon deciding the TCO, it can then be compared with the benefits of the purchase, on whether the benefits can outweigh the overall cost to get the truest total cost of ownership:
- Is the cost worth its value? Is the product of choice useful?
- Does it provide timely access to accurate information?
- Will it allow dynamic information processes to respond quickly to the business needs?
- Does it facilitate the acceleration of time to market because of faster application deployment that further allow revenue acceleration?
- What other benefits will it pose to the business?
- What competitive advantages will it give?
- Will it improve customer retention and encourages repeat order, and subsequently, improve business margins in the long run?
- Is there any salvage value at the end of the lifecycle of the product?
Value of Hybrid Cloud: Cost Vs Benefit
Value should be looked at how it impacts the business financially and operationally. Will it:
- Help to generate higher revenue
- Lower overhead and running costs in the long run
- Improve the cash flow position
- Lowers operational costs with a single point of control
- Streamline operations with automated policy-based management
- Impact the company in regulatory compliance and business continuity
Optimized TCO will allow the businesses to save more while at the same time, to enjoy maximum benefits for its value. Optimized TCO can prevent leakages and wastages on unnecessary costs and help businesses save money in the long run. The extra cash can be used on other things that can bring additional value to the business. Because at the end of the day, cash is the one that adds the most value to an organization. With cash, besides being able to prepare for rainy days, a business can enhance its bargaining power. Therefore, businesses should aim to maximize their Net Present Value (NPV) of the cash as much as possible, and should pay only for what they use.
Most importantly, in deciding your hybrid cloud solutions, do communicate with us about your expectations so that we can truly understand your needs, suggests relevant solutions, apply the concept into your context, and help you optimise the overall TCO.
Written by Emi | Capital Custodian