What is TCO
Total Cost of Ownership (TCO), as related to IT, is a term used to describe the total cost investment to purchase, implement and maintain hardware, software and technology across an enterprise environment (TCO | Total Cost of Ownership – Gartner).
TCO is useful to businesses because it gives them a complete understanding of the cost of a new software or service, and not just the number on the bottom line. Since TCO takes a holistic look at the life-cycle of the product, and factors in the cost of maintenance in addition to the purchase cost (TCO – Technopedia).
Definition in Action
By understanding the TCO of a product or service upfront, you can avoid costly surprises down the line. It is also helpful in determining the best choice when comparing products of similar utility.