Calculating Total Cost of Ownership for VoIP/Unified Communications
It’s human nature to gravitate towards the lowest price, whether we’re shopping for home electronics, a major appliance or a new laptop. The problem with this approach is that the price tag only shows the upfront capital investment for the product, not the total cost of ownership (TCO).
The same applies to IP telephony and unified communications (UC) systems, which are far too complex to choose based upon the lowest vendor price. Failing to evaluate all costs over the course of the product lifecycle, which is about six years, can cause organizations to choose a system with limited system capabilities and performance and make it cost-prohibitive to add new services as business needs evolve. A holistic understanding of TCO enables organizations to accurately evaluate and compare the solutions of multiple vendors and providers.
TCO is a combination of capital costs, implementation costs and operational costs.
- Capital costs cover new and upgraded equipment, including servers and other data center hardware, software licenses, desk phones and cabling costs.
- Implementation costs cover the installation, initial configuration and deployment of the system, as well as initial administrator training.
- Operational costs cover ongoing management, maintenance, training, support, planned downtime for patches and updates, and moves, adds and changes.
Organizations must not only evaluate these three categories, but the individual metrics within the categories. For example, new phones may cost more with a particular vendor, but the lower management, maintenance and administrator training costs may offset the higher capital investment. Also, capital and implementation costs can vary significantly, depending upon the complexity of the existing infrastructure, its compatibility with a vendor’s IP telephony and UC solutions, and the types of business services and applications being deployed.
There are a number of questions that must be answered when calculating TCO.
How difficult will it be to integrate and manage new technology? Will new hardware need to be purchased and installed? What applications are built in? For organizations with multiple branches, can IT resources be centralized and better utilized? How will mobility be supported, and what will be the cost of mobile communication?
What job functions will be enhanced and how will productivity be improved? How are these improvements and enhancements measured? How will IP telephony and UC change certain business processes? How will these changes affect operations immediately following implementation and for the next five years? Is the solution flexible enough to allow for expansion and respond effectively to changing market conditions, and what will changes cost?
According to the 2013 Nemertes Research benchmarking study of IP telephony TCO, ShoreTel UC solutions offer low first-year costs and low operational costs compared to other vendors. One reason why ShoreTel can keep TCO low is because ShoreTel offers more services and functionality in its core product, unlike many competitors who require additional purchases for critical business features. ShoreTel solutions also have less unplanned downtime than any other vendor, according to a study by Aberdeen Group.
ICG is a ShoreTel partner who specializes in developing and implementing cost-effective IP telephony and UC systems. Let us help you calculate TCO and choose a solution that enhances and improves business processes.