Road to TCO includes calculations

Road to TCO includes calculations

The winding road to TCO includes calculations that are both tricky and useless"And they all moved away from me on the Group W bench."

- Arlo Guthrie, "Alice's Restaurant"

When I first heard about the Heisenberg Uncertainty Principle, I wondered why everyone was so worried about Werner Heisenberg's uncertainty. I knew lots of people who weren't certain about any number of things.

I'm more sophisticated now, although not so much so that I've actually learned the mathematics. I've learned, for example, the basic idea behind the Heisenberg Uncertainty Principle - that the act of observing any phenomenon affects the observed phenomenon.

Here's one useful application of this little Nobel Prize-winning insight. The next time you read a market analysis or prediction from a big market-research organisation - Gartner, Meta, Forrester, IDC - consider this "Heisenberg-ish" notion: when these groups observe, analyse, and report on the technology marketplace and you act on their observations, you and they together distort the marketplace.

I'd love to tell you that I have a terrific solution to this dilemma. I don't. Because Albert Einstein failed to find a loophole in the Heisenberg Uncertainty Principle, I'm not all that depressed that I haven't found one either.

Speaking of the GartnerGroup, I received quite a bit of feedback on my recent critique of its highly publicised total cost of ownership (TCO) model for PCs. Several readers suggested a way to measure the value of the PC - "simply" figure out everything you'd have to spend to keep the work going if you got rid of them.

You'd certainly get a huge number, even if you didn't include the cards your employees would need to continue playing solitaire. I'm afraid the number wouldn't mean much more than the TCO itself, though. PCs have transformed the workplace in fundamental ways, defining new kinds of work, invalidating other activities and skills, and changing how communication flows, not just within the company but also throughout the marketplace. Because not all of the changes are for the better, calculating the cost of undoing them would not measure value. It would measure the cost of making time flow backward.

Good try, though.

Calculating costs

I got lots of requests for the "Total Cost of a Day Planner" calculation from my debate with the GartnerGroup at its 1993 Annual Symposium, so here's the five-year calculation, based on Gartner's standard $US40 per hour, fully loaded cost of an employee and 48 productive weeks per year.

Figure the day planner costs about $150. The time management course itself probably costs the company another $150. And it requires a day of employee time, so at $40 per hour times eight hours that equals $320. And every year you buy refills for about $50 - $250 over five years.

Add up the 15 minutes every morning you're supposed to spend planning your day, and you get $12,000 over five years. During the day you may spend 10 minutes putting things on your to-do list and scratching them off. Over five years, that comes to another $8000. In the evening, you are supposed to spend another five minutes recapping the day - over five years the cost is another $4000. Then there is the time you spend fiddling with refills. That adds another $600. Add it all up, and the TCO for day planners is shocking: $25,420 over five years.

OK, I've done my part. I've done my best to debunk the whole silly TCO idea. Now it's your turn. If I've convinced you and you subscribe to Gartner or any other organisation that calculates TCO, it's time to let them know that you don't want to spend another nickel on it. Overhead costs? Yes. Cost per hour of use? Yes.

TCO? As Nancy Reagan used to say: "Just say no."

Bob Lewis is a Minneapolis-based consultant with Perot Systems. Send e-mail to:

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