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TCO/ROI/Amortisation

The Total Cost of Ownership (TCO) refers to the cumulative costs, that a DP structure causes. It includes the acquisition costs of soft- and hardware, initial installation and introductory costs (planning, consulting, training etc.) as well as running costs for support and updates.

There are systems that do not have acquisition costs (e.g. Open Source), but there are no DP systems, that do not entail running costs. For the investment into a DP system to pay off, the running costs have to be considerably lower than the profit.

The savings potential calculated against the TCO over a certain time reveals the ROI (Return on Invest), the profit a company makes through the DP system.

Since the initial investment is higher - in comparison - than the running costs, the point of time at which the investment into a DP system starts to pays off for a company can be calculated – this is called the payback period. This time is obviously shorter for DP systems with a low initial investment than for systems with a high initial investments.

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