# How to Use the Solution Architecture TCO Calculations

## Executive Summary

• Common thinking of over TCO or total cost of ownership is incorrect.
• TCO makes up the total costs in each comparative solution architecture combination.

## Introduction

Oftentimes various unsubstantiated proposals are made about that the common different combinations of applications cost. Some quite expensive applications are justified on the basis of a “lower TCO.” What you see below are the only combined comparisons that we know of which are published.

You can consider this to be a solution architecture document. The intent is to arrive at true total costs for the common different combinations of IT decisions.

## What Makes Up the Total Costs In Each Solution Architecture Combination?

The input to these combinations are on the basis of our TCO analysis.

This compares the costs of a combination of different applications to come to a total cost. The TCO that we use is comprehensive. It is explained in the section on TCO in detail. This solution architecture document is good for performing comparative analysis. This type of analysis is very rarely performed, so IT buyers really never get a full picture of their solution architecture costs.

Architecture Comparison
100% SAP100% Oracle Versus 100% Best of Breed
100% Oracle100% SAP Versus 100% Best of Breed
SAP with Two TieredOracle Two Tiered ERP
Oracle with Two TeiredSAP Two Tiered ERP

## TCO Quiz

This quiz asks the foundational questions of TCO.

### Software Selection

It is difficult for most companies to perform software selection without outside advice. It is impossible to obtain honest software selection support from consulting companies. We offer expert and unbiased remote software selection support.

## References

See our TCO method which is explained in the following book.

## Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

### Getting to the Detail of TCO

One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

### The Mechanics of TCO

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
• Understand why you need to look at TCO and not just ROI when making your purchasing decision.
• Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
• Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
• Learn why ERP systems are not a significant investment, based on their TCO.
• Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
• Appreciate the importance and cost-effectiveness of a TCO audit.
• Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
Chapters
• Chapter 1:  Introduction
• Chapter 2:  The Basics of TCO
• Chapter 3:  The State of Enterprise TCO
• Chapter 4:  ERP: The Multi-Billion Dollar TCO Analysis Failure
• Chapter 5:  The TCO Method Used by Software Decisions
• Chapter 6:  Using TCO for Better Decision Making