How to Use the Solution Architecture TCO Calculations

Executive Summary

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


Frequently various unsubstantiated proposals are made about that the different common combinations of applications cost. Some quite expensive applications are justified based on 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 real total costs for the different common combinations of IT decisions.

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

The input to these combinations is based on 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 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

How Much Do you Know About TCO?

What We Do and Research Access

Using the Diagram

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Research Access

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

TCO 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.
  • 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