2.7. Total Cost of Ownership (TCO)¶
Economic comparative assessments are carried out using economic/financial instruments such as TCO (Total Cost of Ownership), which represents the overall cost of an asset during its life cycle. TCO takes into account both direct and indirect costs, representing the recommended method for measuring total costs (through the identification of all expenses, in clear and easily measurable terms), as well as for carrying out the above comparative assessment during phase 3.
To correctly implement TCO, the costs for the entire life cycle of the software must be calculated and not only those required for its acquisition, such as for example:
- Costs for the acquisition of hardware and proprietary software licences required for commissioning the software being acquired;
- Costs for software customisation;
- Maintenance costs (corrective and upgrading);
- Personnel training costs;
- Costs of data migration from previous solutions.
In these guidelines, it has been suggested to use TCO in two different phases: during macro-phase 2 (as a tool to estimate the cost of acquiring open source software), and during macro-phase 3 (as a tool to assist in choosing between a custom-built creation and the acquisition of proprietary software).
In order to comply with these guidelines, the administration is therefore required to make an estimate of the costs according to the model outlined here during the comparative analysis phase, while always taking account of the overall life cycle. The accuracy of this analysis is especially important when the required acquisition is substantial.
Providing TCO calculation models for the requirements of administrations goes beyond the objectives of these guidelines, as such requirements are different. AgID may, in the future, publish optional ready-to-use models within the Developers Italia platform.