The TCO Trap

BURLINGAME, Calif. -- When EMC launched a new Celerra storage product last February, the press releases bragged about "up to 22% lower total cost of ownership than other systems in the market."

The problem with total cost of ownership (TCO) numbers, says Yankee Group analyst Sheryl Kingstone, is that they often mean very little. If IT decision-makers buy into them, she says, they can easily underestimate what that technology will actually cost, which could include the time it takes to deploy a technology or the opportunity cost of devoting resources to a new project.

"Everyone puts so much emphasis on these numbers but I can make them go whichever way I want," Kingstone says. "It drives me up a wall."

So, why do smart business people buy into optimistic TCO numbers? Because they don't want to be honest with themselves, she says. Her prescription is to "fess up" and take the bitter pill that is cost evaluation. "Understand what it really takes to manage this application," Kingstone says. "While there are great models out there, only you know your own costs."