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• Wholesale Distribution Software Dictionary TCO (Total Cost of Ownership)

TCO (Total Cost of Ownership)

A complete accounting of costs to reflect not only the acquisition cost but also the costs of use and maintenance of system. For an enterprise information system the components include the following costs:

• Training the users and support personnel
• Less than optimal performance due to a lack of system features requiring manual or duplicated procedures
• Planned and unplanned system down time and wait time
• Security breaches, loss of reputation and recovery
• Disaster preparedness and recovery
• Floor space
• Electricity
• Enhancement, integration and upgrade expenses

TCA (Total Cost of Acquisition) is a poor predictor of TCO. For example, a system with a high TCA with features to reduce manual and duplicate procedures, and better inform customer service will produce a lower TCO than a system with a low TCA that lacks the features required by the organization.