What Price PC?

Where The Money Goes

In the majority of cases, PCs make up the lion's share of a company's IT expenses. Years ago, when equipment was more centralized in the MIS department, it was easier to track and control these costs. But as computers migrated to the desktop, costs have decentralized, making it more difficult to get a handle on a business's TCO.

Where does all the money go? Surprisingly, capital costs for your business's hardware and software make up a fairly modest portion of your investment over time, says Bill Kirwin, vice president and research director for the Gartner Group, an IT research firm in Stamford, Connecticut. While it's always a good idea to negotiate the best deal you can with retailers and resellers, this isn't where the bulk of your IT costs come from. And even though businesses could be taking advantage of the savings from today's falling computer prices, many are choosing to spend more money in this area, buying bigger and faster PCs to stay on the cutting edge.

Technical support costs make up a substantial portion of TCO. According to the Gartner Group, the annual cost for software training, technical support and repair on a Windows 95 PC adds up to about $1,300 per user. Then there are administrative costs, which include purchasing technology, the labor costs of managing IT assets and developing policies for equipment usage.

But it's user operations that eat up the largest amount of your IT budget by far. What's even trickier is that these costs are difficult to quantify. They're those things that all employees do while sitting in front of a PC that sap their time, indirectly costing you money in lost productivity. These activities include time spent on PC management tasks, such as installing software, creating and moving files, and learning new technology. A big chunk of TCO comes from time wasted when the office's unofficial techie stands over an employee's shoulder offering PC advice. Plus, there's always the "futz factor," in which employees spend time on nonbusiness-related tasks, such as creating screen savers, sending personal e-mail and checking their horoscopes on the Web.

Beyond hardware and software, there's a number of additional costs associated with computer and high-tech equipment, which add to your TCO. These include expenses for printer ink and paper, software upgrades, fax transmission costs--even the electricity it takes to run PCs and keep your office cool, since they generate a fair amount of heat.

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the October 1997 print edition of Entrepreneur with the headline: What Price PC?.

Loading the player ...

Seth Godin on Failing Until You Succeed

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories