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Why TCO is the Only True Way to Measure Network Costs

Cost always plays a big part in purchase decisions. It’s certainly a factor as I consider buying  a new car. As you’re well aware, purchasing a new car isn’t just about the initial cost. In my case, I’m considering reliability, speed (not that I need to go that fast carpooling my kids to school), mileage, and looks to a certain extent. (I just can’t bring myself to drive a minivan.) But what does buying a car have to do with your customers, or IT spending for that matter?

To put it simply, customers often cite initial cost as a big factor in their network decision-making, too. But if they are looking only at CapEx when purchasing new equipment, it’s the same thing as only looking at the initial cost of a car: They’re not seeing the entire picture.

Total cost of ownership, or TCO, is a better metric to assess network cost, because it considers the full impact on IT spend, including CapEx, services, labor, bandwidth, and energy consumption. And TCO is not just a measure of the initial expense, but of how much equipment will cost over its lifetime.

In June 2011, Cisco commissioned a third-party business consulting firm to analyze the true TCO of the network, comparing the quantitative costs of acquisition, support, labor, bandwidth, energy, and product longevity. The firm also assessed qualitative business benefits like network uptime, user productivity, and security.

The quantitative results alone show that a network built on Cisco’s architectural approach can yield up to a 13% better TCO, building a powerful business case for you to take to your customers about why the choice of networking gear matters.

Here are some facts drawn from the findings, which support Cisco’s firm belief that a strategic next-generation Cisco network architecture delivers superior value and lower TCO: Read More »

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How to Help Customers Plan for the Future of Their Networks

May 2, 2011 at 1:12 pm PST

The network needs to be fast, run all of the latest applications, adeptly handle video, not to mention offer stability and security. Oh, and the network should also be scalable and serve users’ needs.

Whew. Needless to say, we expect a lot from the network. And so do customers.

With all these features on customers’ network wish lists, all too often acquisition costs are the only consideration when planning for the future. But Bob Cagnazzi, CEO of Cisco Master Partner BlueWater Communications Group, says that’s a big mistake.

BlueWater provides a lifecycle suite of services around the network, including: collaboration, video, virtualization, and cloud computing for a range of clients in the tri-state New York area. We caught up with Bob on a recent trip to California to get his thoughts on why it’s important for customers to understand both short- and long-term costs associated with the network.

What questions does Bob ask his customers when they’re planning for the future of their networks? Read More »

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