Organizations in India are increasingly moving towards having a detailed information policy along with well-defined IT objectives. CIOs have realized that they need analysis that reaches beyond initial purchase costs of a hardware or software, and indicates post-implementation operation, support and maintenance costs as well. Hence, there is a need to capture the total cost of ownership (TCO), the sum total of all direct and indirect costs associated with the life cycle of an IT asset.

The recent study by Frost & Sullivan – a leading, global growth consulting firm on the Total Cost of Ownership (TCO) revealed that the Microsoft Windows 2003 environment across enterprises has close to 15.9 percent advantage over Linux and constitutes lower TCO in 80 percent of the instances encompassing application servers, network servers, and mail servers.

The research was conducted on 54 organizations (both high end and mid tier) across BFSI, manufacturing, public sector and government, ITES, BPO and telecom verticals. The target respondents consisted of senior IT professionals (consisting of CIOs, CTOs, heads of information technology, general managers – information technology, senior IT managers, senior system analysts) of large and mid-sized enterprises (500 and more employees). The report was audited by Cap Gemini and commissioned by Microsoft. Organizations such as, Ashok Leyland, Aztecsoft, B2K Corp, Bharat Sanchar Nigam Limited, Bokaro Steel, Directorate of Treasuries, West Bengal Government, Food Corporation of India, Godrej Industries Limited, Haldia Petrochemicals, ITI Limited, National Insurance Company, Tamil Nadu Small Industries Development Corporation Limited, Sundaram Clayton, Tamil Nadu Water Supply and Drainage Board, Timken India, amongst others participated in this research.

According to Frost & Sullivan, the TCO consists of the cost incurred by an enterprise in the course of selection (search and evaluation), installation (capital and deployment cost), maintenance and deployment (both planned and unplanned), and upgrades of software systems over the course of five years. It also includes indirect costs associated with planning, audit, and other incidental costs such as consulting, roll-out, configuration management, bug-fixing and testing, and module integration. Interestingly, in India, hardware is the largest component of TCO of Indian enterprises, where software costs are just about 15 percent of the Capital expense and 6 percent of overall TCO.

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