Tech Talk: The Total Cost of Ownership

At the advent of the 21st century, American schools are devoting more resources for technology in the classroom. Parents are demanding that their children have access to the latest technology-and school officials are responding. But if a district is going to use those technological resources effectively, the cost of the hardware will be only a small part of the expense it can expect in subsequent years.

Every day, school districts purchase new technology. These purchases may be as small as a piece of software or as comprehensive as a complete voice, video and data network. Every day, districts miscalculate what it will take to make those investments useful. In the rush to buy the hardware and software, some districts forget to budget for key elements of the program: staff development, technical support, replacement cost and retrofitting.

What is TCO? Total Cost of Ownership (TCO) is a way for administrators to understand and manage all costs related to technology purchases, including upfront costs and after-purchase direct costs.

It is similar to a district's transportation budget. When a school district buys a bus, the expense does not stop with the cost of the vehicle. You need gasoline to keep it running and maintenance to keep it well-tuned. You have to cover repair bills, increases in insurance premiums and the salary of an additional driver.

School districts need to do this kind of planning for their technology budgets, as well as to ensure that enough money is available to provide teachers with training and technical support, maintain computers and replace them when they become obsolete. Unless you plan thoroughly, your technology investment could fall short of its expected return-or produce a backlash against spending more money.

Be prepared Once a school district has purchased hardware and software and installed networking infrastructure, it must factor in other major expenses, including:

-Retrofitting. Determine if your district needs asbestos removal or upgrades in electrical capacity, cooling and ventilation systems, and security systems. Some buildings may need rewiring.

Retrofitting is not traditionally part of the TCO, but it is a cost that school districts frequently face and sometimes fail to anticipate.

Studies and previous experience indicate the cost of providing additional electrical service-which includes one additional 20-amp, 100VAC circuit, six empty data drop boxes and six duplex electrical outlets-can run up to $2,000 per classroom. You can reduce costs greatly if in-house staff does the upgrades or if the work coincides with other construction in the building.

You will need additional technology wiring infrastructure to upgrade from Category 3 to Category 5, or better twisted-pair wire; add fiber-optic cable; and provide additional data ports within each classroom.

A combination of fiber-optic and twisted-pair copper cabling would be used to connect the classroom technology panel to the headend of the existing network. The cost is projected to run about $250 per port. Additionally, you might need upgraded or expanded 100 MB switched hubs at about $100 per port.

-Professional development. This is arguably the most critical element in your district's ability to achieve its technology goals. If teachers and other staff do not understand how to use technologies and incorporate them into the classroom, your technological investment will fall short.

One budget model calls for a minimum of five days of training per teacher per year and two days per administrator per year, as well as six more days per year of informal peer-to-peer training. The model allocates a minimum of 15 percent of the technology budget for staff training. Another way of calculating this is to allot $25 per student for staff development.

-Support. Schools have extremely low levels of technology support, usually one person for every 500 computer users, compared with a 1:50 ratio in the business arena. Here are some good benchmarks:

-One support person per 500 pieces of equipment (computers, printers, scanners, servers).

-One support person per 60 teachers.

-One technician per three buildings.

With standardized networks, you can reduce the support by 10 percent. Some new centralized network-management systems can help control costs by reducing travel time to schools and permitting central handling of installations, security and backup functions.

-Software. This will account for about 8 percent of the technology budget. This allows for five or six site licenses for tool-based programs. Schools have been saving money by building large libraries of CD-ROMs and videodiscs. Demand for software and online subscriptions are projected to increase to make up about 20 percent of the budget.

You can help control costs by limiting software titles. This reduces the number of staff needed to support the applications and the amount of training needed.

-Replacement cost. It is easy to forget that the day will come when computers will need to be replaced. Wiring, racks and electrical closets are presumed to have a life cycle of about 20 years, but computers, servers and peripherals have an expected life of between three and five years. Districts should purchase computers on a five-year cycle and replace them on the same cycle. Progressive school districts assume they will retire 10 percent of the district's computers each year.

Best practices The following best practices can reduce costs by about 15 percent:

-Define and enforce standards. The fewer the number of technology platforms, the easier support should be; likewise for hardware and software setups. Defining standards generally takes an upfront investment of time, followed by regular reviews to evaluate and update. You have to enforce the standards for them to pay off.

-Use desktop-management technologies. Each trip to a user's PC costs you valuable time, but there is a limit to what you can talk a user through over the telephone. Several products provide electronic software distribution, check for viruses, collect inventory data and perform other chores. There also is remote-control software to take over a user's PC for troubleshooting.

-Limit users' abilities to get themselves in trouble. The support needed for troubleshooting when users download shareware and other applications can be tremendous. Some systems have built-in desktop controls to allow technical support services to administer control centrally.

-Management buy-in. There should be total administrative and school board support for your Total Cost of Ownership reduction efforts. Market your plan to users, get their enthusiasm upfront, and it will help pave the road.

Consider the following when budgeting for technology:

-Retrofitting. Budget adequately to upgrade electrical capacity, improve cooling, ventilation and security systems, and remove any asbestos in older buildings.

-Professional development. Budget an adequate amount for staff training, including the cost of trainers and substitute teachers if training is conducted during school hours.

-Software. Budget adequately for network-management software, computer-based curriculum materials, applications, productivity software and software to adapt technology for special needs.

-Technical support. Budget adequately for staff to maintain the network and other hardware.

-Replacement costs. Budget to cover the costs of replacing computers and peripherals.

-Connectivity. Cover the costs involved with connecting schools to each other and the Internet.

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