There was a sidebar in the May 15 issue of CIO magazine on ROI vs. TCO.
It said ROI (Return on Investment) quantifies both cost and benefit of projects and TCO (Total Cost of Ownership) includes only costs. In their survey (of 225 technology managers), about 60% said ROI influenced project justification and 40% said TCO helped justify the decision.
I don’t think it’s one or the other: it’s both. The total cost of ownership needs to be included in the cost side of the ROI equation. ROI is “simply” the difference between how much something costs and how much cash it brings in the door (adjusted over time). I say “simply” because the devil is in the details of cost and cash in.
Here are some of the “total” cost ingredients to consider when developing your ROI: