Databus Issue: 2003 3 07/17/2003
TCO Helps with ROI
Earl van As Director of Marketing and Sales Operation
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Increased fiscal accountability, finite resources, overextended personnel and the overall trend toward productivity have combined to make school districts look to technology to help them manage their student information. But, for most school districts considering a new student information system, finding and implementing the best solution is not a simple process. Not only are districts battling budget shortfalls, in many cases they’re dealing with the consequences of previous large expenditures on technologies that promised a lot but didn’t deliver.
With the emphasis on fiscal conservation and the need to justify capital spending, districts can track and ultimately determine the return on their technology investments (ROI) and satisfy the requirements of their school boards, by taking a page from the best practices of the business community. Businesses typically measure their ROI through the following formula:
Measurable Benefit
Total Cost of Ownership = Return on Investment
To measure the ROI, districts must first determine the total cost of ownership (TCO) of the technology acquisition, by compiling all relevant costs and dividing the total cost by the measurable benefits* resulting from the implementation. Sample cost areas and sample cost containment areas follow. TCO methodology documents the costs, benefits and value associated with procuring, owning and using student information systems over time.
Chancery Software is developing a methodology that will help school districts assess the total cost of implementing a student information system, by identifying and quantifying the costs that are incurred after the initial hardware/software purchase.
To effectively measure your TCO, you have to look at the total picture before, during and after implementation. The important issues to consider in your TCO analysis include:
• hardware
• software
• infrastructure
• system planning
• implementation and deployment
• training (initial and ongoing)
• maintenance
• support
• upgrades
• staff costs
• asset management
Also, keep in mind that costs vary substantially depending on several factors, including:
• size of the school district
• management processes
• technology platforms
• system configurations
• existing software applications
• technical environment
• available resources
• amount of customization required
In looking at the various factors to consider, it is understandable that school districts do not typically measure their TCO – even businesses have a tough time understanding their technology TCO. However, you cannot manage what you don’t measure. In order to understand their ROI and continue making the right technology decisions, school districts must be able to effectively analyze their total cost of ownership.
Note:
While Chancery has developed the methodology and is working with several customers to test and prove it, TCO methodology must go hand-in-hand with a comprehensive needs analysis and is part of the overall business plan to help school districts make the best case for their technology investments. Most districts currently considering a new SIS can reduce their TCO over two to four years by implementing a scalable, centralized and Web-based SIS.
To request the complete white paper describing the TCO methodology for a student information system, send an e-mail to value@chancery.com or call (800) 999-9931.
About Chancery Software Ltd.
Chancery Software is the leading provider of student information systems for K to 12 schools, districts, classrooms and homes. Chancery solutions offer accurate real-time information on more than 13million students to one million educators every day. Built to address the challenges faced by today’s districts, Chancery SMS is uniquely aligned to meet the accountability and reporting requirements of the No Child Left Behind Act. With 20 years of industry firsts and 18,000 installations customized to meet the needs and budgets of diverse schools and districts throughout North America, Chancery is the educational community’s most trusted and proven partner.
