Real World Return: A Guide To Evaluating Total Cost Of Ownership
The retail industry today has significantly changed in just a few short years. Competition has drastically increased from traditional competitors and niche players, as well as new distribution channels such as the Internet. More knowledgeable and demanding consumers are driving this change, dictating the rules of the buyer/seller relationship. Finally, the general economic climate has produced slow or negative growth for many retailers.
With all of these forces at play, IT buyers and their respective budgets are under considerable pressure to retain customers while lowering costs. Technology investments are closely scrutinized to ensure that projects align directly with business strategies and provide the best possible return on investment.
There is a perception within the retail industry that implementing a POS solution based on PC on a Cash Drawer (PCoCD) is cheaper then traditional POS, both in terms of initial acquisition cost and ongoing system support costs. While in most cases it is true that initial acquisition cost of PCoCD may be lower, when analyzing the true long-term total cost of ownership (TCO) it becomes apparent that these short-term benefits are quickly negated by increased ongoing support costs. The per-unit cost differences become even more dramatic for retailers who deploy equipment in multi-store chains.
The key to understanding TCO is the knowledge that generally more than 50% of the overall IT investment occurs after the initial procurement.
To gain a better understanding of the true TCO differentiation between traditional POS and PCoCD, four distinct phases in a POS solutions life cycle need to be explored in greater detail. These phases include:
- Acquisition
- Deployment
- Life Cycle
- Disposition
While every attempt has been made to accurately capture and validate key TCO considerations, each retailer possesses a unique environment and has a unique set of requirements. Therefore, investments discussed in this white paper serve to guide your POS considerations. Your unique situation and environment should be assessed and included in the final anlysis.