Apr 4, 2006
The Broadhurst Report
When is a TCO not a TCO?
By Guy Broadhurst
TCO is a term that's bandied about in marketing literature, press releases and sales discussions. We all know it refers to Total Cost of Ownership, but what does it really mean?
Sure, the Total Cost of Owning a particular print engine includes lease payments, interest, consumables, service and maintenance agreements; the standard items. But the actual TCO can be as unique as the company making the investment and getting to the "real" number is not always a simple task.
Did anyone notice a "standard?"
Once a machine is up and running, toner consumption is a very real and measurable cost. Vendors make certain assumptions when setting those costs, such as the percentage of the page covered by toner. For instance, at Océ we specify 4 percent coverage on an 8.5 x 11-inch sheet. Another company uses 5 percent and yet another says 3 percent--but bases it on an 11 x 17-inch sheet. The apparently trivial difference can be confusing (at best) to prospective customers, but over millions of pages a year the cost differential can become a significant number. It is further related to the size of toner bottles and their relative yield. But that's only the consumable part of TCO.
Or take print speeds which are quoted in feet, impressions or pages per minute. Which is the best deal? What size are the pages? Is it single or multiple-up? Of course there are ways to calculate all of these and match it to your own operation, but it is nevertheless confusing for buyers.
In all measures regarding speed, print resolution, coverage, and cost per click it's vitally important to make sure you are comparing "apples to apples." Use your own jobs--the page sizes, run lengths, coverage, etc.--as the basis for comparison rather than the generic machine characteristics. This will more clearly point out the differences between systems and what their real TCO is for your business.
But we can really go further.
How about Paper?
Paper is the "other" consumable, the one that's not part of the equipment cost but is part of every job. When the stock used is standardized to just one or two substrates--as it can be in many statement printing and mailing operations--it really becomes part of TCO. To make this linkage work, look at the paper requirements for all the jobs you print. The more you can standardize on one or two types of paper, the better you will be able to obtain the lowest possible price because you can buy it in greater quantities. At Océ we work with customers to understand their paper requirements and can often help them identify substrates, available through paper vendors we partner with, that will satisfy their requirements at the lowest possible cost. This impacts their production costs and effectively makes paper part of the TCO.
Systems & Procedures
Every business has it's own way of doing things. Some make more sense than others and there are always examples of "we've always done it that way." But when you look at a process of say, printing and mailing a statement, there might be ways an operation could be streamlined by using software that comes with a particular print engine, thereby decreasing costs. It might eliminate a step or two, or reduce waste, but it all becomes a part of the TCO of a given system. At Océ we make a point of learning all we can about a customer's business so we can suggest ways of improving their operations and ensuring they get the most out of their equipment and software investment. It might involve changing paper stocks, refining processes or even suggesting document redesign to speed throughput and lower the cost of a job, but it all becomes directly or indirectly, the TCO of the system they use.
TCO is not a simple number but is derived from a variety of measures that are really the defining characteristics of your business. The number quoted by a vendor is a good place to start, but go further to find how it applies to your business, and knowing that, how your choice in equipment and software can help make your business more successful.