As everyone in business knows, time equals money. There’s a constant effort to streamline workflows and improve efficiencies to help reduce costs. However, resources needed for improvements often get overlooked when looking at cost reductions. Sometimes upfront or recurring costs — and changes to the way things work — are required to move forward with improvements.
Of course, the most desirable changes to improve efficiencies have the lowest costs to implement and the least resistance to change by employees. Change can be a challenge for employers. When changes to workflows happen, employees can show resistance because they are used to current processes and may be concerned about their job security.
Total Cost of Ownership
In the simplest form, the total cost of ownership (TCO) refers to the purchase price of the office equipment and additional expenses like operating that piece of technology, the cost of any future fixes, failure, and so on.
According to Gartner, the total cost of ownership is a detailed calculation of information technology (IT) or other expenses for a business over time. For example, when considering the purchase of copiers or printers for your office, you would have to assess the price and the acquisition costs of print management software, supply costs, which includes the toner and ink, and operating costs such as employee training and maintenance.
Considering the total cost of ownership gives you a better outlook on the indirect costs you will be paying in a given time frame of your business. It also helps companies stay alert and prepared for any unforeseen financial surprises.
Key Metrics To Consider For TCO
To get the clearest understanding of TCO implications, you must keep these four key metrics in mind:
- Degree of Utilization. The degree of utilization identifies the expected usage of the equipment. For printers, utilization is evaluated by print volume, so you’ll need to consider how many prints can run before ink or toner needs to be replaced or before the unit needs to be serviced.
- Financial Capability To Handle Equipment Maintenance. When you purchase office equipment, it always comes with a care instruction manual and the manufacturer’s recommendations for its routine maintenance. Having enough resources and discipline to maintain the equipment is another factor to consider for TCO.
- Asset Lifetime and Residual Value. The manufacturer typically determines the life expectancy of office equipment. Still, often companies will push the expected life of the equipment. They’ll try to extend it as long as possible. However, factoring in a reasonable lifespan for the equipment helps budget more effectively for future expenditures, primarily when the residual value or the reselling cost is known at the time of purchase.
- The Cost of Goods Needed for Operation. The foremost metric to consider for TCO is the cost of consumable goods required for the smooth operation of the office equipment you’re buying. If we take the example of printers, the consumable cost includes money spent on buying paper, ink, and toner.
The Relationship Between Efficiency And Office Equipment
When you think of office equipment efficiency, you may consider only the equipment itself without thinking about its effect on workers. Staying with the example of copiers or printers, these can cause daily frustrations when they stop working or delay projects because of malfunctions.
Here’s a few questions to consider:
- Who do you call for service?
- Is the service contract still valid?
- Who places the service call request?
Often when equipment fails, it’s ignored until there’s a critical need. This can be avoided by implementing components that improve efficiencies and continue workflows. Some of these include:
- Data Collection Agent (DCA). This solution constantly monitors the status of printers and copiers and ink or toner cartridge supply levels. Around-the-clock monitoring identifies components before they fail and enables regular preventative maintenance, minimizing disruptions. Ink and toner level monitoring means supplies are always available and ordered when needed. Keep in mind, ink and toner costs can be a significant expense for a company. It’s estimated that 30-35% of total spend on office products for a company is for ink and toner.
- QR Code. Having a QR Code attached to the machine makes it easy for anyone to scan and submit an unexpected service request which minimizes downtime and improves efficiency.
- Managed Print Service Program (MPSP). Implementing a managed print service program to gather and monitor printer data allows businesses to streamline workflows by electronically submitting service and repair requests and improves efficiencies around your organization’s printing needs and requirements. In conjunction with the budget control features of the DCA, this combo can more efficiently manage the total cost of ownership.