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White Paper: Using TCO to Determine PC Upgrade Cycles

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White Paper: Using TCO to Determine PC Upgrade Cycles

Executive Summary

Intel IT and Intel Finance have developed a comprehensive total cost of ownership (TCO) methodology that lets us calculate the real cost of operating more than 90,000 PCs.

We’ve been tempted to reduce expenditures in the short term by delaying PC upgrades to replace older models, also known as a “PC refresh.” But we also realized that we didn’t understand the full implications of such a move.

We needed to understand PC costs over time. Standard return on investment (ROI) analysis didn’t help, because the question with PC refresh isn’t if you should replace an aging PC but, instead, when should an aging PC be replaced?

We turned to an equivalent annual cost (EAC) method that let us account for the variable timing of modeled costs. We considered the costs associated with PC deployment, usage, and retirement. By calculating these costs across the specific life spans of PCs, we were able to arrive at an effective and valid comparison of refresh cycle options. Our analysis shows that our recommended PC refresh rate is about three-and-a-half years:

The new model provides several key benefits:
• Provides a holistic understanding of our PC costs, which improves our decision making.
• Allows us to explain the dynamics of PC costs in a clear and understandable way.
• Offers the flexibility necessary to perform “what-if” and sensitivity analyses. We can insert assumptions about costs and view their effects on overall TCO.
• Provides a solid baseline on which future cost metrics can be developed.

We continue to use and update the tool to improve our PC management practices and strategies.

Read the full Using TCO to Determine PC Upgrade Cycles White Paper.