What is Network TCO?
Network Total Cost of Ownership (TCO) measures the overall cost of building, owning, operating, and managing a network.
Network TCO & ROI difference
Network TCO includes costs associated with Day 0 to Day N operations, such as hardware, software, and personnel.
Return on Investment (ROI) is a superset of TCO that includes the cost of benefits realized from an efficient TCO.
By calculating ROI and TCO, businesses can better understand the cost-benefit analysis of their network infrastructure.
What are the components of Network TCO?
Day 0 operations
Span planning, designing, and procuring network components. Costs include:
- Time and hard cost spent on third-party site surveys.
- Time spent architecting the network design based on business requirements.
- Time spent creating the Bill of Materials (BoM). This includes evaluating and onboarding multiple vendors and managing their hardware equipment SKUs.
- Hard cost of capital expense (CapEx) as part of BoM procurement.
- Time spent creating an implementation and test plan.
Network TCO does not include staff and time costs for hardware refreshes of wireless or wired infrastructure (every three-five years).
Business Value Assessment
Organizations across different industries are realizing the business, TCO, and ROI value of NaaS.
Vertical | Higher Education |
|---|---|
Users | 620 |
Region | North America |
Network Costs 3 year |
|---|
Day 0 | 47% |
|---|---|
Day 1 | 6% |
Day 2/N | 47% |
NaaS 3 year |
|---|
TCO Savings | 53% |
|---|---|
ROI | 129% |
Vertical | Healthcare |
|---|---|
Users | 2,000 |
Region | North America |
Network Costs 3 year |
|---|
Day 0 | 39% |
|---|---|
Day 1 | 14% |
Day 2/N | 47% |
NaaS 3 year |
|---|
TCO Savings | 49% |
|---|---|
ROI | 112% |
How is Network ROI calculated?
- Cost savings, including a decrease in hard costs, efficiencies via fewer man-hours spent on tasks, and the elimination of money spent on additional tools.
- Productivity increases through lower downtime costs, fewer man-hours spent on troubleshooting, and streamlining personnel numbers assigned to specific network tasks or project management.
- Risk reduction due to improved risk and compliance management. This includes reduced cost of network breach and fewer man-hours spent reacting to security threats and alerts.
How Does a Consumption Model Affect Network TCO?
The cost model of today’s networks is complex. It involves many stages, including network planning, procuring, deploying, managing, and securing. Each requires different tools with their own costs.
Consumption models centered around “as a service” allow organizations to shift network costs from a CapEx to an operational expense (OpEx) model. This improves network cost efficiency and predictability.
Network as a Service (NaaS) consumption models offer the ability to scale network services up or down as needed to meet changing business needs. By paying only for what is used, network costs are further reduced.
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