View from the Top - The Total Cost of Ownership Issue

How much is your company spending on networking, printing and copying? If you don't know, don't worry - you share this in common with the vast majority of UK businesses. Yet it is likely to be a very substantial part of your business overhead, and should certainly be a prime target for cost reduction in the current economic environment.

What matters is not just the "up front" costs, but the total cost of ownership, (TCO). Set-up, configuration and networking of IT resources and business equipment are naturally key elements of TCO, but extended and indirect costs also need to be taken into account. These include administration, training, quality and reliability issues, as well as the sometimes substantial financial risk in the event of system failure. Some of these costs are intangible and difficult to quantify, but that makes them no less real. They cannot be ignored just because they are sometimes hard to count! TCO captures the overall life-cycle costs of ownership as precisely as possible. The results of this kind of analysis are generally eye-opening.

Most organisations could make significant cost savings by taking a few simple steps. Typically, for example, budgets are split between different managers. The IT manager may be responsible for introducing and updating core office IT equipment, whilst the Office Manager may deal with consumables such as paper and toner. This often results in purchasing decisions in these two areas being made independently of each other. A common outcome is that good cost control in one department (eg equipment procurement) might result in inflated overheads elsewhere (eg consumables).

This is a common scenario, which many finance professionals will recognise. Differences in the priorities of individual budget holders make it hard to assess the true operational outlay, and therefore to take steps to optimise costs for the organisation as a whole. The answer to this is to ensure that someone has a global view of purchases and costs in this area across all elements and over time. The Finance Director is often well placed to fulfil this "umbrella" role, overseeing the entire spending process, integrating decisions and authorising the allocation of resources. Manufacturers can help, too, by giving honest and relevant support and guidance.

Purchase decisions need to take into account the constant change in markets and technologies. With an increasing range of products and packages on offer, managers need to do their homework to ensure that the solutions they employ match their changing organisational needs, optimising costs as they do so. These days, networked solutions, such as those Canon specialises in, offer customers the flexibility to improve their business processes and generate competitive advantage. Digital multifunctional products, such as Canon's imageRUNNER series of digital-copier printers, enhance control of features including copying, printing, sending and receiving faxes without the user even having to leave their desk. The fact that fewer machines are required can lower initial outlay and, in particular, ensuing running costs. Training for employees is minimal - an advantage which should not be underestimated in today's stressed offices! Increased connectivity reduces production and peripheral costs and enables a single device to perform all tasks either individually or simultaneously, freeing up office-space which is often at a premium.

These developments in digital technologies are raising the potential for increased flexibility in work-flow, higher productivity and a greater return on investment. These are all crucial aspects of business purchasing decisions yet companies remain largely unaware of the real benefits of converging technologies and many continue to flounder in the mire of hidden costs.

Recognising this customer need, Canon has developed the Page Consulting eTool, which is designed to provide customers with a realistic TCO comparison between their existing print solutions and those offered by Canon. This consultancy system, developed in association with Winmark (an independent research body), enables Canon and its business partners to establish where a networked digital copier/printer solution will save customers money. In addition, Canon offers software solutions that allow companies to monitor and control print costs within workgroups.

Technological advances are challenging the traditional approaches to business solutions, improving office efficiency and helping to reduce the total costs of ownership. Such advances and savings, however, can be very confusing for busy managers charged with the buying decisions.

Companies interested in finding out more about Canon Business Solutions can visit www.canon.co.uk

Canon (UK) Ltd
Woodhatch Reigate
Surrey RH2 8BF

T. 01737 220000
F. 01737 220022
www.canon.co.uk