Thinking IT Through

Choosing Between UC ROI and TCO Tools

By David Yedwab

SMBs are approaching UC deployment in a deliberate manner befitting the financial struggles many are experiencing. They see UC as a pathway for addressing several key business pain points, such as:

  • How will the company be able to respond to customer demands for higher levels of personal service and responsiveness?
  • How will it increase customer loyalty and extract maximum value from customer relationships?
  • How will it achieve competitive differentiation?
  • How will it acquire new customers while retaining existing ones?

SMBs must address such issues as: cash preservation and low overhead, predicted smooth cash flow, time to market, limited IT staff, controlled feature/function rollout, technology refresh and end-of-life disposal. In other words, should they buy, or go with a leased UCaaS solution? The way to approach the UC decision has been pitched as either through a UC ROI or TCO tool or modeling approach.

The common understanding of the tradeoff between TCO and ROI is between the hard costs including acquisition, installation, integration, operations and end-of-life UC system removal, and a full business case that examines the net present value, associated internal rate of return and discounted payback period of alternative cash flows arising from the set of the alternative business decisions presented.

In fact there’s no contest here. BDMs, CIOs and CFOs are being paid to collaborate and assess all project costs and benefits, including the opportunity costs associated with forgone opportunities across the portfolio of candidate projects. The correct issue is not one of TCO vs. ROI as a contest of hard costs vs. soft benefits, but one of effectively managing the risk associated with all costs and benefits involved.

To achieve the best solution the SMB should partner with a VAR/consultant who is both conversant in the hardware, integration and managed services aspects of UC and collaboration solutions, and the use of predictive analytics so that risk assessments can be properly accounted for. IT

David Yedwab is a founding partner in Market Strategy and Analytics Partners (News - Alert) LLC (