# The Total Cost of Ownership of. Hosted UC

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1 The Total Cost of Ownership of Hosted UC

5 Calculating TCO: The Hard and Soft Costs At the end of the day, how do all of these costs add up? On average, hosted UC services will cost about \$32 per user per month, or Sample \$384 per 5-Year user TCO -per Totalyear. The exact 450 cost will vary depending on the feature sets you choose, but the package typically includes a desk phone and a bundle of voice usage minutes for each user. 250 An equivalent premises-based system will cost about \$48 per user per month, or \$577 per user per year. The cost is higher in the first year, at an average of \$954 per user, 150 due to the additional capital expense that occurs in that year. Premises-Based UC Hosted UC To put it all together, here s a ballpark calculation of the 5-year TCO for an organization with 100 users: Thousands Capital Expenses Installation Operational Expenses Sample 5-Year TCO - Total Sample 5-Year TCO - Total by Year Thousands Thousands Premises-Based UC Hosted UC 0 Year 1 Year 2 Year 3 Year 4 Year 5 Capital Expenses Installation Operational Expenses Premises-Based UC Hosted UC And 160 It Gets Even Better for Hosted UC Thousands 140 These 120 ballpark calculations don t take in to account the net present value (NPV) of future expenditures. A 100 dollar spent today is worth more than a dollar spent five years from now. Likewise, spending \$100,000 now 80 is not the same as spending \$20,000 a year over five years: in fact, the total 5-year NPV of that \$20, annual 40 expense is only \$77,633. Because a higher proportion of the costs of a hosted UC solution are spread out over 20 time as operational expenses, the NPV equation works out in its favor. 0 Sample 5-Year TCO - Total by Year Year 1 Year 2 Year 3 Year 4 Year 5 Premises-Based UC Hosted UC 5 SIDEBAR: And It Gets Even Better for Hosted UC These ballpark calculations don t take in to account the net present value (NPV) of SIDEBAR: And It Gets Even Better for Hosted UC These ballpark calculations don t take in to account the net present value (NPV) of future expenditures. A dollar spent today is worth more than a dollar spent five years from now. Likewise, spending \$100,000 now is not the same as spending \$20,000 a year over five years: in fact, the total 5-year NPV of that \$20,000 annual expense is only

7 DIY TCO Calculating your exact TCO may seem to be a daunting task. Fortunately, there are resources that will do a lot of the heavy lifting for you. For example, you can use a calculator tool to crunch the numbers. Use the link below to download a TCO calculator in Excel spreadsheet format. Even if you don t have all the numbers on hand, you can still use this calculator to get a general sense of the TCO; it can be configured to use industry standard values. Download TCO Calculator 7

9 About the Research The DSCI team curated this whitepaper s data from numerous market research reports, vendor whitepapers, and industry publications, including: Aberdeen Group, IP Telephony TCO for the SME: Think Beyond Equipment Cost, December 2012 Aberdeen Group, The Total Cost of Ownership Benchmarking Study for Unified Communications, January 2012 BroadSoft, Premise-Based vs. Hosted UC Systems: A Cost of Ownership Comparison, April 2013 BroadSoft, Understanding Unified Communications: Choosing the Right Solution for your Business, October 2013 Chadwick Martin Bailey, Unified Communications Applications: Uses and Benefits, July 2008 CIO Magazine, Unified Communications Drives Collaboration, Cost Savings (After a Lot of Hard Work), September 2013 Frost & Sullivan, From Premise to Cloud: Adopting Hosted Unified Communications to Converge, Collaborate, and Compete, June 2013 Nemertes Research, IP Telephony and Unified Communications Total Cost of Ownership, March 2014 Wainhouse Research, Video Collaboration When You Need It, Where You Want It, and How You Like It: Video Conferencing & Collaboration from the Cloud, April

10 About DSCI DSCI is New England s leading hosted communications provider. With the power and reach of our Hosted Communications Network, we deliver innovative unified communications and connectivity services to more than 1,300 businesses and organizations throughout the region. We back our services with a zealous commitment to Customer Care, including a 100% network uptime guarantee and 24/7/365 live-answer technical support. Connect with DSCI main 866.GET.DSCI sales customer care f i t w Y

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