What goes into the total cost of ownership (TCO) of enterprise software?
We are comparing vendor proposals, and each one counts costs differently: one offers a subscription, another a perpetual license, a third prices implementation separately. Which costs should we include to compare them fairly?
10 November 2026
0
3 min
Answer
The total cost of ownership of an enterprise system is every cost over its lifetime: licenses or subscription, infrastructure and its administration, implementation, integrations, training, support, upgrades, and customization. Compare vendor proposals by this total over the same period, for example three years, rather than by license price. Gartner defines total cost of ownership (TCO) as an assessment of all IT costs over the life of use: hardware and software acquisition, management and support, communications, end-user expenses, and the opportunity cost of downtime, training, and other productivity losses.
Which cost items to include
Break every proposal down into the same items:
- Licenses or subscription: the model (per user, per employee, per concurrent session), the term, and what happens as the company grows.
- Infrastructure: servers and administrators for an on-premises installation, plus separate environments for development and testing. In the cloud, this item is part of the subscription.
- Implementation: process configuration, data migration, acceptance.
- Integrations with accounting and other systems.
- Training for users and administrators.
- Support and upgrades: what the contract covers and what is billed separately.
- Customization: who does it and who fixes conflicts between customizations and new versions.
Infrastructure and add-on costs were part of the decision when Commonwealth Partnership chose SimpleOne ITSM: the company got a boxed ITSM solution "without hidden fees for additional modules", and cloud licenses removed hidden fees for more infrastructure capacity as the number of requests grows.
What to ask the vendor for
To calculate these items the same way for every vendor, ask for:
- The full licensing policy, not just a price list: who counts as a user, how many licenses one person with several roles needs, and whether you can temporarily exceed the licensed number.
- A list of what support and maintenance include and what is billed separately.
- Infrastructure requirements and the skills administrators need.
- Whether you can customize the system yourself, without the vendor.
The last point was one of the reasons ITG Corporation chose the SimpleOne platform: its low-code tools let the team build the applications it needed and customize processes without vendor involvement.
How it works on the SimpleOne platform
The SimpleOne platform is a low-code platform for business process automation; SimpleOne ITSM, ESM, and HRMS are built on it. Here is how it maps to the cost items:
- Processes in one product. Incidents, requests, changes, problems, SLAs, and the configuration management database are all part of SimpleOne ITSM, not separate modules.
- Upgrades and support. In the cloud, service support is included in the delivery.
- Customization. Processes and applications are customized without the vendor, in visual designers and with scripts, by your own team or with an implementation partner. During an upgrade, the system shows where the new version conflicts with your customizations before you install it.
- Expansion to other departments. ITSM, ESM, and HRMS run on one platform, so neighboring departments are connected to the same instance.
- Training and evaluation before purchase. Self-paced SimpleOne courses are free, and instructor-led courses are paid. Documentation for all products is open at docs.simpleone.io. Some extensions in the SimpleOne Marketplace are free.
The final project cost is calculated by an implementation partner based on your specific requirements. What the platform includes is described on the SimpleOne platform page.
