The Web Economy/19

Completion status: this resource is ~50% complete.
Type classification: this is a lesson resource.
Educational level: this is a tertiary (university) resource.

TCO PyramidEdit

This is a lesson part of the module The Web Economy out of the Open Source ERP/Executive Diploma course conducted by a private university.


  • Total Cost of Ownership[1] or TCO is the burning term used by practitioners to judge the real cost of using a software that includes warranty, support, training and hardware.
  • TCO are different from the Operating System level to the Business Application level. Desktop setup displacement cost saves a user only 3,000 unit price as compared to an ERP[2] that costs about 300,000 unit price.
  • Implementation and Customisation as well as maintenance and support are the areas where Open Source is most crucial and attractive for vendors to sell such services.
  • TCO is only relevant if there is ROI (Return of Investment) involved. In the long term the TCO may skewed if there are indirect but important benefits such as a more independent and self reliant workforce.
  • The author (Red1) has created the TCO Pyramid illustrated here to demonstrate the high worth of focusing on the upper layers of services such as Implementation and Maintenance of Business Applications rather than providing for displacing lower layers such as the Operating Systems or Database even. Lower rungs are relatively much lower in TCO compared to the higher ones.
  • Thus having Linux or PostgreSQL may not save as much (or even cost more in terms of TCO) as having ADempiere ERP running on Oracle and Microsoft Server. This is even more compounded if the company is running SAP on Linux and SAP-DB (open source by SAP) as compared to the later scenario.

Assignment TasksEdit

  • Find out the TCO of using free operating system compared to using free ERP. Based the finding on a simulated live case with actual figures.


  • Publish your works in an attractive manner in your user page, stating your own views and findings providing links to your sources. Use the talk page here to score marks.
  • Create or edit sub-pages of course materials within wikiversity.
  • Discuss in the forum (link shall be provided) by offering your ideas and answering or comment on others' postings.



Links to Student NotesEdit

(Provided by Students - subject to edit ranking by tutor)

Notable Links to ResourcesEdit

(Provided by Students - subject to edit ranking by tutor)


(Done in wikiversity as course material by the students under the guidance of the tutor)

Course NavigationEdit

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