Troon Golf, headquartered in Scottsdale, Arizona, is one of the world's leading luxury-brand golf management and marketing firm with 197 golf courses worldwide in its portfolio. When it saw its IT expenses spiraling out of control, Cary Westmark, its vice president for technology decided to introduce the concept of total cost of ownership.
Like most companies, managers had viewed hardware as one-time expense and had failed to recognize the hidden cost of operating and maintaining the hardware. Often support costs increased over the projected life of IT, contributing to unexpected rise in IT expenses. For better planning of IT costs and to develop a funding mechanism for IT projects throughout their planned lives, managers created a strategic replacement program.
Under the program, managers calculated total cost by including cost of technical support, user productivity loss, downtime loss, and any associated data quality loss. This allowed Troon management to refresh its aging hardware at the optimal cost level. As a result, its support costs reduced from $800 per month to $300, saving roughly over $50,000.
Read the case study answer the following questions.
1. Why does the TCO approach allow Troon management to refresh its hardware at the optimal cost level?
2. Why, in your opinion, were IT expenses spiraling out of control before the TCO system? What are examples of the hidden costs of operating and maintaining the hardware?
3. If you were the head of marketing for Troon, what benefit would you receive from Mr. Westmark's decision to implement TCO?