Total cost of ownership may not be the best way of predicting expenditure.

Has TCO run its course?

Replace TCO because it is too difficult

Forget TCO, it is too difficult, it is too unpredictable and it is unreliable. Replace it with ...

Attempts to accurately calculate "Total Cost of Ownership" (TCO) have never been successful. Organisations just don't have the required information at the necessary level of granularity to do the job.

The task is made even more difficult because too many factors are unpredictable. The result is that many times the predicted expenditure is unreliable and therefore becomes meaningless as an instrument to manage costs.

What is the alternative?

The recommended alternative is to work at a much higher level and move to a seat management approach. It is based on costing per seat over the complete life-cycle of a system from cradle (procurement) to grave (decommissioning). By no longer attempting to manage systems directly, organisations can shelve costly and complex systems management tools - which ironically were installed in an attempt to reduce costs. 

This all sounds so obvious that it is strange that this is not being done.

Why is it not done?

It is not done because it is counter-intuitive. Management is normally implemented via tight controls. It is difficult to change this habit because it is difficult to identify the appropriate measures. By agreeing an acceptable cost per seat target for defined services, the actual costs are then measured against this. 

To meet this target organisations must identify the cost drivers and then manage them. This becomes a self-managing system when cost reduction targets are applied - as one set of costs are controlled the next set of uncontrolled costs are tackled