TCO Analysis is Blind to Business Benefits (Except Cost Savings, Sometimes)
TCO analysis is not a complete cost benefit analysis, however. TCO pays no attention to many kinds of business benefits that result from projects or initiatives, such as increased sales revenues, faster information access, improved competitiveness, or improved product quality. When TCO is the primary focus in decision support, it is assumed that such benefits are more or less the same for all decision options, and that management choices differ only in cost.
TCO may be used as shown above, however, to find the benefits cost savings and avoided costs. These benefits show up when TCO for one scenario is compared to TCO for another scenario. As in the example above, when TCO is less under a "Proposal" scenario than TCO under a "Business as Usual" scenario, the result is an expected cost savings under the proposal scenario.