Total cost of ownership (TCO) is the accumulation of all costs—not merely software costs or IT costs—associated with making a system carry out its purpose. Many organizations have no idea what the total costs are to operate a system because only a handful of costs are “hard,” quantifiable costs. Hard costs such as software license fees and maintenance fees can be easily defined and are readily accessible. Soft costs are not readily visible as out-of-pocket costs, but cost the organization in terms of productivity and time. In fact, if you were to just look at hard costs, a new ERP system will typically appear to be the more expensive option. However, as you evaluate the total cost of your system, accounting for both hard and soft costs, you may find that a new system is warranted because of the productivity gains, time savings, and increased revenue opportunities that a new system brings.