Glossary term
TCO modelling
Also: Total Cost of Ownership, TCO analysis
A structured estimate of the full lifetime cost of a vendor decision, including licence, implementation, integration, operation, change management and exit cost. List price is usually 20 to 40 percent of real TCO; modelling exposes the rest.
List price is the easiest number in a vendor decision and the least informative. A useful TCO model includes: licence over the contract term, implementation and onboarding, integration cost into the existing stack, ongoing operation (FTE, tooling, support escalation), change management for end users and the cost of exit at contract end.
Exit cost is the most often overlooked dimension. DORA Art. 28 explicitly expects documented exit strategy for critical ICT third-party providers; modelling exit cost early makes the dealbreaker visible before signature rather than after.
In a weighted vendor matrix, TCO is typically one of five to eight criteria, but it interacts with almost all others (data residency, exit rights, support model). Treating it as a stand-alone number hides the real cost structure.
Related terms
Vendor matrix
A structured comparison of vendor options across weighted criteria, showing scores, evidence per cel…
Decision memo
A short structured document that captures why a decision was made, the options considered, the crite…
DORA ICT risk management
The EU Digital Operational Resilience Act regulates the operational resilience of financial entities…