Welcome to this section about TCO or Total Cost of Ownership. TCO was already mentioned a few times. TCO stands for Total cost of ownership and is a comprehensive assessment of IT's total costs or other costs over time.

For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses, and the opportunity cost of downtime, training, and other productivity losses.

Comparing the TCO of different environments is not an easy task. Especially in the "old world," the on-premise world, many factors play a role in this assessment, as this overview shows.

Let's take the facility costs for example. Something like space, power, cooling. It's nothing you have to worry about when using AWS resources. 

Using the cloud has greatly simplified the TCO assessment.

Because most additional costs are included in AWS's service prices, there are far fewer factors to take into account.

As someone who started his IT career by assembling servers and configuring switches, I can assure you that physical IT operation involves a lot of effort, costs, and stress.

Today, an EC2 instance can be started with just a few clicks; in the past, a server had to be assembled, installed, mounted in the data center, and wired. Also, there were costs for maintenance, cooling, space, power, licenses, and other factors.

Understanding TCO improves the overview on the business and helps you recognize issues and opportunities at an early stage.