Final answer:
The Total Cost of Ownership (TCO) is the model used to determine the actual cost of technology implementations, weighing all long-term costs against the benefits. It assists firms in making more informed investment decisions for their technology assets.
Step-by-step explanation:
The model that can be used to analyze the direct and indirect costs to help firms determine the actual cost of specific technology implementations is the Total Cost of Ownership (TCO). TCO considers all ongoing costs related to an asset throughout its life cycle, including acquisition, deployment, operation, support, and retirement costs. By using TCO, a company can estimate the overall long-term costs associated with their technology investments to make more informed decisions.
To conduct a TCO analysis, firms may create a T-shaped chart where costs, such as the cost of acquisition, operation, and maintenance, are on one side, and the benefits, including time saved, increased efficiency, or other improvements, are contrasted on the other side. This helps the firm to weigh the marginal costs—the extra cost of adding an additional unit—against the marginal benefits—the extra benefit of adding the same unit. Understanding these trade-offs assists in making choices that could affect the company's profitability and efficiency.
Mathematical models can also be employed in the early stages of the design process to roughly estimate costs for various approaches and compare them to other options by normalizing the costs.