Transcript Hosted by Windows TCO – Best Practices for Managing Costs and Maximizing ROI Thomas Pisello CEO and co-founder Alinean™ - The IT Value Experts™ Author of “ROI.

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Windows TCO – Best
Practices for Managing
Costs and Maximizing ROI
Thomas Pisello
CEO and co-founder
Alinean™ - The IT Value Experts™
Author of “ROI for IT Solution Providers” (IEP – 2002)
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Why Is TCO Important?
IT investment proposals increasingly require financial analysis and
justification. CIO’s and senior IT managers are increasingly facing pressure
to cost justify IT investments on a financial basis. - Gartner Group
IT Spending Peaks
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650
$642
IT spending rose from 18.2%
of all US business capital
investments to a peak of
46.7%
600
550
$573
500
450
Est. 20 % decline
in US IT Spending
from 2000 to 2003
400
Flat Spending Predicted 2002 to
2003, Up-tick in late 2003/early
2004
350
300
Source: Bureau of Economic Analysis, Table
5.5. Real Private Fixed Investment by Type,
[Billions of chained (1996) dollars],
December 21, 2001,
250
200
1995
1996
1997
1998
1999
2000
2001
IT Spending / Revenue
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IT Spending / Revenue
3.73%
4.00%
3.50%
2.72%
3.00%
2.50%
2.00%
1.50%
0.82%
1.00%
0.50%
0.00%
Avg. US Company
Best 25 Companies
(>$500M)
Lowest 25 Companies
(>$500M)
Alinean ValueIT™ Peer Comparison Software – Database of over 20,000 US and international companies
Best /Worst Ranking based on Information Productivity® = EVA/SG&A (Strassmann, Inc.)
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PeerMap™ - IT Performance vs. Spending
Frugal Leaders
Investing Leaders
Frugal Followers
Investing Followers
Characteristics of Value Leaders
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 Market Position
•
65% of companies success related to market position
Empirimetric)
(PIMS Program –
 Frugal
•
•
•
•
•
Strong project selection committees with fiscal discipline
Modest new project budgets
Self service to reduce administrative overhead
Standardization and consolidation
Agility: Able to scale spending to performance/market conditions
quickly
 Higher Project Success Rates
•
•
•
•
Smaller projects with more milestones
Strategic alignment, planning and benchmark measurement
ROI, TCO and Value management discipline
Strong business unit collaboration
 Focus on Core Competencies
•
•
•
•
Strategic outsourcing
Higher training and career development spending
Lower staff turn-over, satisfied employees
Culture and mission
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CIO Top Priorities – Spending Accountability
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
Prove and improve the value of IT
 Over 80% of companies now require ROI and TCO analysis to be
performed on most IT investments
 65% of companies indicated that they do not have the knowledge
or tools needed to do ROI and TCO calculations
 75% have no formal processes or budgets in place for measuring
the ROI and TCO of IT projects
 68% do not measure ROI and TCO on IT projects 6 months after
the work is completed.

Do more with less
 IT Spending will remain flat in 2003 budgets, but spending
backlog is building

Communicate more effectively to stakeholders
 44% say either the CEO or CFO is heavily involved in the decision
making process
 Business units are gaining control over the majority of IT
decisions
Sources: IDC, E&Y, ComputerWorld
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The TCO of Windows: Managing Costs and
Maximizing ROI
Technology investments now hinge less on features and functions and
more on finance. - CFO Magazine
Businesses are done with mere technology. From now on, the role of the
CIO is to make money. - Paul Strassmann, ComputerWorld Columnist
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TCO – Capturing All Lifecycle Costs
Plan
Retire
Change and
Evolve
Acquire
Deploy
Manage and
Maintain
3 to 5 year lifecycle
TCO and ROI – Project Timeline
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Revenue After
Revenue &
Profit
Revenue Before
Total Expenses
And TCO Today
IT Budget &
Business
Operating
Expenses
Project Costs
Total Tangible
Benefits
As Is
Total Expenses and TCO
After Project
To Be
Windows 2000 TCO
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TCO = $6,845 annual per PC
Windows 2000 TCO
14%
23%
23%
30%
3%
Alinean 2003 – Windows 2000 environment with low best practices
Windows 2000 TCO by Category
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$2,738
$3,902
Alinean 2003 – Windows 2000 environment with low best practices
TCO Drivers
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Up to a 26% Savings with Best Practices
Management Practices
Capability and Maturity
$500 to $1,500 per PC to implement
Est. savings of $1,845 per PC/year
Complexity and
Use
Service Levels, Availability
and Performance
Alinean 2003
Best Practices
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Implementing a cohesive set of best practices can lead to cost
reductions of more than 26% in PC TCO
However, need to factor in cost of achieving best practices ….. ROI
Alinean 2003
Windows Client TCO by Platform
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$8,000
6,000
Downtime
End-User
Ops.
4,000
Admin.
2,000
IT Ops
HW/SW
Unmanaged
Desktop
Typical Managed
Desktop
Win2000
NTW4
Win98
Win95
Win2000
NTW4
Win98
Win95
Win2000
NTW4
Win98
Win95
0
Highly Managed
Desktop
Copyright © 2001
Mobile Computer TCO by Platform
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$14,000
12,000
Downtime
10,000
EndUser
Ops
8,000
6,000
Admin.
4,000
Ops
2,000
HW/SW
0
Win95
Win98
NTW4
Day Extender
Win2000
Win95
Win98
NTW4
Road Warrior
Win2000
Copyright © 2001
Migrating to Windows 2000 and AD
 TCO Considerations:
•
System replacements and
replacement labor
•
System upgrades and upgrade
labor
•
•
•
•
Software Licensing
IT and User Training
Migration Labor
Migration related Help Desk
Calls
•
Migration related User
Downtime
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 Est. at $1,000 per
desktop
 PC Lifecycle
•
•
36 month desktop
24 month mobile
 Upgrade vs. Replace
•
$45 per admin hour
 3rd party tools
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Pre-Migration Planning
 TCO Considerations
• Asset analysis for replacement /
system upgrade
•
•
•
•
•
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Develop Business Case
•
•
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Security Impact (ACL)
IT Training
Identify obsolete users
Identify expired Computer Accounts
Identify trust relationship
Identify Administrator Privileged
Users
Detecting Naming Conflicts
NT Service Account Identification
 20% of total migration
costs
 Administration and
Support Labor
 3rd party tools required
Migration
 TCO Considerations
• Windows Migration
System Replacement and Upgrades
OS and System Distribution
Migrate User Accounts and Rights
Migrate Computer Accounts and Rights
Rename Machines
Directory Updates
Updating Access Permissions to File /
Print Services
 Maintenance of Access to Exchange
 Preserving End User Desktop and
Applications (Profile)
 Preserving System Registry Access
 SID History Cleanup
 User Training
Exchange Migration
 Account creation and deletion
 User properties
 Distribution groups and lists
 Mail forwarding / delivery restrictions
 User Training







•
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 80% of Migration
Costs
 Systems and
Software Costs
 IT Ops and Admin
Labor Costs
 User Training
 Downtime Impact
• User Productivity Loss
(salary)
•
Business Loss (profit)
Change Management
 TCO Considerations
• Software distribution




•
Remote Installation Services
Windows Installer Services
SMS
System Restore
Directory and Resource Security and
Administration
 Create/Delete/Add / Remove a
Group or User
 Permissions Management
 Role Based Delegation
 Changing Directory Security
 Reset Passwords
 Change User and Personal
Information
 Manage Print Queue
 User Auditing and Reporting
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 IT Operations and
Administration Labor
 Support Calls
 Downtime
Change Management
 TCO Considerations
• File Security Administration





Change File Security
Service Account Maintenance
Visualizing Permissions
Searching Replacing Permissions
Security Auditing and Reporting
•
Group Policy Administration
 Resultant set of Policies
 Analysis and Documentation
 Backup and Restore / Versioning
•
Physical MACs
 Imaging
 Shipping
 Staging
 Standardization
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 IT Operations and
Administration
Labor
 Support Calls
 Downtime
Operational Management
 TCO Considerations
• Availability Management
 Microsoft Operations Manager
(proactive system monitoring and
event management)
 Microsoft Application Center
 Advanced Enterprise Server clustering/failover
 System Restore Hierarchical
Storage Management (HSM)
•
Security Management
 Encryption, PKI, Kerberos
 Anti-virus (requires systems >
300MHz for background anti-virus
protection)
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 Respond and Resolve
Labor
 Support Calls
 Downtime
Asset Management
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 TCO Considerations
•
Maintaining Standards
 Image management
 Systems standardization
 Group policy management
 Systems Management Server
(SMS)
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Centralized Procurement
 Standardization
 Systems Purchasing
 Software Licensing
 IT Ops & Admin Labor
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Customer Services
 TCO Considerations
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•
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Centralized support
Standardization
 Support Calls
 User Downtime
Remote diagnostics and control
Password management
Self-service
User Training
Low
Medium
High
Typical Help Desk Costs per Call
$15
$18
$25
Typical Call Volume (Average number
1.2
2.0
2.5
of calls per user per month)
Business Value - Productivity
 Mobility
• Additional 6-8 productive hours per week
• At Meetings, Road, Home
• Migration from desktops to mobile
computers
•
•
Wireless
Higher TCO by 25 to 50%
 Business Agility
• New applications
• New business opportunities
• Important in uncertain times
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Alternative 1: PC as a Utility
Managed Services
Benefits
• Re-allocate IT Operations and Administration Staff
• Improve Service Levels
• Increase Availability
• Migrate to Latest Platform and Best Practices
• No large up-front investment required
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Alternative 2: Linux
Lower TCO?
• Lower Software Licensing Costs
• Slightly Higher IT Ops & Admin Costs
• Better Availability
• Slightly Less Agility
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Conclusions
 Potential 26% savings with a well managed Windows
environment - $1,845 per PC / year
 Requires Active Directory and Policy Management
 Migration costs average $1,000 per PC
 Implementing best practices can cost an additional
$500-$1,500 per PC
 Typical payback in 12-18 months from deployment
 Other alternatives, such as Managed Services deserve
serious consideration
Thank You!
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Thomas Pisello
[email protected]
www.alinean.com
• Additional ROI research
• Free on-line peer comparison tool
• Sample reports and ROI/TCO benchmarking and analysis
software