Where's the Beef:

Calculating Linux ROI

Bob Gifford

Strategist

Novell, Inc.

Agenda

Viewer Discretion Advised

Overview

Server ROI

Desktop ROI

Conclusion

Viewer Discretion Advised

Warning

This presentation contains material that may be unsuitable for viewers without a questioning, skeptical mind. Some slides contain evaluations, analyses, and conclusions which, while based on financial data and real-world experience, should be examined critically to determine their applicability and relevance for each audience member.

Viewer discretion advised.

Don't trust anyone.

Even me.

Analysts on Linux ROI

No Dearth of Analysis

Linux, UNIX, Windows TCO Comparison Parts 1 & 2; Yankee Group; April 2004

Server OS Licensing & Support Cost Comparison; Bearing Point (sponsored by MS); May 2004

Windows 2000 vs Linux in Enterprise Computing; IDC (sponsored by MS)

The Costs and Risks of Open Source; Forrester; April 12, 2004

Linux Servers: No 'Silver Bullet' for Total Cost of Ownership; Meta Group; November 22, 2002

Linux on the Desktop: the Whole Story; Gartner; August 2003

The Costs and Benefits of Moving to Sun's StarOffice; Gartner; July 1, 2002

How to Save Money with Linux Servers; Gartner; June 19, 2002

Four out of four experts agree: Linux lowers TCO; IT Manager's Journal; June 8, 2004

TCO for Linux Web Servers; Robert Francis Group; July 2002

Saving Cash: A Comparison of Open Source and Proprietary Software; Soreon Research; May 2003

Equating Linux TCO Requires New Equation; Meta Group; April 6, 2004

Business Case for Using Open Source Software; Forrester; November 29, 2004

All have something to contribute, but they don't all agree

You will need to determine the truth for your organization and your environment

Pitfalls

Don't base decision on transient factors

Many factors, pro and con open source, will change over time

Such as:

Salaries for Linux administrators may be high one year, lower the next

Tools that don't exist today for Linux will in the near future

Microsoft's pricing will react to competitive inroads

Pitfalls

Don't rely on market surveys

Vendors are very interested in market surveys, but you needn't be

Echo Chamber:

Press reports on the consensus to IT managers

IT managers give it to analysts

Analysts present it to the press as “fact”

Press reports...

Instead, look at what the pioneers are doing, and whether they are succeeding

Move to where the puck will be, not where it is

Pitfalls

Don't ignore the strategy

Don't rely on overly narrow, specific benchmarks

Many benchmarks don't translate across application loads, configurations

Software decisions shouldn't be made on project-by-project based solely on the numbers

Don't make each platform decision in a vacuum

But to achieve the expected benefits, it must fit within an overall enterprise-wide strategy

ROI Overview

Assumptions for ROI

Suitable server-side applications exist for the Linux platform

Novell SUSE® LINUX with support subscription

Administrators are trained up front during migration

Available admin tools, such as ZENworks® Linux Management Update Manager (formerly Red Carpet) and image management software, are used

“Chart of Accounts”

One Time

Hardware

Software

Migration

Training

Application Migration

Software Install

Document Conversion

Help Desk

Program Management

Annually Recurring

Hardware Support

Software Support

Administration

Maintenance

Service

Capacity Mgmt

Virus Protection

Help Desk

Deskside Support

Impact of Open Source

One Time

Hardware	

Software	

Migration	

Annually Recurring

Hardware Support	

Software Support	

Administration	

Impact of Open Source

One Time

Hardware	

Software	

Migration	

Annually Recurring

Hardware Support	

Software Support	

Administration	

Generalizing across servers and desktops, open source provides a good ROI whenever:

The decrease in one-time and ongoing software support costs are greater than one-time migration costs

Strategic Factors

Bloatware

When is good enough good enough

Negotiating power

“All Microsoft all the time” is not a strategy

Agility and flexibility (1)

Avoiding vendor lock-in

Agility and flexibility (2)

Transferability of skill sets from the PDA to the mainframe

ROI of Linux on the Server

Impact of Open Source Servers

One Time

Hardware	

Software	

Migration	

Annually Recurring

Hardware Support	

Software Support	

Administration	

Hardware and admin costs are roughly comparable

Software and software support costs are dramatically lower for Linux and open source

Migration costs, if applicable, are much less than the software cost savings

Server Hardware

Using commodity Intel hardware is cheaper than proprietary Unix hardware

You should already be using the cheapest hardware suitable for the task

Some workloads still require Unix servers

Clustering, virtualization makes migration to commodity hardware easier

However, Linux is not the only option on commodity hardware

ROI analysis needs to compare Windows on Intel vs. Linux on Intel

Linux will run on older, less powerful hardware

This is a factor if it extends the useful life of existing hardware

Server Admin

We have found that server admin labor requirements are lower on Linux

Lower virus vulnerability is a big advantage, but may (or may not) disappear over time

Some analysts see higher admin costs for Linux

Some argue that admin salary costs are higher than for Windows or Unix

If true, its temporary

Our calculation of lower Linux admin costs may be due to using:

Novell SUSE LINUX with annual maintenance instead of roll-your-own Linux

Trained, experienced admins

Either way, this cost factor isn't a big enough impact to be the deciding factor

Server Software

Open source alternatives for much of the software stack below the application layer exist

Some alternatives may not always be comparable

Is good enough good enough?

Server Linux ROI

New Installation: OS Only

Greenfield installation (no migration costs)

Software costs include OS only

Much lower TCO

No migration costs

Substantial software cost savings

Server Linux ROI

New Installation:
OS, App Server, DBMS

Windows, Websphere, SQL Server vs. Linux, JBoss, mySQL

TCO savings grow as the size of the software stack grows

Server Linux ROI

Migration, OS Only

Migration of existing hardware from Windows to Linux

Software costs include OS only

Substantial TCO savings

Minimal migration costs

Software support and maintenance cost reduction

Server Linux ROI

Summary:

Linux matches or exceeds the cost performance of Windows or Unix for typical workloads in every component of TCO

Hardware savings alone make Linux less expensive than Unix

Linux is the same cost or less to install and administer than Windows

Linux software support is much less expensive than Software Assurance for Windows

Other services software costs for Linux are the same or less than for Windows

The decrease in one-time and ongoing software support costs are greater than one-time migration costs

ROI of Linux on the Desktop

Impact of Open Source Desktops

One Time

Hardware	

Software	

Migration	

Annually Recurring

Hardware Support	

Software Support	

Administration	

Hardware and admin costs are roughly comparable

Software and software support costs are lower for Linux and open source

Migration costs are significant, but still frequently less than the software cost savings

Desktop Software

Open source alternatives for the most common desktop software are available, most bundled with NLD

Desktop Software

In addition to NLD, costs for CrossOver Office should be included

CrossOver Office is a commercial implementation of WINE

WINE (WINE Is Not an Emulator) is an open source implementation of Windows APIs

CrossOver allows Windows applications to run on Linux

CrossOver must be licensed, but reduces the cost of migrating app clients

Desktop Admin

Opinions run strong on both sides regarding ease of desktop admin

Our experience has been that desktop admin labor required is the same for Windows, Linux

The same activities must be performed for Linux, Windows

Comparable imaging, software distribution tools exist for both

Comparable admin costs assumes the use of

Novell SUSE LINUX distribution

ZENworks® Linux Management Update Manager (formerly Red Carpet)

Ghost

Migration Costs

Application Migration

Office Migration

Desktop Migration

Training

Help Desk

Program Management

Application Migration

Client-side applications can be migrated to Linux via five paths:

App migration costs will depend on:

Number of applications to convert

Functional complexity of the applications

Underlying application technology

Office Migration

OpenOffice.org can read and write MS Office files, with no loss of content, and almost no loss of format

However MS Office uses VBA, OOo uses OOo Basic

They are similar, but not compatible

There is no automated translation utility (yet!)

Macros and document templates must be rewritten under OpenOffice.org

The cost depends on how widely the enterprise utilizes Office macros and templates

Desktop Migration

Alternatives for migrating desktops and laptops:

User self-install over the intranet

IT assisted install

IT installed

Innovative approaches can reduce the cost, user disruption

Migration Stations

InstallFests

Group Installs

Other Migration Costs

Training

IT will require classroom training

User training should be web-based and self-paced

Help Desk

Plan on costs for higher call volumes than normal

Program Office

Plan on costs for a program office, such as

Communications

Training

IT Operations

etc.

ROI for Linux on the Desktop

For 5,000 users, the three-year IRR is 46%

The ROI will continue to improve

As more software becomes available on Linux, CrossOver will not be required

More browser-based apps will reduce app migration costs

Migration Costs

Is Open Source Right for Us?

Novell Ngage delivery approach

Empowerment

Strategy

Discovery

Proof of
Concept

Direction Setting

Requirements Assessment

Design

Development
& Deployment

Support

Implementation

Project Management

Business focus

Rapid results

Consensus driven

Phased, iterative approach

Leverage existing investments

Open systems and standards-based

Proven tools & techniques

Global best practices

Skills transfer

Complete Lifecycle

Nterprise Linux Services

Strategy

Organization & Process

Where is your Enterprise going?

What is your vision? What are your goals?

What are your problems? What are your opportunities?

How can Open Source capabilities help you meet your objectives?

Technology

What are you technical and application enviroments?

How should you evolve you Open Source technologies?

People and Change

Management

Do you have the right sponsorship for Open Source initiatives?

Will Open Source intiatives face resistance?

How can you secure sponsorship and promote acceptance of change?

Project Manangement

& Governance

What are the main risk factors for your Open Source initiaves?

How do you manage large initiatives?

Will Open Source initiative compete with other initiatives?

Discovery Dimensions

Business Value Justification

Examine

Review Business Objectives

Gather Data

Forecast

Forecast Value Drivers

Forecast Benefits

Forecast Solution Costs

Novell ROI methodology to create CFO-ready business cases for IT solutions

Analyze

Discount Cash Flows

Model Uncertainty and Risk

Review and Refine

General Disclaimer

This document is not to be construed as a promise by any participating company to develop, deliver, or market a product. Novell, Inc., makes no representations or warranties with respect to the contents of this document, and specifically disclaims any express or implied warranties of merchantability or fitness for any particular purpose. Further, Novell, Inc., reserves the right to revise this document and to make changes to its content, at any time, without obligation to notify any person or entity of such revisions or changes. All Novell marks referenced in this presentation are trademarks or registered trademarks of Novell, Inc. in the United States and other countries. All third-party trademarks are the property of their respective owners.

No part of this work may be practiced, performed, copied, distributed, revised, modified, translated, abridged, condensed, expanded, collected, or adapted without the prior written consent of Novell, Inc. Any use or exploitation of this work without authorization could subject the perpetrator to criminal and civil liability.

You can see that Novell Ngage is ready to help your businesses implement ambitious, complex architectures and solutions. But we always start with an entry point that is safe, proven, and comfortable for our customers.

Our approach is very innovative and flexible. It’s not one size fits all. We apply established, proven methodologies to unique, specific business requirements and needs.

This gives us the flexibility to work with different customers in different ways.

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When we’re working with new technology, many customers ask us to begin with a prototype, so they can see the solution in action before they make a commitment.

All these different starting points are designed to help our customers reduce risk, ensure success, and facilitate good, clear communication throughout the process.

We also use a phased deployment approach. This allows us to break projects into segments with clearly defined objectives and deliverables. This facilitates good communication, provides a framework for concrete goals and objectives, and makes it easier to move forward rapidly toward those goals.

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2003-12-08T12:43:39