Look before you leap
NEW DELHI: There is nothing like free lunch. Businesses usually fail to include both direct and indirect costs throughout the lifecycle of the IT asset while calculating the total cost of ownership (TCO).
The TCO evaluation should go beyond the initial purchase cost of a hardware or software to include pre-implementation soft costs and post-implementation operation, support, maintenance, downtime and training costs.
According to Frost & Sullivan, hardware is the largest component of TCO of Indian enterprises, while software cost is just about 15 per cent of the capital expense and just 6.8 per cent of TCO. Soft costs (costs related to planning, configuration and project management of server environment) are about 17 per cent of TCO, while maintenance and downtime costs constitute about nine per cent each of TCO in Indian enterprises.
The F&S report on TCO, which is audited by Cap Gemini and commissioned by Microsoft, compares the TCO of Windows based applications ecosystem vis-à-vis Linux based applications ecosystem. The report also points out that Windows 2003 offers a 15.9 per cent lower TCO as compared with the Linux environment. The initial costs (capex) for the Linux operating system might be low but the operating expenses (opex) could be significantly higher as compared to the Windows 2003 operating system.
According to the report, on an aggregate level, Windows Server 2003 has 59 per cent lower training costs, 35 per cent lower upgrade costs, 25 per cent lower downtime costs, 667 per cent lower cost of Installation, 62 per cent lower maintenance costs and 30 per cent lower soft costs. For the five-workloads compared, Microsoft Windows 2003 has a clear TCO advantage over Linux for Application, Networking and Mail servers.
Linux Servers’ higher costs can be attributed to relatively low availability of IT professionals trained on Linux servers and tools. Installation costs are 667 per cent higher in the Linux environment reflecting the gaps in maturity to work in an enterprise environment. According to the report, Windows 2003 also gains by higher supply of qualified IT professionals thus decreasing acquisition costs and easier problem solving and trouble shooting because of better documentation and support.
Windows has a clear cost advantage over Linux in application servers. The TCO of Linux is 22.4 per cent higher than that of Windows 2003. Linux application server despite having low capital expenditures, cost significantly higher in operational expenses.
While Windows 2003 starts with a distinct disadvantage by way of higher software and hardware costs, overall costs are more than mitigated owing to the mature ecosystem created around windows environment. The windows advantage includes 59 per cent lower training costs, 35 per cent lower upgrade costs, 25 per cent lower downtime costs, 667 per cent lower cost of Installation, 62 per cent lower maintenance costs and 30 per cent lower soft costs.
F&S ICT practice director – consulting Dr. TR Madan Mohan recommended that there is nothing like a free lunch and a lot of things we assume as free are not free and there are a lot of hidden cost of installation, not enough trained people and integration cost associated with it.
He added, “There is lot of other costs associated with server deployment and these include training, upgrade and maintenance cost. If we consider all this, we will find that Windows 2003 performs extremely better on multiple workloads in application, networking and mail server. The performance difference on the other servers like web and file/print servers is not very high. Eighty per cent of deployment today is on the first three servers where TCO advantage of Windows 2003 is higher.”
Dr. Mohan also recommended that from a CIO’s perspective when you are making new deployments, it makes strategic sense to deploy Windows 2003 because several other associated costs are lower thereby lowering the total TCO.
He added, “Thirdly, your opex is almost same as your capex cost. Please look at the overall cost and realize that there are lot more advantage of implementing Windows 2003 than open source platforms.”
Giving the rationale behind commissioning this study, Microsoft India competitive strategy director Radhesh Balakrishnan said, “From a development model perspective we have learnt a lot from open source. But 95 per cent of all open source software is commercialized and then the cost of acquisition comes into play. Although companies do not pay for licensing, they do pay for support, training, etc and this is where TCO comes into play. We commissioned this study because Indian customers want India specific data as labor market is different in India, need for computing can be different.”
He added, “Microsoft Windows server share of shipment over the last four – six quarter has been in the 65 per cent -68 per cent range and has stayed the same. In the server market, either Linux or Windows is replacing Unix. So the net gain is between the two. Going forward, while targeting customers, this study would be a good proof point that customers have been asking for.”
The research was conducted on 54 organizations (both high end and mid tier) across BFSI, manufacturing, public sector and government, ITeS, BPO and telecom verticals. The target respondents consisted of senior IT professionals (consisting of CIO, CTO, Head of Information Technology, general manager - Information Technology, Senior IT managers, Senior System Analysts) of large and mid-sized enterprises (500 and more employees).
Source: http://www.ciol.com/content/news/2006/106110703.asp?nl=7_204540_Nov7
The TCO evaluation should go beyond the initial purchase cost of a hardware or software to include pre-implementation soft costs and post-implementation operation, support, maintenance, downtime and training costs.
According to Frost & Sullivan, hardware is the largest component of TCO of Indian enterprises, while software cost is just about 15 per cent of the capital expense and just 6.8 per cent of TCO. Soft costs (costs related to planning, configuration and project management of server environment) are about 17 per cent of TCO, while maintenance and downtime costs constitute about nine per cent each of TCO in Indian enterprises.
The F&S report on TCO, which is audited by Cap Gemini and commissioned by Microsoft, compares the TCO of Windows based applications ecosystem vis-à-vis Linux based applications ecosystem. The report also points out that Windows 2003 offers a 15.9 per cent lower TCO as compared with the Linux environment. The initial costs (capex) for the Linux operating system might be low but the operating expenses (opex) could be significantly higher as compared to the Windows 2003 operating system.
According to the report, on an aggregate level, Windows Server 2003 has 59 per cent lower training costs, 35 per cent lower upgrade costs, 25 per cent lower downtime costs, 667 per cent lower cost of Installation, 62 per cent lower maintenance costs and 30 per cent lower soft costs. For the five-workloads compared, Microsoft Windows 2003 has a clear TCO advantage over Linux for Application, Networking and Mail servers.
Linux Servers’ higher costs can be attributed to relatively low availability of IT professionals trained on Linux servers and tools. Installation costs are 667 per cent higher in the Linux environment reflecting the gaps in maturity to work in an enterprise environment. According to the report, Windows 2003 also gains by higher supply of qualified IT professionals thus decreasing acquisition costs and easier problem solving and trouble shooting because of better documentation and support.
Windows has a clear cost advantage over Linux in application servers. The TCO of Linux is 22.4 per cent higher than that of Windows 2003. Linux application server despite having low capital expenditures, cost significantly higher in operational expenses.
While Windows 2003 starts with a distinct disadvantage by way of higher software and hardware costs, overall costs are more than mitigated owing to the mature ecosystem created around windows environment. The windows advantage includes 59 per cent lower training costs, 35 per cent lower upgrade costs, 25 per cent lower downtime costs, 667 per cent lower cost of Installation, 62 per cent lower maintenance costs and 30 per cent lower soft costs.
F&S ICT practice director – consulting Dr. TR Madan Mohan recommended that there is nothing like a free lunch and a lot of things we assume as free are not free and there are a lot of hidden cost of installation, not enough trained people and integration cost associated with it.
He added, “There is lot of other costs associated with server deployment and these include training, upgrade and maintenance cost. If we consider all this, we will find that Windows 2003 performs extremely better on multiple workloads in application, networking and mail server. The performance difference on the other servers like web and file/print servers is not very high. Eighty per cent of deployment today is on the first three servers where TCO advantage of Windows 2003 is higher.”
Dr. Mohan also recommended that from a CIO’s perspective when you are making new deployments, it makes strategic sense to deploy Windows 2003 because several other associated costs are lower thereby lowering the total TCO.
He added, “Thirdly, your opex is almost same as your capex cost. Please look at the overall cost and realize that there are lot more advantage of implementing Windows 2003 than open source platforms.”
Giving the rationale behind commissioning this study, Microsoft India competitive strategy director Radhesh Balakrishnan said, “From a development model perspective we have learnt a lot from open source. But 95 per cent of all open source software is commercialized and then the cost of acquisition comes into play. Although companies do not pay for licensing, they do pay for support, training, etc and this is where TCO comes into play. We commissioned this study because Indian customers want India specific data as labor market is different in India, need for computing can be different.”
He added, “Microsoft Windows server share of shipment over the last four – six quarter has been in the 65 per cent -68 per cent range and has stayed the same. In the server market, either Linux or Windows is replacing Unix. So the net gain is between the two. Going forward, while targeting customers, this study would be a good proof point that customers have been asking for.”
The research was conducted on 54 organizations (both high end and mid tier) across BFSI, manufacturing, public sector and government, ITeS, BPO and telecom verticals. The target respondents consisted of senior IT professionals (consisting of CIO, CTO, Head of Information Technology, general manager - Information Technology, Senior IT managers, Senior System Analysts) of large and mid-sized enterprises (500 and more employees).
Source: http://www.ciol.com/content/news/2006/106110703.asp?nl=7_204540_Nov7
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