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By : John Kane
Microsoft Corporation
November 8, 2007
1
Agenda
2
Infrastructure Optimization Management (IOM)
Strategy and Benefits
3
Microsoft-IDC Projects
Product Focused
Desktop
Systems Business Business
Managing Identity
Value of Value of
the and Mgmt
Strategy Windows Access Server
Windows Windows
Vista Vista
Desktop Mgmt (Enterprise) (Midmarket)
Generating
Value
Through
Improving
IT Operations
with
Best Practices Server
Managing Managing
Windows Collaborative
Servers and
Messaging
Systems
4
IT Challenges Today
Technology
Change
Infrastructure
Complexity
Manual Processes
Security
Threats
Poorly Integrated
Solutions
IT Service
Management
Inflexible
Architectures
End-user
Downtime
Cost
Pressures
5
Our Goal
Lower your
IT costs
Improve
your
business
agility
Realize the
Value of your IT
infrastructure
investments
Evolve IT to
become a strategic
asset
6
Aspects of Infrastructure Optimization
Business-linked
Inefficient
SLAs
10
Infrastructure Optimization Model
Business-linked
Inefficient
SLAs
Which
Whichofofthe
thedescriptions
descriptionsabove
above
best
bestmatches
matchesyour
yourcurrent
currentIT
ITenvironment?
environment?
11
Annual IT Labor Costs Comparison by
IT Optimization Level
13
Project Participants, Roles and Recap
ROI Analysis Project Overview
ROI analysis conducted to assess the costs and benefits of implementing the Core
IO Case Study - Standardized for Company XYZ
The project is managed by Jane Smith for the group
Tool, model and data are all third-party standard information created by leading
industry research firms:
IDC
the premier global market intelligence and advisory firm in the information technology and
telecommunications industries.
Over 700 IDC analysts in 50 countries provide local expertise and insights on technology
markets, and our management team is comprised of experienced and respected industry
luminaries.
Alinean
the leading developer of ROI and TCO analysis methodologies and tools.
Over 10 years of intense experience in developing ROI and TCO models and tools. Largest
database of IT spending and TCO benchmarks.
Formed by Gartner alumni and original creators of Gartner TCO Manager/Analyst product
line.
Data collection
Reviews and additional interviews and refinement
Assumptions / Scope
14
Company XYZ Profile / Overview
Company XYZ was analyzed and the following company profile information was
documented with the team:
Industry: Financial Services
Location: United States
Group Analyzed: Mid-Market Segment
Number of users supported: 5,000 users
Users were distributed as follows:
Higher performance workers - 5.0% or 250 workers
Knowledge workers - 47.0% or 2,350 workers
Structured task workers - 33.0% or 1,650 workers
Data entry workers - 15.0% or 750 workers
Road warriors - 10.0% or 500 workers
The organization consists of the following site profile:
3 headquarters / campus / main sites and 30 satellite / branch offices
1 different countries / regions
10 unique business units
55.0% local IT support (versus remote with travel to provide local)
15
Company XYZ Client Profile / Overview
Total number of PCs were found to be: 5,000 including 3,500 desktops and 1,500 laptops. The
current PC profile was found to be as follows:
Microsoft Windows Vista / Vista Enterprise - 0.0% or 0 PCs
Microsoft Windows XP SP2 - 0.0% or 0 PCs
Microsoft Windows XP - 100.0% or 5,000 PCs
Microsoft Windows 2000 Pro - 0.0% or 0 PCs
Microsoft NT4 Workstation and Windows 95/98 - 0.0% or 0 PCs
Non-Microsoft Client Computers - 0.0% or 0 PCs
Total number of thin clients were found to be: 0
Total number of Microsoft Windows Mobile messaging devices was found to be 1,500 and Other
mobile devices were: 0
16
Company XYZ Server, Storage & Network
Profile / Overview
The total number of servers was indicated to be 271, with the following workload profile:
143 File / Print Servers
50 Directory / Networking Servers
33 Security Servers
28 Messaging and Collaboration Servers
17 Other Servers
The current servers were determined to have the following operating system profile:
0 Windows NT Servers
0 Windows 2000 Servers
271 Windows Server 2003 servers
0 Linux Servers
0 UNIX Servers
0 Other OS Servers
The total storage was determined to be 5,189.7 GB in total, with total per server of:
1,430.0 GB for File / Print Servers
500.0 GB for Directory / Networking Servers
330.0 GB for Security Servers
2,441.4 GB for Messaging and Collaboration Servers
488.3 GB for Other Servers
The organization was determined to spend $90,000 WAN networking fees between main sites
and branch offices, and $500,000 annually on dedicated security hardware (not included in
security servers above) for VPN, firewalls for offices
17
Company XYZ Opportunities / Findings
18
Current Practices Assessment
19
PC IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following Optimized PC Infrastructure practices:
Comprehensive PC Security
Notebooks and desktops are equipped with antivirus utilities No
Notebooks and desktops are equipped with anti-spyware/malware utilities No
Notebooks are protected by centrally managed PC firewalls Yes
Network Access Control (NAC) is used for PCs entering the network No
Automated patch distribution system is in place for all notebooks and desktops No
20
PC IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a
Rationalized level by implementing the following Optimized Identity and Access Management with
Active Directory practices:
21
PC IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following Systems Management practices:
22
Server IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following server practices:
23
Server IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following server practices:
24
Server IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following server practices:
25
Server IO Recommendations
Examining the current practices, the analysis indicated that the organization could improve to a Rationalized
level by implementing the following server practices:
26
Expected IT Labor Productivity
Improvements
Annual Labor Costs per User Current (As Is) Optimized Annual Benefits
(To Be) per User
PC Operations and Administration $331.38 $189.27 $142.11
Server Operations and Administration $210.02 $141.35 $68.67
IT Service Desk $204.73 $90.27 $114.46
Tools and Directory Management $39.34 $33.61 $5.73
Total Annual Labor Costs per User $785.47 $454.50 $330.97
Total Annual Labor Costs $3,927,350 $2,272,500 $1,654,850
27
Expected Additional Direct Cost
Avoidance
Annual Costs per User Current (As Is) Optimized Annual Benefits
(To Be) per User
28
Additional Indirect Benefits
Additional Indirect and Business Benefits Annual Indirect and
Business Benefits per
User
Reduced end user operations costs $114.53
Reduced service desk problem resolution downtime $41.44
Reduced PC unplanned downtime $15.45
Reduced PC planned downtime $0.91
Reduced server unplanned downtime $50.72
Reduced server planned downtime $0.52
Reduced security breach user impacts $9.95
Reduced PC data loss / recovery costs $0.96
29
Recommended Microsoft Solutions
The investment to achieve these best practices and implement the requisite infrastructure is estimated to
be $1,227,285 initially, and $2,655,892 over the 3 year analysis period.
The costs consist of $1,227,285 in capital investments, and $1,428,607 in operational investments.
30
Recommended Microsoft Solutions
31
TCO Comparison
Comparing the TCO of the current environment versus the proposed optimization plan indicates a total
available savings of $2,741,704 per year (on average), and $8,225,110 cumulative over 3 year analysis
period.
32
TCO Summary (1-year average)
TCO Comparison Average by Year Solution A Solution B Difference Difference
Current (As Is) - Optimized (To (A - B) (A - B)%
Standardized Be) -
Rationalized
IT Costs
Client Hardware Purchases $2,545,617 $2,669,612 ($123,995) -4.9%
Client Software Purchases $138,335 $226,635 ($88,300) -63.8%
Client Maintenance and Support Contracts $472,875 $472,875 $0 0.0%
PC Power $477,909 $322,590 $155,319 32.5%
Server Hardware Purchases $411,852 $284,070 $127,782 31.0%
Server Maintenance and Support Contracts $674,489 $485,138 $189,351 28.1%
Server Facilities and Overhead $120,004 $85,082 $34,922 29.1%
Server Software Purchases $49,638 $71,941 ($22,304) -44.9%
PC Operations and Administration $1,810,467 $1,034,056 $776,411 42.9%
Server Operations and Administration $1,147,446 $772,261 $375,185 32.7%
IT Service Desk $1,118,523 $493,179 $625,343 55.9%
Tools and Directory Management $214,921 $183,636 $31,285 14.6%
WAN Network Bandwidth $94,575 $94,575 $0 0.0%
Dedicated Security Hardware $525,417 $509,654 $15,762 3.0%
Additional OS Licensing Rights for Virtual PC with $0 $0 $0 0.0%
Vista Enterprise
Incremental Reduction in Image Management $0 $0 $0 0.0%
with Vista Enterprise
Optimized Infrastructure Investment - IT Capital $0 $160,000 ($160,000) 0.0%
Investment
Optimized PC Infrastructure Investment - IT Labor $0 $420,942 ($420,942) 0.0%
and Service
Total IT Costs $9,802,067 $8,286,247 $1,515,820 15.5%
33
Benefits Summary
Examining the benefits from implementing the plan results in cumulative 3
year savings of $6,482,114 in direct benefits, and $6,359,680 in indirect (soft)
benefits.
34
Benefits Summary
Benefits Summary Year 1 Year 2 Year 3 Total
Total Benefits (to Solution B from Current (AS $3,257,178 $4,592,788 $4,991,829 $12,841,795
IS))
Top Benefits
PC Operations and Administration $532,908 $758,506 $826,771 $2,118,185
End User Operations (Indirect) $429,502 $611,325 $666,344 $1,707,172
IT Service Desk $429,219 $610,922 $665,904 $1,706,045
Improve Search Efficiency (Indirect) $392,006 $557,956 $608,172 $1,558,134
Server Operations and Administration $257,517 $366,532 $399,520 $1,023,570
Server Unplanned Downtime (Indirect) $190,208 $270,730 $295,095 $756,033
Service Desk Problem Resolution Downtime $155,405 $221,193 $241,100 $617,698
(Indirect)
Improve Search Effectiveness (Indirect) $153,394 $218,330 $237,980 $609,704
Server Maintenance and Support Contracts $144,219 $198,668 $211,232 $554,118
Current Business Agility - New Applications $128,169 $182,427 $198,845 $509,441
Development and Deployment (Indirect)
All other included benefits $444,630 $596,199 $640,866 $1,681,695
Total Top Benefits $3,257,178 $4,592,788 $4,991,829 $12,841,795
35
Top Benefits
36
Benefits By Goal and Stakeholder
37
Investment Required
The total investment is expected to be $1,227,285 in non-recurring Initial costs, with an
additional $2,655,892 cumulative recurring costs over the next three years.
38
Investment Breakdown
39
Investment Summary
Investment Summary Initial Year 1 Year 2 Year 3 Total
Total Investment $1,227,285 $1,421,663 $3,472 $3,472 $2,655,892
Capital Expenditure
Virtualization Software Licensing (IT) $480,000 $0 $0 $0 $480,000
PC Hardware Upgrade Costs (IT) $371,985 $0 $0 $0 $371,985
Windows Vista Operating System Upgrade Costs (IT) $264,900 $0 $0 $0 $264,900
MOM Licensing Costs (IT) $110,400 $0 $0 $0 $110,400
Security and Identity Access Management Utilities (IT) $0 $0 $0 $0 $0
Client Access Licenses (IT) $0 $0 $0 $0 $0
PC New Hardware Costs (IT) $0 $0 $0 $0 $0
Group Policy Software Utilities (IT) $0 $0 $0 $0 $0
Exchange Server 2003 Licensing Costs (IT) $0 $0 $0 $0 $0
Server Hardware Purchase Costs (IT) $0 $0 $0 $0 $0
New Mobile Messaging Devices (IT) $0 $0 $0 $0 $0
New Thin Clients (IT) $0 $0 $0 $0 $0
Application Development and Customization Software $0 $0 $0 $0 $0
(IT)
SMS Hardware and Software (IT) $0 $0 $0 $0 $0
Windows Server 2003 Operating System Licensing Costs $0 $0 $0 $0 $0
(IT)
Active Directory Hardware and Software Upgrades or $0 $0 $0 $0 $0
Additions (IT)
Microsoft Desktop Optimization Pack Hardware and $0 $0 $0 $0 $0
Software (IT)
Server Hardware Upgrade Costs (IT) $0 $0 $0 $0 $0
Software Assurance (IT) $0 $0 $0 $0 $0
Personal Productivity Software (IT) $0 $0 $0 $0 $0
40
Business Application Software (IT) $0 $0 $0 $0 $0
Cumulative Costs vs. Cumulative
Benefits
41
ROI Analysis
ROI Analysis (Solution B) (Probable Case) Initial Year 1 Year 2 Year 3
Benefits (to Solution B from Current (AS IS)) $0 $3,257,178 $4,592,788 $4,991,829
Cumulative Benefits $3,257,178 $7,849,966 $12,841,795
Investment (Solution B) $1,227,285 $1,421,663 $3,472 $3,472
Cumulative Investment $1,227,285 $2,648,948 $2,652,420 $2,655,892
Cash Flow ($1,227,285) $1,835,515 $4,589,316 $4,988,357
Cumulative Cash Flow ($1,227,285) $608,230 $5,197,546 $10,185,903
ROI 384%
Risk Adjusted ROI 319%
NPV Savings $8,075,926
IRR 211%
Payback period (including deployment period) 10 month(s)
42
Summary of Core IO ROI Analysis
Overall, the proposed infrastructure optimization project is expected to take Company XYZ from:
its current Standardized level
to Rationalized.
The proposed improvements, from the current (as is) IO level, to the proposed (to be), is projected to yield the
following results:
Reduces net total costs per user per year from $2,450.41 to $2,312.87
Improves overall IT productivity through task automation and proactive avoidance, reducing labor related efforts on
Client and Server IT Operations and Administration from:
32.89 full time equivalents (FTEs) in-house resources to 18.49 FTEs under the optimization plan, a reallocation opportunity
of 14.40 FTEs (Year 1)
0.00 FTE out-sourced / contract resources to 0.00 FTEs under the optimization plan, a reallocation opportunity of 0.00 FTEs
(Year 1)
Reduce the need for managed services from $0 to $0 per year (Year 1)
Reduces service desk calls from 5,048.0 total calls per month to 2,852.1 total calls per month
Helps avoid net total capital expenditures for servers, client computers and software of $848,875 over the next 5
years.
Helps avoid net total support and maintenance contract and other non-labor operating expenditures of $2,069,687
over the next 5 years.
Has the potential to reduces indirect costs such as end user operations and downtime per user from $231.38 to
$111.42 per year, a savings of $119.95 per year per user
Yields a total of $6,482,114 in direct benefits, and $6,359,680 in indirect benefits over the next 3 years (risk adjusted
results)
The project will requires a $1,227,285 initial investment and $2,655,892 cumulative investment over 3 years.
Comparing costs and benefits, the project is expected to deliver:
Risk Adjusted ROI of 319%
Net Present Value (NPV) savings of $8,075,926
Payback period of 10.0 month(s)
Risk adjustments include deployment period of 3 months and adoption curve of 100.0%,100.0%, and 100.0% over
each successive year of the analysis.
43
Next Steps
44
IDC Research
IDC Core Infrastructure Optimization White Papers
The relationship between IT labor costs and best practices for managing the Windows deskt
op
The relationship between IT labor costs and best practices for identity and access managem
ent with Active Directory
Windows Server Best Practices (TBD)
The relationship between IT labor costs and best practices for Systems Management Server
Messaging and Collaboration Best Practices (TBD)
Developing an IO Strategy (TBD)
Analysis of the value of Windows Vista
45
This analysis report should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of the report. This
analysis report is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS DOCUMENT.
Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rights under copyright, no part of this report may be reproduced, stored in or introduced into a retrieval
system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Microsoft Corporation.
Microsoft may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this analysis. Except as expressly provided in any written license
agreement from Microsoft, the furnishing of this analysis does not give you any license to these patents, trademarks, copyrights, or other intellectual property of Microsoft.
46
Appendix A: Additional Benefits – Vista
Enterprise
Additional Benefits of Vista Enterprise Annual Benefits per PC for Vista Enterprise
Additional OS Licensing Rights for Virtual PC
with Vista Enterprise $0.00
47
Appendix B: Estimated MDOP Costs and
Benefits
The Microsoft Desktop Optimization Pack for Software Assurance (MDOP) is a
dynamic desktop solution available to Software Assurance (SA) customers,
which employs innovative technologies to help reduce the TCO of the
Windows desktop by accelerating OS and application management, and
enhancing IT responsiveness and end-user uptime.
MDOP is a product suite of technologies that includes:
SoftGrid Application Virtualization: Microsoft SoftGrid Application
Virtualization dynamically delivers applications to PCs reducing application
deployment and support costs.
Asset Inventory Services (AIS): Microsoft Asset Inventory Services
provides intelligence about installed software on an organization’s PCs.
Diagnostic and Recovery Toolset (DART): Microsoft Diagnostic and
Recovery Toolset reduces the time it takes the service desk to diagnose
and repair PCs.
Advanced Group Policy Management (AGPM): Microsoft Advanced Group
Policy Management simplifies the management of Group Policy Objects in
an organization.
Desktop Error Monitoring (MSCDEM): Microsoft System Center Desktop
Error Monitoring enables IT to proactively manage problems with
applications and system components that crash or cause live PCs to hang
48
Appendix B - continued
Note: this assumes 100% benefit realization over 3 years and 0 month Implementation Period
49
Appendix B - continued
The table below summarizes estimated costs per PC to deploy MDOP:
50
Appendix B - continued
This tool estimates 4 types of benefits that MDOP enables. The first 3 impact IT Labor. The 4th impacts user labor (an
indirect/intangible benefit).
•Best Practice "Sustain" Benefits: MDOP is expected to significantly reduce the costs to maintain (or enhance benefits
of) 5 of the 7 IDC best practices. This is an annual/on-going benefit that applies to any of these 5 best practices that the
company has already implemented or plans to implement.
•Best Practice Implementation Benefits: MDOP also can help to significantly reduce the costs of implementing 5 of the 7
best practices. This is a one-time benefit for any of the 5 best practices that the company plans to implement.
•Other IT Labor Benefits: MDOP also enables various other benefits that are not modeled via the IDC best practices.
Example: DART's ability to reduce help desk issue resolution time.
•User Labor Benefits: MDOP can significantly reduce user labor (e.g. PC issue resolution time and downtime)
These benefits (per PC) are summarized below:
51
Appendix B - continued
The best practice-enabled benefits per PC are shown below by best practice:
52