I talk to a lot of potential customers about virtual desktops.  Frankly, I don’t see financial types at these meetings.  The guys I meet are there to solve a problem or, in most cases, multiple problems.  This runs the gamut: from managing outsourced workers or handling a merger efficiently to locking down desktop data.  They want to know how virtual desktops will integrate into existing environment, whether their users will accept the technology, and how to the architect the solution.  We’re the ones that mention TCO savings first. Of course there is a lot of discussion about licensing costs, server requirements, Microsoft licensing and the like.  But, really, I’m talking to a bunch of people who are prepared to spend money for a strategic enterprise solution, not bet their careers on a bean-counter’s spreadsheet.

When do they start talking about TCO?  Last year, it was only when the CFO had to sign off on the PO.  Recently, it’s when the IT dept sees their budget starting to fade away.  Scenario 2 is obviously on the upswing as IT budgets get slashed due to huge gaping holes in 2009 revenues.  Of course, the Finance folks still don’t come to the meetings. The guys that do come are still primarily concerned with meeting their strategic goals; it’s just that they need to learn how to spell ROI and TCO. So what about Return on Investment and Total Cost of Ownership?  (See, I spelled it out for those folks who really are finance-challenged.  Don’t be embarrassed.  It’s a badge of honor!)  ROI is the net present value (NPV), ie. put into today’s dollars, of the cost savings divided by the cost of buying the solution.  Of course, something greater than zero is what we want – better than 50% is good.  TCO is the cumulative cost of purchasing and maintaining your infrastructure including power costs, training, etc.
I have netted out these costs based on analyst estimates of PC and virtual desktop OS/app support and power/cooling costs.  If Bottom line is that you can save 50% on Desktop Administration costs and about the same on power and cooling by running Desktop Virtualization to thin clients.  you are really serious, you can start selling carbon credits if you deploy enough of these devices. For 1000 desktops, all this represents over $1M in savings over 3 years. Add in around 60% savings in app admin using built-in application virtualization and it’s another $400K or so.  For those of you that have figured out ROI, this is a ROI of more than 75%, given list prices for the technology, servers, storage, and clients. When you re-purpose your old PC’s, overall ROI is a lot higher but you lose the green benefits. Desktop Streaming can cut TCO by another $500K or so for 1000 users.     

What actually generates these desktop management savings?  I like to think of it as how you managed desktops before (the old way) and how you manage them now that they are virtual (the XenDesktop way).  The old way, configuring/upgrading/repairing hardware required a long turnaround and site visit. You actually had to get to the box and do config changes or, worse, take the machine back to your desk to re-image. With XenDesktop, you can send a thin client to the site with minimal or no configuration and let the new user login to their VM. Or an existing user with bad hardware can grab a new box (Repurposed PC or thin client), plug it in and log on.  Patching OS, reimaging systems, resolving corruptions, the old way, were done per user, per incident. Now using XenDesktop single image management (OS Streaming) you simply update one OS image to roll out a patch or update automatically to thousands of users.  The old way, moves, adds, changes, and deletions took hours.

The XenDesktop way requires a few seconds to add/delete new users and VMs from the safety and comfort of your own workstation.  Data recovery, archiving, and backup is difficult on distributed PCs. You have no control on whether the user leaves their PC on for an automated backup.  In a lot of cases, you depend on the user to do backup procedures, which, let’s be honest, hardly anyone actually does.  The XenDesktop way, we just have to backup data files and user settings. And we can do that any time we want since the data is in the data center. So a full backup or restore is quick and easy and the user may never know it happened. I have summarized savings estimates here below:   

Desktop Management Activities % of overall mgmt costs Est. cost impact with XenDesktop
Configuring/upgrading hardware 40% 80% lower cost
Patching OS, reimaging, resolving corruptions 25% 30% lower cost
Data recovery, backup, archiving 10% 80% lower cost
Moves, adds, changes 25% 30% lower cost  

The same thing goes for application management.  The old way, you might now even know what endpoint you were dealing with, what OS, what other scary apps were installed when you were asked to rollout a new app to 2000 users.  With Citrix, apps are isolated from OS/Hardware and other apps, giving you absolute certainty that an app will appear on your virtual desktop and run fast and reliably.  Just like the OS, apps are installed once on the server farm and can be delivered to thousands of users in a few seconds.

 So, for those of you who are getting hit by the bean counters when building their strategic virtual desktop solution, try trotting out some of the numbers I mentioned.  That should keep them quiet long enough for you to push your project through.  And, now, you can amaze them with your knowledge of ROI and NPV.  And by the way, don’t wimp out with a small pilot; centralize the whole PC population with a quarter of the upfront cost that VMware would quote.   

Folks, drop a post describing your experience with TCO/ROI and desktop virtualization.  Has anyone done cost studies on existing desktop deployments?  What do you think can be saved by moving to virtual desktops?       |