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Evaluating the ROI of Open Source on the Desktop

Linux and OpenOffice are ready for your business

When people hear that open source software is often free and overall cheaper than proprietary solutions, they're intrigued. But how much cheaper is another question. What other costs are involved? This article examines the budgetary impact of migrating corporate desktops to open source solutions. This is one of many areas where open source can positively impact IT budgets.

Classifying Desktops
The first step in evaluating the license savings on the desktop is to determine which desktops in your organization are candidates for migrating to Linux, OpenOffice, or both.

Step One: Inventory and Distribution
Do a complete inventory of desktop applications in your organization. Be sure to interview users directly, since some may be dependent on Windows-specific applications that the IT department neither knows about nor supports. Once you have an accurate inventory of desktop applications, the next step is to map this to the list of desktops in the organization. It may be easier to map your list to the organizational chart. You will end up with a picture of not only the applications used, but also how they are distributed.

Step Two: Dividing Desktops into Three Categories
The next step is to divide the desktops into three categories:

  1. Those that can migrate to Linux and OpenOffice
  2. Those that require Windows, but can migrate to OpenOffice (Windows version)
  3. Those that must remain with Windows and Microsoft Office
Those candidates for migrating to Linux will include desktops that must meet basic needs, such as word processing, e-mail (even Outlook), a Web browser, and maybe a terminal emulator. Browser-based applications will need to be tested in a Linux (non-Internet Explorer) browser to ensure that a replacement is possible. The Windows version of OpenOffice could replace Microsoft Office on those desktops that require other Windows-specific applications. There are likely to be some desktops, however, that will continue to require Windows and Microsoft Office. Anyone who needs to share documents containing complex macros with other Microsoft Office users should stay with Microsoft Office for now.

Step Three: Calculating Totals
After evaluating the desktops in your environment, you should know the total numbers of each of the three classifications. Sorting by department will probably make it easier to track, and the worksheet discussed later in the article will help. Now that you have determined your particular mix of desktops, and their potential for migration, we can move on to the associated cost savings.

The ROI Formula
First, let's define ROI for the purposes of this exercise. Calculating a return on investment can be simple or very complicated, depending on the intangibles you try to quantify. But quantifying intangibles provides less "hard evidence" than the cost of acquisition. So for the sake of simplicity and credibility, we will look at the initial investments in software infrastructure with the knowledge that the greatest savings are long term in productivity, administration, and security.

Using general estimates for the cost of deployment, we will use a cost-benefit calculation to get a rate of return on the investment required to perform the migration. In other words, we will calculate a percentage from the benefits received (money saved) divided by the cost to deploy:

ROI = money saved/cost to deploy

Savings
First we'll outline the savings from software licenses starting with the obvious - the operating system and Microsoft Client Access Licenses (CALs).

Operating System and Client Access Licenses
You will save on each operating system license that you are able to replace with Linux. You also drop the CALs required for that desktop to access Windows servers in the environment (providing you are choosing to migrate to Linux file and print servers as well). The prices your organization paid are likely to vary, but retail pricing is as follows.

Microsoft Windows Operating System pricing:

  • Windows XP Professional: $299
  • Windows XP Professional upgrade (limited): $199
Microsoft Windows Client Access License pricing:
  • Windows Server CAL 20-pack: $799
  • Windows Server 2003 CAL pricing is the same as above.
Make sure to count each time you pay for the operating system, too. In the case of Windows, many organizations end up paying twice: once to the hardware vendor, and again in a software contract agreement, like Software Assurance. This may sound ridiculous, but it is very common and expensive oversight.

There has also been a perception until now that the cost of Microsoft operating system licenses is built into the cost of the hardware, since license and hardware costs are typically paid on the same invoice. Because of this history of paying for Windows through the hardware vendor, many people have never thought about the actual cost of the operating system software. Now that hardware vendors are selling systems preloaded with Linux, the additional expense is becoming more obvious. Performing your own installs on white-box PCs results in even more savings.

How you calculate your client license savings can be a little complicated, depending on how you paid for them. The simplest case, and one that is common in small to mid-sized organizations, is to pay for them on an as-needed basis, usually in packs. To get an accurate estimate of your anticipated savings, you'll need to look up how your organization bought the licenses. If you paid for them as part of a larger package agreement, then you may have to do some estimating to arrive at a value per client access license.

Office Suite Licenses
You will really start to see the savings add up for each desktop that can use OpenOffice. The dollar figures are highly subjective, and can be anywhere from around $50 per seat negotiated for educational organizations to $400 per seat retail. You will need to know how much your organization pays for Microsoft Office in order to come up with credible numbers. If you don't have a record of Office itemized, then use the standard OEM pricing of about $300.

Microsoft Office pricing:

  • Office XP Standard $399
  • Office XP Standard Upgrade $239
  • Office XP Professional (includes Access) $499
  • Office XP Professional Upgrade $299
Upgrades are only allowed from Office 97 or Office 2000. The cost of Office XP Professional when bought preinstalled from a vendor like Dell is about $300.

Again, make sure you count each time the organization paid for Office. If you bought Software Assurance, but purchased your hardware with Office installed, then you need to count both expenditures. If this is the case for your organization, then first divide the contract covering Office by the number of desktops to get a per-desktop figure. If you don't have an actual figure to use for the original expense related to hardware, a good rule of thumb is to calculate the price by which a major vendor like Dell reduces an order without Office. This information is easily obtained, and the worksheet referenced at the end of this article contains a reasonable figure that you can use.

Making available a few copies of Microsoft Office via a terminal server is a good way to ensure that everyone will always be able to open a complex document.

Hardware Savings
Linux requires a little less power than newer versions of Windows, and can use older machines in many cases. Some organizations have saved money by stretching the life of their hardware. This will be a factor if you find that you are able to keep hardware that would have to be upgraded for another operating system for another couple of years.

Staffing Savings
In a 2002 survey report titled "Total Cost of Ownership for Linux Web Servers in the Enterprise," the Robert Francis Group found that the three-year cost of Linux was two and one-half times cheaper than Windows, and seven and one-half times cheaper than Solaris. One reason Linux was cheaper was its reliability. Respondents evaluating Windows and Solaris reported that security patches and accompanying reboots took longer to administer, requiring more staff. Another reason was a reduced effort in responding to viruses and Internet worms. According to the survey, the ratio of administrator to server was 44 for Linux and 10 for Windows. Average salaries for Linux administrators were about 4% higher than for Windows administrators, and about 20% lower than for Solaris administrators. Taking these factors into account, the staffing costs of Linux were less than one-fourth the staffing costs for Windows on the server side. Although the Robert Francis Group survey addressed Web servers exclusively, their findings should apply to other Linux installa-tions. At the time of this writing, no similar survey has been conducted for the desktop.

How these savings are realized will depend on the organization. Some IT shops may downsize the staff to reduce the budgetary requirements. Others may reprioritize staff efforts, freeing up time for back-burner projects.

Costs
Although many open source products are either free or low cost, there will, of course, be expenses associated with any migration. Hiring outside help from a systems integrator is likely to be the largest expense. If you normally hire outside help for Windows upgrades, however, then this expense will approximately cancel itself out in comparison to services you would normally purchase. Training can also be an important factor, and the possible downtime of a first-time migration also needs to be considered. Depending on how you end up mixing and matching Windows and Linux desktops, there may be additional software that you need to purchase to make it all work seamlessly.

Training Expenses
Training is often mentioned as the biggest expense, but it depends on your current staff. All-Microsoft IT outfits with no Unix experience are not advised to begin anything more than a pilot migration project without some retraining and a new Linux hire. The Robert Francis Group survey "Total Cost of Ownership for Linux Web Servers in the Enterprise" found no real difference in the cost of training and certification between Linux, Windows, and Solaris. Training is included here as a cost, however, because so many organizations have reduced training spending due to the technology recession. Online classes can save a little, especially if you would otherwise incur travel expenses. Don't overlook your local community college, either - these inexpensive classes are frequently taught by local system administration professionals for the chance to improve speaking skills. Additionally, participation at your local Linux User Group is a good way to gain valuable training and knowledge.

One of the most important things you can do to help your staff learn Linux is to encourage them to attend your local Linux User Group. These groups are your best source for tips, support, and advice on specific products that run on Linux. In general, groups comprising professional system administrators are more relevant than university groups. If you tap into this network of experienced, smart, and helpful people, you will find that knowledgeable assistance is just an e-mail away.

Downtime During Migration
Another factor that can cut into your return is the downtime during the migration. A longer-than-normal downtime is likely to happen if this is the first Linux deployment your staff has performed. It is almost certainly going to be more cost effective for the first round of deployment to be outsourced to an experienced consulting group. Let them mentor your staff so they'll be prepared for the next round.

Consulting Fees
If internal staff normally conducts Windows upgrades, then you're not likely to have consulting fees associated with your first wave of migrations, provided your staff are capable of the task. If you normally hire a systems integrator to do this work, then the rates are likely to be comparable. Your local Linux User Group (a professional group, not a university group) can help you locate a vendor if you need some recommendations.

Additional Required Software
There may be software that you need to purchase for some desktops if you migrate to a hybrid Windows-Linux environment. For Windows desktops that use OpenOffice, you may need to purchase Outlook and a connector if you're using Microsoft Exchange or an Exchange clone.

Putting It All Together
Now that you have a count of the desktops that are potential migration candidates, it's time to calculate the ROI of the migration. To make this easier, you can download the worksheet at http://windows-linux.com/LinuxWorld/ DesktopROI.html and fill in your values. The cost-benefit formula is already in the spreadsheet.

First, fill in the assumptions at the top of the spreadsheet based on your organization's historical budgetary data. The default values are typical of OEM pricing. The values for costs to deploy are based on fees you can expect from a typical small consulting company, but larger consulting companies may charge more. If your internal staff will perform the deployment, then you may choose to reduce the estimated cost. It is not possible to generalize for every reader, but the default values are intended to give you a basis for your estimate.

Next, list your departments and the number of migration candidates for each one. Again, you will have two categories of desktop migration: those for which you will replace Microsoft Office with the Windows version of OpenOffice, and those that you will migrate to Linux and OpenOffice. Once you have this data filled in, the spreadsheet will automatically calculate the ROI of migration.

Timing
Because pricing for software is subject to how it was negotiated and purchased, you will need to look at your internal historical budget data in order to calculate an accurate return on a migration investment. Naturally, this brings up the question: Why do I want to migrate anything if I have already paid for what I have now? The answer is that you don't. Any migration to open source should follow the hardware upgrade cycle, the software agreement cycle, or expansion. The time to begin planning, however, is well before these events force the next upgrade. For many organizations, the time to make a move will be when their Software Assurance agreement expires.

Conclusion
With the introduction of good, stable replacements for Microsoft Word, Excel, and PowerPoint for Windows and Linux, and for Microsoft Outlook on Linux, it is now possible to migrate many desktops to at least some open source software. The dramatic result is cost savings and an impressive return on the migration investment. A well-presented spreadsheet can be used to prove in business terms that Linux and OpenOffice on the desktop are worthy of serious consideration.

Reference

  • Robert Francis Group report, "The Total Cost of Ownership for Linux Web Servers in the Enterprise," 2002.
  • More Stories By Maria Winslow

    Maria Winslow is the author of The Practical Manager's Guide to Open Source, available at http://www.lulu.com/practicalGuide and can be contacted at [email protected]

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