Welcome!

Linux Containers Authors: Elizabeth White, Yeshim Deniz, Jignesh Solanki, Stackify Blog, Pat Romanski

Related Topics: Linux Containers

Linux Containers: Article

TCO Comparisons: The Real Story

How to really read an analyst's report

There has been some controversy recently over a Microsoft-commissioned TCO (total cost of ownership) study claiming that the long-term cost of Windows is lower than that of Linux. It's time to clear up the confusion.

TCO Primer

Let's start with the basics of TCO. When we talk about measuring the total cost of ownership, it is important to understand what that measurement will actually tell us. TCO is defined as the total cost of a particular item over its useful life. It includes the cost of acquisition, maintenance, support, and disposal. In short, it includes everything you will ever spend on the item, and is useful for understanding future costs that may not be apparent at the time of deployment.

In theory, calculating TCO is easy. Simply add up all the expected costs over the life of the item you are measuring. In practice, however, this can be a little tricky, which is why most organizations don't actually track TCO. A number of factors are typically included in TCO calculations, including hardware costs, software licensing, initial costs to deploy, purchased support contracts, staffing costs, and additional overhead. The following is an overview of the TCO?process:

  • Plan to calculate for each class of system (file server, Internet-related server, desktop, etc.)
  • Determine hardware costs
  • Determine software licensing costs
  • Determine deployment costs (outsourced deployment, for example)
  • Determine support costs, extend to expected life of system
  • Determine staffing costs to maintain system
    -Determine number of staff supporting system
    -Determine hourly costs based on salaries
    -Determine percentage of time spent supporting system
    -Determine total number of staffing hours over expected life of system
    -Calculate dollar value of total staffing hours
  • Determine any additional costs for overhead
  • Add it all up
Some items on the list are fairly straightforward, such as hardware, software, and support contract costs. Staffing costs can be trickier, especially if your company doesn't have experience with the new technologies. If it were easy, of course, everyone would routinely calculate TCO figures. But it's important to at least have an idea of what's involved.

The Analysts' TCO Comparisons

There have been just a few studies of the TCO for Linux, all looking at costs for servers. An independent study, "Total Cost of Ownership for Linux in the Enterprise," conducted in 2002 by the Robert Francis Group, compared the total costs of enterprise Web servers on Linux, Windows, and Solaris. Data was drawn from actual experiences of interview participants. They found that the three-year total cost of Linux was two and half times cheaper than Windows, and seven and a half times cheaper than Solaris. One reason Linux was cheaper was its reliability. Respondents reported that security patches and accompanying server reboots took longer to administer on Windows, 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 systems per Linux administrator, and 10 systems per Windows administrator. 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. Again, this data came from asking interview participants about their already-deployed systems, and so involved real-world experiences rather than speculation.

IDC released a similar study in 2003 comparing Linux and Unix. Sponsored by Red Hat, "Linux and Intel-Based Servers: A Powerful Combination to Reduce the Cost of Enterprise Computing" was based on an earlier report that surveyed 142 companies about costs associated with Linux and RISC/Unix servers. No comparison was made with Windows in this study. IDC found that the TCO of Linux was a little more than half that of Unix for Internet/intranet workloads, and about one fifth that of Unix for collaborative workloads. IDC defined "collaborative workloads" as e-mail, group calendaring/scheduling, shared folders/databases, threaded discussions, and custom application development. The calculations did not include support contracts for hardware or software, but these costs are likely to be higher for Unix.

Microsoft commissioned a report, also from IDC, on the TCO of Windows versus Linux. This report, "Windows 2000 Versus Linux in Enterprise Computing," is currently being promoted in their "Get the Facts" marketing campaign against Linux. This study examined costs in five workloads: network infrastructure, file serving, print serving, Web serving, and security applications. They found the TCO of Windows to be comparable, or superior (meaning cheaper), to every workload except Web serving. The costs of software were calculated as being higher for Linux than for Windows. Staffing costs were also calculated as being higher for Linux.

The Yankee Group claimed in a recent press release that they have completed a study showing that Linux is "not a low-cost alternative to Unix and Windows for large enterprises." Their analysis is that small firms may benefit from a limited migration to Linux, but that Linux did not bring a measurably improved TCO to large organizations. The Yankee Group did not respond to requests to view the report by the deadline for this article, so the analysis here is based on information provided in the press release.

How Can These Reports Be So Different?

How did these studies arrive at vastly different conclusions? The short answer is that if you are abstract enough with your goals and methodology, are selective with the costs that you include, and ask the right questions, then you can arrive at any conclusion you want. I'll focus on the Linux versus Windows studies, since those are the most controversial.

Abstract Assumptions Don't Translate Well to the Real World

The Yankee Group report claimed that some interviewees reported that "a significant Linux deployment or total switch from Windows to Linux would be three to four times more expensive" than the usual Windows upgrade. Well, duh! There should be little question at this point that the total cost of owning a Linux system can be lower than that of a Windows system, assuming that you do nothing with the machine besides run an operating system. But in the real world, software is required to do work, and there is a great variety of software in use. If your organization requires a collection of disparate Windows-specific applications, for example, then you will have to make a number of changes in order to use Linux instead. You may need to rewrite custom applications, switch vendors of critical systems, retrain users on new systems that are quite different from the old ones, and suffer lower productivity because of awkward choices of replacement open source software. If you were to force these changes, then it is certainly possible that the total cost of those systems over their life cycles would be higher than the status quo given the overall costs to make it work. It is certainly possible to imagine scenarios in which this type of forced conversion would lead to a higher TCO for Linux systems.

The pragmatic approach most organizations take in adopting Linux and open source software is to find those areas where they can use it to gain the most benefit with the least cost and disruption. If you were to blindly convert your entire operation to Linux and open source software, you would save money in some places, but potentially at a great cost and disruption in other places. But let's be realistic - no one indiscriminately replaces one technology with another one wholesale. It was an unrealistic question that produced a meaningless and misleading result.

Real-World Data Is More Valuable than Opinion

It also makes a big difference whether the data was collected from real-world experiences of interviewees or from opinion. In the Robert Frances Group study, interviewees supplied all the data from actual field experiences. In the Microsoft-sponsored IDC study, the methodology is less clear. After several readings of the document, it appears to this author that 100 different North American companies were interviewed to help establish the assumptions that would drive the TCO calculations. In other words, the actual data appears to be at least partially generated, not gathered from field experience.

It should also be noted that this study claimed (in the front page "IDC Opinion" abstract) that "the cost advantages are driven primarily by Windows' significantly lower costs for IT staffing." It is unclear from the methodology description how the staffing costs were calculated. In any case, the results are in dramatic opposition to the data gathered by the Robert Frances Group from practitioners with active deployments.

Omissions Can Make the Data Unrealistic in Practice

In the IDC study that Microsoft is promoting in its "Get the Facts" campaign, suspicious omissions make the data unrealistic for most organizations. When the five-year costs are calculated for each workload, a load of 100 end users is used. The software costs are not broken down, but it is clear that Client Access Licenses (CALs) cannot possibly be included. Perhaps IDC considered them to be a part of the client operating system costs, even though they are required for Windows but not for Linux. This is a very important point because at about $800 per 25 users, the CALs really add up. This means that if you have 400 users instead of the calculated 100, you are adding about $9,600 to the software costs, clearly a significant figure. The apparent omission of the required Client Access Licenses is misleading.

What to Look for in a Study

How do you know who to believe? If you're going to follow the advice in an analyst report, then read the document and ask yourself these questions:
  • Were the interviews based on experience or guessing?
  • Was there actual data from real-world settings?
  • Are cost estimates realistic and inclusive?
  • Do the authors sufficiently describe their methodology so that I can understand how they arrived at the data?
If you're going to follow advice from analysts then read the reports and look for signs of solid methodology and independence in the research. Think about the advice you are being offered, and decide for yourself if it's helpful or not. As you can see, there is a wide discrepancy in the available analyses.

References

  • The Robert Frances Group, "Total Cost of Ownership for Linux in the Enterprise," 2002.
  • IDC, "Linux and Intel-Based Servers: A Powerful Combination to Reduce the Cost of Enterprise Computing," 2003.
  • IDC, "Windows 2000 Versus Linux in Enterprise Computing," 2002.
  • The Yankee Group, "Linux Not A Low-Cost Alternative to Unix and Windows for Large Enterprises, says the Yankee Group," 4/5/04 press release.

    Adapted from Manager's Guide to Open Source Manning Publications, summer 2004.

  • 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]

    Comments (0)

    Share your thoughts on this story.

    Add your comment
    You must be signed in to add a comment. Sign-in | Register

    In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


    @ThingsExpo Stories
    A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
    Imagine if you will, a retail floor so densely packed with sensors that they can pick up the movements of insects scurrying across a store aisle. Or a component of a piece of factory equipment so well-instrumented that its digital twin provides resolution down to the micrometer.
    In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
    Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
    BnkToTheFuture.com is the largest online investment platform for investing in FinTech, Bitcoin and Blockchain companies. We believe the future of finance looks very different from the past and we aim to invest and provide trading opportunities for qualifying investors that want to build a portfolio in the sector in compliance with international financial regulations.
    Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
    Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
    No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
    Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
    In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
    "IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
    When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
    Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
    We are given a desktop platform with Java 8 or Java 9 installed and seek to find a way to deploy high-performance Java applications that use Java 3D and/or Jogl without having to run an installer. We are subject to the constraint that the applications be signed and deployed so that they can be run in a trusted environment (i.e., outside of the sandbox). Further, we seek to do this in a way that does not depend on bundling a JRE with our applications, as this makes downloads and installations rat...
    Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
    DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
    In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...
    Digital Transformation (DX) is not a "one-size-fits all" strategy. Each organization needs to develop its own unique, long-term DX plan. It must do so by realizing that we now live in a data-driven age, and that technologies such as Cloud Computing, Big Data, the IoT, Cognitive Computing, and Blockchain are only tools. In her general session at 21st Cloud Expo, Rebecca Wanta explained how the strategy must focus on DX and include a commitment from top management to create great IT jobs, monitor ...
    "Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
    The IoT Will Grow: In what might be the most obvious prediction of the decade, the IoT will continue to expand next year, with more and more devices coming online every single day. What isn’t so obvious about this prediction: where that growth will occur. The retail, healthcare, and industrial/supply chain industries will likely see the greatest growth. Forrester Research has predicted the IoT will become “the backbone” of customer value as it continues to grow. It is no surprise that retail is ...