Welcome!

Linux Containers Authors: Elizabeth White, Mano Marks, Mehdi Daoudi, Pat Romanski, Carmen Gonzalez

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
    You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
    WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus o...
    Big Data engines are powering a lot of service businesses right now. Data is collected from users from wearable technologies, web behaviors, purchase behavior as well as several arbitrary data points we’d never think of. The demand for faster and bigger engines to crunch and serve up the data to services is growing exponentially. You see a LOT of correlation between “Cloud” and “Big Data” but on Big Data and “Hybrid,” where hybrid hosting is the sanest approach to the Big Data Infrastructure pro...
    In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
    Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists peeled away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud enviro...
    With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
    "LinearHub provides smart video conferencing, which is the Roundee service, and we archive all the video conferences and we also provide the transcript," stated Sunghyuk Kim, CEO of LinearHub, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
    Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
    "There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
    The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
    Discover top technologies and tools all under one roof at April 24–28, 2017, at the Westin San Diego in San Diego, CA. Explore the Mobile Dev + Test and IoT Dev + Test Expo and enjoy all of these unique opportunities: The latest solutions, technologies, and tools in mobile or IoT software development and testing. Meet one-on-one with representatives from some of today's most innovative organizations
    SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 7-9, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and E...
    SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
    20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
    WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
    "Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
    WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
    "A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
    DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
    WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, introduced the technologies required for implementing these idea...