Managed Client Impact on the Cost of Computing

By Serenity Systems International

Summary
The computer industry is grappling with enormous expenses represented by an increasing Total Cost of Ownership associated with the computing environment. This document has put forward the elements and models associated with TCO. Serenity Systems has implemented a Managed Client solution which directly impacts many of the major areas associated with TCO. In addition to lowering TCO by attacking operational support and system management costs, the Managed Client can reduce the expenses associated with the cost of acquisition and upgrades.

Using materials provided in this document, it is likely that many organizations can reduce TCO by 30% to 50%. Even greater reductions may be possible for some organizations. All while providing greater responsiveness, user access to applications, reliability, availability, and serviceability.

What are the expenses?
Despite the expense associated with acquiring computer hardware and software, according to most computer analysts this expense is a minor part of the overall business expense. Some industry experts, such as the Gartner Group, put the purchase costs in the range of 20% with the remaining costs associated with managing this resource. A University of Texas Business School 1998 study (1) indicated that over 75% of the annual cost of networked computers is not hardware related.

So, how much do computers cost businesses? In a document from IBM, readers are advised that total cost of ownership can range from an annual cost of $3,520 to $18,000. If the life cycle of a computer can be assigned a period of two or three years, the expense associated with managing and supporting the computer and the user can be measured in tens of thousands of dollars, while the acquisition expense over the same period of time could be measured in hundreds of dollars.

For example, in a feature story on 10/21/97, PC Magazine ONLINE quoted a Gartner Group figure of an annual cost of ownership of $9,784 for a PC running Microsoft Windows 95. If the PC and software had cost the company $2,400, after three years the company would have spent $2,400 or $800 per year to acquire the computer and $30,000 or $10,000 a year to manage and support it.

One of the factors which causes the TCO to be so high for these computers is the independant nature of the devices (see Briefly, the Rise of PCs aka Fat Clients on this site). Therefore, many analysts focus on the tasks associated with managing and supporting networked PCs, the same tasks addressed by WiseManager, as an opportunity to decrease costs. According to analysts, including Gartner Group (2), Forester Resarch (3), and IDC (3), the TCO can be reduced by 25% to 40% by Managed Client type solutions. While individual situations will vary, the WiseManager Managed Client can actually be expected to exceed these ranges because of economies associated with platforms and access to management features.

Total Cost of Ownership
The differences in the range of TCO figures can significant and can be attributed to the types of computer users, applications, and environments, a broad spectrum of business uses. For example, the low end of the range may consist of transaction oriented users, such as reservation agents or customer service agents, who are entering and retrieving information and executing transactions. These workers tend to be specialized, perform limited tasks, the applications and perhaps even hardware may be specialized. As long as the applications tend to be stable, avoiding significant development cost, this group should have a low TCO.

Moving up the range of expense you may find casual users of office computers. These workers tend to have very complete software "loads" or inventories. It is not unusual to find that these workers have a "standard desktop", a set of applications controlled by Information Services. This set of applications is usually far more than the worker requires and the lack of familiarity with seldom used applications or utilities can create support problems.

On the other hand, creating many subsets of the standard desktop can also be very expensive for the IS function to support and manage. So a standard, or "general issue", desktop is created and maintained as a compromise between user needs and support organization. This compromise tends to create problems for both groups and problems translate to expenses. In the IBM document, some of the largest contributors to TCO included systems and network management, development, and support, including operations, help desk, peer and self administered support.

These casual users tend to be overmanned by hardware and software, including large office suites and other software. Generally they find themselves using only a small percentage of this software which comprises their "desktop". The trend is to equip these users with powerful PCs. Not because the tasks performed require a powerful computer, but because the software is driving hardware requirements.

For casual computer users, typical office workers, the computer tends to represent a small part of their overall activity. They become familiar with frequently used tasks, like e.mail, document creation, calendaring, and interacting with a specific data base. They become "application literate" but tend to remain "PC illiterate". In a sense, this is as it should be because their job should not require them to develop technical PC skills. But the result is that this group of user tends to be among the most expensive for a IS services to manage and support.

Calculating The TCO
Calculating a TCO is extremely difficult, however it is also extremely important. An organization must do some work to list activities. A range of expenses must be associated with these activities based on the amount of time associated with the task and the salaries of the personnel performing the task. Without going through this exercise the value and benefit, even the need to change, is difficult to quantify, so effective decisions cannot be made.

To help people calculate what they may actually be paying for the use of the computer, let's outline some of the activities associated with workstations. A spreadsheet based on these tasks is available and can be downloaded to help organizations complete this exercise. Please use this list of activities as a starting point. It may also be necessary to break out additional expenses, such as the training associated with some tasks, or fee paid to service providers and consultants.

A sample case study prepared by IBM is also available on this site. It includes a basic formula for generating a cost of ownership, including a worksheet, and provides a sample. Savings in the IBM example approach 45%. This is consistent with the savings opportunity available using WiseManager and Managed Client products from Serenity Systems.

Here is a list of tasks which can be used as a starting point to develop a Total Cost of Ownership:

It is easy to see two things; why there is tremendous range associated with the total cost of ownership and that the major expenses associated with computers have little to do with the actual purchase expenditure. Computers, which have been positioned as a tool to help companies do business, can themselves become an obstacle to doing business by using resources which could have otherwise been spent on servicing customers.
 * User Needs Assessment
 * Software testing, selection, acquisition, and upgrades
 * Hardware testing, selection, acquisition, and upgrades
 * Associated peripherals, printers, network including upgrades
 * System planning and design
 * Software development, testing, and maintenance
 * Installation and maintenance
 * Hardware
 * Operating Systems
 * Applications and utilities
 * Network Management
 * Trouble shooting and problem resolution
 * Network traffic planning and management
 * Performance tuning
 * User administration
 * Operating System support
 * Systems Management
 * Systems research and planning
 * Travel expenses incurred by support function personnel
 * Software distribution
 * Asset management
 * Security, including hacking and virus protection
 * Configuration and reconfiguration
 * Installation of upgrades
 * Storage Management
 * Disk and file management
 * Storage capacity planning
 * Data access management
 * Back up and archiving
 * Disaster recovery planning
 * Repository management
 * End user operations and support
 * File management
 * Report generation development
 * Formal learning
 * Casual learning
 * Peer support, which can be very expensive and ineffective
 * Time spent on personal adjustments (color pallete, wallpaper, etc)
 * Help desk support
 * Hidden costs, which are activities associated with computer use including hold times while waiting for assistance, non-productive time associated with computer down time, and so forth.
 * Hidden costs, which are activities associated with computer use including hold times while waiting for assistance, non-productive time associated with computer down time, and so forth.

As one works through the expense associated with each of the tasks listed above, a skill set and salary range should be associated with these tasks. The fact is, many of these tasks require the attention of highly paid technical support personnel. In many small accounts, that resource is non-existant. So the task is either not performed, or waits until an outside resource can be contracted. This can have a severely adverse effect on the productivity of the computer users.

Having identified the expenses, it would be appropriate to create a estimated Total Cost of Ownership and this would require a formula or tool to enter, associate, and extrapulate the information. To help work through a cost of ownership model, please see the methodology provided by IBM Network Computing Software Division. An outline of their proposed methodology is available on the site, as well as the ability to download the files which can be used to put the estimates into a spread sheet to examine a specific Total Cost of Ownership.

Managed Client Lowering the Total Cost of Ownership
The Managed Client product, as implemented using WiseManager and WiseClient, was created specifically to address the difficult tasks associated with supporting business computer users. This focus on making it simple to support the computer network, including users, software and hardware, allows the Managed Client implementation to significantly decrease the TCO at a time when most IT services are charting a significant increases in this area.

WiseManager provides a graphical interface which allows an administrator to easily create machines and users, and to associate a set of applications with these machines, users, or group of users by executing simple drag and drop operations. The adminstrator may also create a folder of users or a folder of applications. To provide a set of users with an upgraded version of an application, one drag and drop on to the folder containing those users completes the upgrade!

This offers users the opportunity to greatly simplify their computing environment, emphasizing management and support tasks. It also simplifies the tasks done to create a custom desktop, providing users with more effective access to applications. These features can simplify using the business computer, improving the productivity of end users in addition to lowering the TCO. From a TCO perspective, this simplified desktop can reduce end user related expenses like training or personal adjustments, not just the support related costs.

But on the support expense side, the Managed Client desktop can make it easy to correct problems like corrupt files or deleted icons, improving the availability and reliability of the workstation. Again, this can have a positive impact on the end user. And since the operations can be performed by any workstation, even a remote workstation dialing in to the server, there is a tremendous opportunity to lower the costs associated with support and management.

The hardware associated with a Managed Client can function very effectively without a diskette, CD ROM, or hard drive. Not only can this significantly reduce the expense of the hardware, contribute to security and protection of intellectual property, but can improve the reliability of the workstation. Even if the workstation should experience a catastrophic hardware failure, disconnect the failing unit and connect a new or "spare" workstation. The user is right back in operation without tying up support resources and it is unlikely that any data has been lost. The low cost associated with these workstations make this feasible and attractive.

WiseManager brings about significant ease of use, ease of adminstration, and therefore, a hard dollar savings opportunity. It emphasizes the business tool nature of the computer, and de-emphasizes the focus on technology for technology's sake. At the same time, this fundamental shift improves reliability, availability, and serviceability (RAS), long considered key objectives for any computing environment. Achieving this improves the productivity of both the support organization and the end users, and this can have a significantly more important effect than the TCO, itself.

Rising Cost of Acquisition, the Technology Treadmill
Today's computer environment is vendor driven. By that we mean that computer users are constantly pressured into cyclic upgrades of hardware and software even though the nature of what they are doing with the computer has not changed. For many businesses, this is simply an unnecessary expense and hurts their ability to meet business objectives by siphoning off resources to participate in the unwanted technology (select one: churn, chase, treadmill) churn.

The significant issue as relates to this point is that the computer was intended to be a business tool. However, the organization may wind up spending significant monetary and human resources upgrading hardware and software to follow vendor dictates while receiving no return in the form of improved capacity or productivity. A Managed Client implementation can do much to improve this situation be re-establishing the user control of upgrade strategies and focusing on user requirements.

For example, some Microsoft Windows users experienced this scenario with Windows95 and Office95, and later, Office97. Specifically, even though a user may have found Windows 3.1 and MSOffice to be sufficient for their activities, they begin to find they cannot exchange documents with computer users who are using Office 95. So, they must upgrade to Windows95 and use Office95, only to find that they now need Office97.

The Managed Client implementation is committed to open standards and applications like StarOffice, from StarDivision. StarOffice recognizes and supports more file formats than MS Office, providing more compatibility and a greater ability to exchange information than MS Office, taking control from the vendor and returning it to the user. Now the user can upgrade based on user requirements, not at the whim or mandate of the vendor.

If users are forced into "upgrade churn", in addition to the cost of acquisition users must now begin training on new tasks and interfaces. They may need to upgrade the PC, use a faster processor and use more memory as well as more storage for all the new files associated with the operating system and the applications. And none of these changes were driven by a change in the tasks the user performed. All the expenditures absorbed by this business user were driven by the vendor and proprietary file formats used by the vendor.

Serenity Systems is committed to open standards and working with Independent Software Vendors (ISVs), large and small, to insure that the Managed Client is a premier application platform. Therefore, control regarding changes to applications and platforms can return to a criterion of user requirements and not vendor dictates.

Additional Considerations
The Managed Client tends to run on less expensive hardware (PCs). While some organizations may need to upgrade hardware to support new platforms and applications, the Managed Client may actually provide an opportunity to replace a hardware platform and receive immediate cost savings passed on the reduction of support expense.

The combination of a server managed desktop, which prevents users from damaging files and data, and reduced client hardware devices can improve the reliability and availability of the workstation. Many causes of traditional "downtime" are eliminated while others are reduced. This relieves the associated support expenses and non-productive "wait" times for users.

Putting files, data, applications, and so forth on the server provides a more secure environment. Both from a standpoint of server access, and limiting the ability of users to copy or back off information at the workstation.

The Managed Client is committed to open systems. This means that many existing applications can be carried over to the Managed Client environment, protecting IT investments and reducing operator training expenses.

The goals of Serenity Systems' WiseClient are consistent with those espoused by industry leaders, such as Apple, IBM, Netscape, Oracle, and Sun. These include:

In executing these goals, WiseClient provides the business user with a desktop which can support the company's business requirements and objectives. The company's resource can focus on acheiving those objectives and goals and not on managing computers, networks, and complex user support.
 * Be architecturally neutral
 * Provide a lower total cost of ownership than PCs.
 * Be significantly easier to use and administer
 * Enable security
 * Commit to open systems standards

WiseManager provides users with a simple way to manage the day to day administrative tasks and operations associated with users, applications, and workstations, creating a simple, responsive way to provide users with access to the applications they need when they need them. At the same time, the organization is provided with a way to control expenses associated with software distribution, hardware and software upgrades, and management of network users, including problem determination and corrective actions in a simple and technically elegant environment.

NOTATIONS: (1) Network Computing - Total Cost of Ownership, University of Texas Business School Study, 1998, from A Model for Addressing the Total Cost of Ownership (TCO) and Value for Network Computing Client Software. (2)Gartner Group, The TCO Manager, Version 3.6, July 1998 (3)Windows NT Magazine, July 1998