by December 1, 2011 0 comments



Alok Sinha, AVP, Huawei Enterprise

Once you conclude your deployment strategy, then starts a significant part of the quest to create a convincing cost benefit structure that provides a commercially clear business case for deploying VDI. In our research to find a suitable TCO model, we faced a constant issue of finding a relevant TCO model. Most TCO tools were either too generic or too “non-India” specific. Comparing US or the western world with Indian services cost structures is not real. We quickly realized that something needs to be built, which not only encompasses the reality of today’s deployment in India but also provides in-depth parameters of each. Here are the parameters we considered:

Snapshot


Applies to: CIOs
USP: Learn about the tremendous cost savings in deploying VDI
Related articles: Implementing VDI for anywhere access

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The in-tangibles – As a conscious decision we chose not to monetize the in-tangible benefits that VDI offers. This does not imply in anyway, the lack of impact of such value benefits. It was just too open-ended and varied significantly from organisation to organization. Refer to the box for a list of important, yet intangible benefits of a typical VDI deployment.

Laptops/Nettops — The TCO model is based on the fact, that there is real value in replacement of desktops and not laptops or netbooks, which are designed for a slightly different functional use. Hence, these calculations are based on desktop usage only.

Minimum Clients per location – The second parameter that would be important to consider is the concentration of the desktops in one location. The primary driver for this would be the response time parameter. In our assumption we have taken single location deployment, this minimizes the potential degradation of response time on users. Our assumptions are based on a ‘large’ deployment strategy — where, service management — such as deskside support, operation support to end users, anti-virus support and management, security and patch management practices needs to be deployed. We have assumed our business model to consider around 500 desktops in one location — ie. On the same LAN network.

Cost case period — Not evident at first, this plays a very important role in determining the cost benefits. Unlike the developed economies, where it is simple to calculate a 3-year refresh cycle for the capital — being the actual life of the desktop environment, in India, we tend to ‘stretch’ the life of the devices to 4-5 years. Weighing on the conservative side, we chose to use five years, a reduced period, gives a better return on investment for VDI.

Diminishing costs over cost case period — Our model has not taken into account a further optimisation that will be arrived, due to postponement of investment, due to the VDI solution. Disk, RAM prices are under constant pressure. By increasing the efficiency of utilisation, the investment in dead-stock is significantly minimised. Once again to keep the cost case simple, we have left this additional optimization out of equation.

Hours of operation – In order to derive the cost of operations, it would be important to establish the work hours of your organisation. We have assumed our organisation to run for an average of 10 hrs of operation per day and around 240 working days. You would want to modify this to your specific requirement. One very interesting thing, you later notice in this article, is that for situations where the operation hours are 24×7, the net savings on your operations are close to 50% as against somewhere close to 30% in normal operations.



Excludes server operations — We make a strong assumption that your existing servers, hosting your enterprise applications, our not being impacted by this change-over into the new world of VDI — all server-based applications will continue to run as they have been and optimization, if any, would be a part of separate initiatives.

Infrastructure support costs

Most CIOs will happily gloss over this section, as this may not be under their direct key performance area. However, when you look at the impact, one would realize, that as one of the chief officers of the company, it would be prudent not only to take this into consideration, but also pro-actively work to reduce the same.

Power consumption (Rs 5,016 saved per year): Most desktops consume power in the range of 100 to 300 W. This excludes the power consumed by monitors. For the sake of our calculation, we chose 200 W as the average power consumption. Correspondingly, the price of per unit of commercial power was assumed to be 11 rupees. You should of-course change it to the rates that you are paying. We have not factored in the cost of power price increase, which is approx 7% year on year for India, primarily to keep the calculations simple. Thin clients on the other hand are fairly power efficient, consuming 6 to 20 watts of power, depending on the make and model. For our calculations we have taken a median value of 10 W.

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Cooling (Rs 3,637 saved per year): Yes that little thing, you call the desktop, plays a significant role, when impacting the cooling requirements. On an average a desktop dissipates around 300 to 700 btu/hr. To give you a fair idea, the 1.5 ton air-conditioner hanging on your wall can provide around 18,000-19,000 btu/hr of cooling. A thin-client, on the other hand, is extremely efficient, when it comes to heat generation and dissipation — a normal thin client would not generate more than 10 to 60 btu/hr. Our template uses a thin client generating 30btu/hr of heat.

Real estate (Rs 500 saved per year): Global yard sticks put average space required per office worker to be around 200 sq ft, closer home it is about 75-100 sq ft. This not only includes the workstation but also the walking areas, corridor, meeting rooms, reception, etc. Desktop contributes to around 7-8% of this space. The thin client brings about extremely high savings on this real estate space. However, the net impact is reduction from the assumed Rs. 75/sqft/month to Rs. 70/sqft/month.

The base infrastructure costs (above three combined together) bring a saving of Rs 9,153/yr or about Rs 45,760 for five years per desktop.

IT infrastructure costs

For the sake of arriving at a comparable cost for investments, we amortised the capital expense to a linear five year base. This helped us in arriving at the annual notional cost of the current expenses. As discussed in our VDI deployment strategy (refer to the box), this template would fit perfectly for green field projects — where you are deploying equipment in a new office. For existing offices, one can reduce the cost of current investment from the proposed case. This gives you a clear picture of what you can save. It does, however, bring up the issue of cash flow — the answer to this problem lies in commercial solutions. Some of the cloud solution providers such as IBM and Huawei provide solutions to mitigate cash flow issues.

End user devices (Rs 7,200 saved per year): For our calculations, we found that an average desktop, that is required for office work would cost around Rs. 40,000 per desktop. Feel free to modify this as per your current actual number. On the other hand, a comparable thin client costs roughly around Rs. 4000 for a similar I/O environment. Amortised over the period of cost case, this amounts to about Rs. 7200 savings per month.



Servers (Rs 3,100 additional costs per year): While we make an assumption above that servers will be not touched, the inclusion of VDI brings the need to deploy servers that would host your VDI infrastructure. Additionally, while there are solutions that do a simple mapping of one blade server to a desktop, we are assuming our VDI solution to virtualize the server CPU. Several reports show one quad core CPU server can service about 30 desktops comfortably. Keeping in view the Indian conditions, where we would want to optimize every single CPU cycle, we have taken 25 desktops to 1 server as a standard ratio. The solutions offered by most vendors — VMware, Citrix, and Huawei allow even RAM optimization and allocation. But, we have left that element out of our calculation. Assuming the server cost to be around Rs. 3,90,000, and dividing the CPU power to 25 VDI clients, we arrive at a capex of Rs. 15,600 per VDI client.

Storage (Rs 1,950 additional costs per year): This is one of the most passionately disputed parameters in the global market. We have taken two paths of convergence on this. On one side is the cost of hardware — which will vary from situation to situation, on the other side we have tried to analyze hardware requirements per employee. Additionally, another key parameter in VDI — the IOPS — Disk reads/writes per second, has been factored into the cost of hardware itself. The average Indian office desktop carries around 300-500GB of disk space, this factor is primarily based in the cost of “most-commerically- viable-storage” than actual usage. Our actual usage is not even 10% of this. Thus in the VDI structure, this would relate to the actual disk the employees would be using. In the Indian context — and comparing the current desktop storage type with a base level RAID (Raid 5) architecture, we have started with Rs. 50,000 / TB (raw space) and arrived at 70% of actual disk space. Adding the above two factors, we end up at Rs 1,950 capex cost. In the desktop environment, this cost is nil, as the disk is already provisioned in the desktop.

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Others — Network, Communications, Display, Keyboard (nil savings per year): As discussed above, this is to be deployed in the same network and hence the above costs do not impact one solution or the other. It is imperative to note, that VDI would require gigabit switches, which we assume your organisation has already deployed.

In total the IT infrastructure accounts for a net savings of Rs. 3690 per year (Rs. 18,450 for the cost case period)

Cost of Services

Most evolved enterprises have three distinct areas of services support. Annual maintenance charges for the hardware required. Deskside services, we feel is yet another significant cost element.

Typical components of desk side support

1. Hardware break fix.

2. Provisioning of new hardware.

3. Trouble shooting issues related to Password recovery support; Mail; Internet; Network issues; Version upgrade; and Backup support.

4. Security policy implementation; Maintenance; Vulnerablity scanning; Basic hygiene checklist; Anti-virus signature upgrade; Patch upgrade; and UID management.

Annual maintenance charges (Rs 923 saved per year): We are aware that different vendors have different AMC rates, and many include the cost of the AMC within the initial costs, yet this cost is around 4-8% in the industry and we thought it to be prudent to keep it at 5%. This when extrapolated on the desktop and VDI infrastructure, gives a saving of Rs. 923 per client.

Desk-side support services (Rs 18,000 saved per year): While many companies may not follow the complete rigor of the processes associated with desk-side support and thus save on direct costs, they end up spending more to contain the losses due to this missing vital piece. Those organisations that do provide a high quality of desk-side, realise they pay upto Rs 600 to 900 per desktop per month. In our case, since the concentration is in one location — we have assumed this to be on the lower side of Rs. 600 per desktop per month.



In the VDI world, the thin client is the only device you have at the end user side. This is a small, low-cost device that you can keep in spare, for ‘complete-replacement’ at the deskside — thus greatly reducing the time and skills required onsite. The ability to repair and maintain, a “switched-off-PC” (after all a VDI image is just a file on server — a dead PC) offers a unique value proposition — virus scanning, security policy deployment, hygiene check, vulnerablity tests — ALL can be now done — automatically during night hours. Even backups can be taken, while your beloved PC is switched off — automatically. This in practice results in much lower cost of deskside support. For our calculation we have taken Rs 300 / month per VDI image.

Server side support required (Rs 8,000 additional expenses per year): In order to maintain and manage the server side of the VDI architecture — creation of new profiles, upgradation of images, allocation and management of resources etc are needed. We believe one would require Rs. 2,00,000 per server per year. This when translated to per VDI client comes out to Rs 8,000 per anumn. This is an expense, you would not have needed, had you not deployed the VDI solution. Adding the above cost savings together for services— we end up saving about Rs. 10,922 per year or Rs 54,612 for the cost case period.

Software (Rs 4,000 additional expenses per year): We made an assumption that the organisation has the OS and other office-use applications as organisations-wide EULA and thus the cost impact of deploying on a VDI will not be impacted for operating system license, office applications or any other similar licensing. The only impact would be in the cost of VDI layer — management, creation, and monitoring of the VDI. Companies like VMware, Microsoft, Huawei, Citrix quote different prices at different situations — hence it is extremely difficult to arrive at a firm price. Vendors like EMC Corp, Xiotech Corp., Huawei claim they can provide most of the above for $25-$100 (Rs 1,250 to Rs 5,000) per client (2,000+ desktops). For our case, we took only 500 desktops as the base minimum and hence took a price of around Rs 4,000 per VDI image per year. Please be fore-warned that this price will vary significantly based on your numbers, type of deployment, etc. This cost is a pure addition to our overall expense, which in desktop-based deployment does not exist.

Desktop PCs Vs VDI: Comparing Costs

Basic assumptions

Hours of operation per day

10 hours Days of operation per year 240 days/yr
Price of power (Rs) 11 per unit Price of real estate 100 per sqft
# of years in business case 5 years Average AMC Assumed 5.00% per anumn
1 Btu/hr 0.2931 watts VDI Storage optimization 90.00% of current desktop use
Avg disk capacity 300 GB Avg storage cost (Rs) 50000 Per TB
Storage lost in RAID 5 30.00% Desktop per server ratio 25
Cost of server (Rs) 390000 Deskside support — desktop (Rs) 600 per month
Deskside support — VDI (Rs) 300 per month Server support (Rs) 200000 per server/yr



Desktop VDI Current/year (Rs) VDI/year (Rs) Savings/year (Rs) Savings/period (Rs)

Infrastructure

    16649 7496 9153 45764

Power (W)

200 10 5280 264 5016 25080
Cooling (Btu/hr) 500 30 3869 232 3637 18184
Real estate
(sq ft/employee)
75 70 7500 7000 500 2500
IT Hardware (Rs) 40000 21500 8000 4310 3690 18450
Desktop 40000 4000 8000 800 7200 36000
Server 0 15600 0 3120 -3120 -15600
Storage 0 1950 0 390 a-390 -1950
Display/Keyboard No impact No impact 0 0 0 0
Network No impact No impact 0 0 0 0

Communication

No impact No impact 0 0 0 0

Services (Rs)

    38000 27077.5 10922.5 54612.5

AMC

2000 1077.5 2000 1078 923 4613
Deskside support 36000 18000 36000 18000 18000 90000
Server support 0 8000 0 8000 -8000 -40000
Software     0 4000 -4000 -20000
Operating System No impact No impact 00 0 0 0
VDI layer (Rs) 0 40000 0 40000 -40000 -20000
Application layer No impact No impact 0 0 0 0
      62648.92 42883.64 19765.28 98826.42

Cost case life cycle (years) – 5
                                        Estimated savings @ 500 desktop – (Rs) 49,413,212 Estimated savings per Desktop – (Rs) 98,826            Savings as a percentage of current expense – 31.55%

Putting it all together

If you add the savings from infrastructure (approx Rs 9,000/yr), IT hardware (approx Rs 3,700/yr), Services (approx Rs 11,000/yr) and software (expenses of Rs 4,000/yr), we arrive at a net savings of Rs 1,00,000 per desktop in a period of 5 years.

If you had 500 desktops to start with, that is a cool Rs 5 cr or ONE MILLION DOLLARS saved for the period of five years. It leaves little argument on the commercial viability of the project, not even including the latent intangible benefits of the solution. So if, the question Who, will be the next millionaire?, still evades you — the answer is clear — You !!

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