Desktop Virtualization and Thin Clients

Virtualization of the desktop is not as prevalent at this time as server virtualization, but many companies are investigating desktop virtualization and implementing pilots. Virtualization actually provides a layer between the hardware and software and provides a logical view of the computing resources. Therefore, each server acts like a group of servers, each disk drive functions like a pool of disks, and each desktop uses centralized computing power. Machine virtualization actually inserts a virtualization layer (hypervisor) between the operating system instances and hardware, whereas application virtualization inserts the layer between the application and the operating system. Therefore, when the user needs an application, the server software downloads the application to the machine and it runs as if it were installed. When the user is done, it is uninstalled and available for another user.
Top Tip: Desktop virtualization

"We used desktop virtualization to be able to run applications remotely during a disaster. We were able to do this during hurricane Gustav. This provided an up-time gain with minimal costs that we did not have in place for Katrina."
—Roger Champagne

Top Tip: Desktop virtualization savings

"We are starting a desktop virtualization program. We anticipate a minimum of 15-20% savings"
—Paul Kay
Long Term Care Group

Desktop virtualization moves the end-user operating environment from a dedicated piece of hardware in a local PC to a virtual machine on shared hardware. You can virtualize applications by hosting, updating, and patching a single application instance and delivering the functionality over the network rather than deploying and maintaining instances on each individual PC. It is a viable option for cost reduction depending on the application and business needs. You are able to realize cost savings in virtualizing clients by decreasing support and maintenance costs, and reducing downtime due to desktop issues. One company reduced desktop total cost of ownership by an estimated 20 percent by virtualizing desktops and centralizing desktop management. With a virtualized desktop environment, you are able to access a desktop from any location using any device, which increases functionality and supports remote use.
Virtualizing desktops can be a major endeavor, and you should proceed slowly. Although the virtualized client hardware and software is significantly less expensive than a full PC, you need to consider the additional costs of the back-end infrastructure required. It has a significant impact on the network capacity. Be sure you review the network to ensure it is robust enough to carry the additional traffic, and include network and server upgrade costs in the return on investment calculation. Desktop virtualization may require a significant up-front investment, and cost savings will be long-term rather than short-term. A partial implementation of desktop virtualization may actually increase your overall costs as you have to maintain the overhead of both methods. During an interview, a CIO was not convinced of the cost savings of desktop virtualization and he commented, "You have the additional blade in the data center, and you have the additional costs of the blade in an expensive facility, which has to be less expensive than that of a PC for any benefit to be realized. You also have introduced a single point of failure."
Top Tip: Desktop virtualization and the network

"We did a pilot for desktop virtualization. The problem with desktop virtualization is that any latency on the network is very painful. Every network has some latency. As you lower the costs on the desktop, the provisioning costs on the network can go up. However, there are some places that it does make sense."
—Samuel J. Levy
University of St. Thomas

Investigate alternative client architectures and other methods to reduce the requirements for desktops to provide a more thin-client approach, which reduces support costs, maintenance costs and delays the need for upgrades. Citrix is a common example of software that many companies have deployed to reduce desktop costs. Another example is VMWare's ACE product, which still virtualizes the desktop but runs the result using the desktop CPU and dramatically reduces the data center footprint of desktop virtualization.

Microsoft Licenses | DESKTOPS

Microsoft license fees are a major expense and financial commitment for companies, whether it is for Microsoft Windows, Office, server operating systems, or even Microsoft back office applications such as Customer Relationship Management (CRM) and ERP. Negotiating with Microsoft is a challenging prospect, particularly for small- and medium-sized organizations. Many companies poorly understand Microsoft licensing and do not manage Microsoft licenses as effectively as they could, which costs a significant amount of money. Microsoft has unique terminology, licensing and pricing structures, policies, software bundles, and frequent changes. For example, Microsoft removed Outlook from Exchange Server 2007 and put it in the Office 2007 suite, which changed licensing fees for some companies.
It is well worth your time to understand Microsoft's products, roadmap, and licensing, or hire a company to assist you. Before starting negotiations, know the products you are licensing, the volume of purchases, and your upgrade plans. It is also beneficial to centralize software license purchasing and negotiation to take full advantage of cost savings opportunities. As mentioned in an earlier chapter, make sure you are compliant with licenses at all times as hiding overuse results in significant fines and loss of negotiation leverage.
Top Tip: Desktop licenses

"Reduce costs of the desktop by having multiple licensing strategies. For example, the cost of desktop operating systems is high. Unless you are going to upgrade, you don't get much value. Consider not having maintenance on certain products that you do not intend to upgrade."
—Mike Degeneffe

It is important to calculate the financial impact of the various options provided by Microsoft and other upgrade scenarios. Compare a la carte pricing to product bundle pricing and the options for various client license types. For example, Microsoft's Client Access License (CAL) is assigned on a per user or a per device basis. Each CAL gives either one user or one device rights to access all instances of the Microsoft product. It is more cost-beneficial to apply user CALs when you have several devices used by one user. Device CALs are more cost-beneficial when you have devices shared by multiple users such as workstations in a 24-hour manufacturing plant or call center. Although Microsoft recommends that companies standardize on one type of CAL, this actually increases costs for organizations with both types of users. You may be able to save costs by purchasing a mix of user and device CALs.
In July 2008, Microsoft announced the Select Plus program which allows business units to receive volume discounts from the enterprise level without submitting forecasts of demand, with no expiration date for purchases. As there is no expiration date, it means that terms are not renegotiated. This means terms are critical when negotiating the first time. Qualifications for discount levels are based on the previous year's actual purchases, which mean that the timing of transactions is important because you move up a tier as soon as a transaction puts you over the volume threshold. Companies that consolidate demand may be able to achieve a better discount. Negotiate other terms in addition to price, such as planning or upgrade services and training.
Microsoft's maintenance agreement—Software Assurance (SA)—is expensive, as it is typically 25 percent for server products and 29 percent for desktop products, which quickly doubles the acquisition cost of software. In other words, in four years you pay 100 percent of the server price in maintenance costs and 116 percent of the desktop price. SA provides version upgrades, the ability to spread license payments over the terms of the agreement, support, training, and desktop optimization. Microsoft packages some enhancements at an additional cost. It is a major decision for a company considering whether to purchase SA as you need to consider your own upgrade strategy as well as Microsoft's future releases. For example, SA may not be cost effective for you if you plan to implement Microsoft's next release more than three years out as it will cost between five and six years of SA payments to qualify for the new version. If you skip a version, you end up paying twice the license fee than if you bought the licenses when needed. For example, one company purchased an enterprise agreement and upgraded to Windows XP in 2003. They decided to skip Vista and planned to implement Windows 7 in 2011. They purchased three, three-year SA terms to get upgrade rights. Therefore, they paid 261 percent of the original XP price for the Windows 7 licenses.
Review the cost of various options to SA maintenance and enterprise agreements, such as:
  • Buy or renew a component of an enterprise agreement for a subset of products and combine remaining purchases with a SA.
  • Renew an SA only for certain products or for some users. SA is not all or nothing. For example, if you upgrade products or users at different rates, apply SA coverage only to those products or users.
  • Purchase licenses when needed under an SA.
  • Consider not renewing the enterprise agreement if upgrades are more than four years apart.
  • Consider deferring expenses and buying licenses when needed. For example, if you need to cut costs now, it may not make sense to pay for three more years of SA coverage to obtain Windows 7 upgrade rights.
  • Consider the business version of Windows operating system. Vista comes in business and enterprise versions with the business version coming standard on equipment purchased. If you do not need the enterprise version of Windows, you may not want to involve those licenses in volume purchasing or SA coverage. When you upgrade the operating system, you may need a new upgrade of hardware anyway.
  • Implement improved software asset management processes rather than purchasing an enterprise agreement.
  • Do not consider SA the same as purchasing premier support, nor is SA a requirement for premier support.
  • Centralize license purchasing to achieve larger discounts and increase negotiating leverage.
  • Consider reassigning licenses to eliminate the need for purchasing new licenses.
  • Consider purchasing a mix of user and device CALs.
  • Assign CAL licenses to minimize spending.
  • An enterprise agreement evenly spreads out payments with predictable annual costs rather than upfront costs but may not make sense in times of budget cuts.
  • Re-evaluate the costs and benefits of unpredictable upgrade cycles and skipping versions particularly if you have SA.
  • Do not pay SA for unused products. If you do not use all the software that is covered in the agreement, you may be wasting money. For example, if you purchase Core CAL or Enterprise CAL bundles and only use some of the software, you are paying more when factoring in the cost of SA than if you would have purchased each CAL under an agreement without SA.
    Top Tip: Audit upgrades

    "Although standardizing is a good move, you do increase risk and reliance with one vendor. Take each renewal or upgrade and audit against the business roadmap to make sure it is worth it."
    —Roger Champagne

  • Evaluate if virtualization saves money (discussed later).
  • Negotiate discounts for SA.
  • Wait for operating system upgrades with a hardware refresh.
  • Consider open source alternatives (discussed below).
There will continue to be changes in the pricing of Microsoft licenses and maintenance agreements. The point is that you need to understand current Microsoft license terms and costs to determine the most cost-effective option for structuring maintenance and upgrades as the difference in total cost is substantial. You may have more leverage than you think with Microsoft negotiations if you consolidate your negotiations for no-choice software (like Windows and Office) with negotiations for software in categories where Microsoft has to compete aggressively (e.g., ERP SQL Server).