By The Bell

The desktops may be virtual, but the ROI is real

Fielding questions while on the VDI panel at last month's Vail Pacific Crest Forum, it became apparent that investment analysts consider a lack of VDI ROI to be common knowledge. But while the savings resulting from desktop virtualization may be less obvious than with server consolidation, they nonetheless are often substantial.

Gartner's March 2009 press release predicts exploding VDI sales of $65B by 2013 – equating to 40% of the professional PC market, and up from only $1.4B and less than 1% today. This represents "…part of bigger shift in client computing from traditional thick-client distributed PCs toward more manageable, secure and centralized client computing environments." A VMware-sponsored IDC analysis of View customers indicates that a centralized VDI approach produces measurable efficiencies.

The IDC white paper shows that compared with using unmanaged PCs, organizations deploying VMware View saved an average of $287 per user annually from lower device costs and $601 from lower IT support costs. Another $130 was saved from improved user productivity resulting from faster start-up time, less security issues, etc. The overall 5 year ROI was 367% with a 5.61 month payback.

While the white paper lacks supporting data, the numbers nonetheless look reasonable. For comparison, I recently calculated annual savings of $455 for an organization virtualizing 1,000 PCs and laptops as part of a phase one View 3 deployment. The payback period of 11.7 months against an investment of $500,000 is in the general vicinity of the IDC averages. Applying the IDC white paper estimate of $130 in user productivity savings further reduces the payback period to 9.3 months.

The only support savings calculated are those specifically related to hardware issues. The organization's extraordinarily well-managed physical desktop environment includes extensive tracking and categorization of support request – conferring unusual confidence in the numbers.  

 

The analysis assumes that as PCs and laptops reach their refresh periods of 48 months and 36 months respectively, they are replaced with Pano Logic zero clients. The already mostly virtualized data center reduces the incremental storage, server and services costs from those required for a green field VDI deployment.

Annual HW/SW savings of $131 per user result primarily from no longer needing to refresh the $800 PCs and $1,200 laptops (including tax, shipping, set-up, etc.). The $324 in annual hardware-related support costs per PC/laptop does not include typical costs of less well-managed environments such as OS and application patching/upgrades, desktop imaging, etc.

This organization lacks small remote offices that could significantly contribute to VDI savings by eliminating local network infrastructures. And the ROI doesn't quantify tangential VDI enhancements such as much faster boot times, greater stability, reduced security risk and ubiquitous desktop access from anywhere users can get to a browser. It also disregards significant disaster recovery advantages.

Embracing VDI

Tyler Rohrer makes a case on www.vdi.com that VDI is not about reduced Capex or Opex, but about increased potential user productivity. It certainly is useful to compute not only productivity benefits, but also to evaluate the positive impact of virtual desktops on organizational objectives such as "green IT", employee empowerment and business process efficiency. But at the end of the day, CFOs expect to see hard metrics for VDI savings. Fortunately, it frequently is possible to show a compelling ROI.

Note: This article is also posted on http://www.dabcc.com/article.aspx?id=12094

 

VMworld UCS sign brings back an unrelated memory

The sign at the entrance to Moscone Center last week specified that the impressive display of 16 UCS systems was not just "blinking lights", but was powering VMworld. That made me think of a situation I was fortunate to escape where racks of mostly blinking lights were used to fraudulently extract $120 million in loans from unsuspecting banks.

On September 12, CNBC's American Greed will air Fraud in Cyberspace, which chronicles the career and Ponzi-like scam of Barton Watson, CEO of the CyberNET Group. He used proceeds from newer borrowings to stay current with older loans while continuing to fund his lavish lifestyle. When the Feds finally stopped the music, he was found to owe somewhere north of $100 million against assets of only $2 million.

I first encountered Barton, or "Mr. Watson" as his employees were forced to refer to him, nine years ago when he came to northern California to discuss acquiring my Citrix integration company, RYNO Technology. Barton had been recommended to me by a senior Wyse VP, and seemed to have impeccable credentials including a Stanford MBA and former Goldman Sachs partnership. During the next six months, we had over a dozen meetings including multiple all-day affairs at his opulent Grand Rapids, Michigan headquarters.

Certainly, the first thing most people would notice about Barton was his sheer size of around 6'2" and 400 pounds. This would be quickly followed, though, by an impression of extraordinary intelligence. Barton had an uncanny knowledge about almost any subject. A valedictorian of his Belding, Michigan high school, Barton was said to be without question the smartest kid in the school district.

Barton and his wife, Krista, traveled first class around the world staying in the best hotels and eating at the finest restaurants. He drove a Ferrari, Bentley and Rolls Royce among other luxury autos. While I've never been much for the trappings of luxury, I was beguiled by Barton's charm and intelligence. He and Krista would frequently fly to San Francisco where he'd meet my wife and me for wonderfully entertaining meals at expensive restaurants. I met his top executives and spoke with his two largest Citrix clients, both of which gave his organization glowing references.

I began to see another side of Barton as negotiations progressed. He exploited his talent of quickly reading character in order to throw people off balance and make them more susceptible to his thinking. The "gut feeling" cliché became increasingly tangible for me in the form of an aching stomach, but I was determined to see the acquisition through… until he made an offhanded comment about being friends with Citrix CEO, Mark Templeton. Shortly afterward, I happened to run into Mark who assured me that he did not know Barton…and Barton was not the type of man anyone was likely to forget meeting even one time.

This encounter prompted me to hire a private eye firm to investigate Barton which eventually revealed a significant record of litigation, fraud and jail time. In the interim, I did some deeper due diligence on my own. I called back CyberNET's two big Citrix references, and this time reached someone different at one since Barton's contact was on vacation. The replacement said terrible things about CyberNET and that his company would never again work with them. I also called up both Stanford University and Goldman Sachs to verify Barton's claims of an MBA and former partnership respectively…both of which turned out to be untrue.

I emailed Barton about the strange inconsistencies and he angrily retorted, "I will not have my integrity questioned. THE DEAL IS OFF!!!" This was quickly followed by a letter from his attorney demanding the return of every document related to our aborted merger and stating that if I mentioned a word about the details of our transaction to anyone that I would be sued.

Barton managed to keep his charade going another four years. CyberNET was listed as #110 on the VARBusiness 500 with 2003 sales of $300M, though actual sales estimates are between $10M - $12M. On November 18, 2003 the Feds surrounded Barton in his posh Grand Rapids, Michigan home. After drinking a $700 bottle of Le Tache wine, he placed a 911 call to police. "Hi, this is 911 Emergency, what's your emergency?" asked the sheriff's dispatcher. "Well, there's a gun in my mouth," replied Barton. He repeatedly urged the dispatcher to relax. "The theory is that I wouldn't call you if I didn't want help. But…I just want someone to clean up the mess." Barton proceeded to lecture the dispatcher about what was necessary to make a good bottle of wine. He was found dead at the age of 44 from a gunshot wound to the head.

Excerpts from my VMworld 2009 vExpert presentation

I was surprised when John Troyer asked me to present on evangelism to the group of charter vExperts. I mean, come on...that's like being asked to speak about partying to a San Diego State frat house. But being reluctant to ever turn down an opportunity for exposure, I of course accepted.

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While being fortunate that I don't have to justify my daily activities, I do want to ensure that senior management knows they're getting a good return for their money, and that my blogging and Tweeting is actually benefiting the firm. This is more important now that other company execs are starting to follow me on Twitter and can see me Tweeting during the middle of the day instead of doing real work.

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Differentiation works personally as well as professionally. Seven years ago I found myself in a surprising divorce. I dreaded the prospect of going back into the dating scene...I was never that successful the first time around, and now I was a heck of a lot older. But I quickly discovered Internet dating, and then was pleasantly surprised to learn that most men have little concept of marketing. Most match.com tag lines read something like, "Great catch", "Last good man on earth", or "Likes to take long walks on the beach at sunset". I, naturally, took a different approach.

My dating experience was vastly better the second time around, and I eventually met a great lady who I married. I've drafted her as part of my evangelistic efforts – she assisted Krystal Lowe yesterday by driving the VMworld spouses up to tour our good customer, Korbel Wineries. By the way, the VMworld wives were joking about how their geeky husbands upon arriving at the Moscone Center immediately flocked to the huge Cisco UCS display to take pictures.

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John asked me whether or not being really smart is necessary to be a good evangelist. I can assure you from first-hand experience, it is not. Over the years I've co-authored many Citrix books and a VMware book. Many people assume that I'm an engineer who knows what he's talking about. The reality is that I work with very bright co-authors who are far more knowledgeable than me, but I get to share in the glory.

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Speaking with a client led me to the idea of approaching PG&E about extending rebates to clients who virtualize. I told a couple of our VMware reps about it in confidence, but otherwise kept the program secret thinking that it was a competitive advantage for AccessFlow. But then Diane Green was on the stage at VMworld along with the CEO of PG&E, never mentioning AccessFlow or Steve Kaplan. It taught me a good lesson about the folly of trying to horde good ideas. I might as well put them out there and get credit for them.

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The first company in the world to receive a utility rebate check for virtualizing was our good customer, 1-800RADIATOR – which has about 25% of the U.S. radiator market. The CTO was speaking for us at a VMware seminar, and held up our T-shirt which had a picture of VirtualMan unplugging a server and which read, Fight global warming…virtualize now. The CTO said, "Steve gave me this T-shirt and I'm thinking, 'What the heck is this? We're a radiator company. We like global warming.'"

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Like many things, you can either put a little effort or a lot of effort into evangelism. If it's the latter, I encourage you to do some self-reflection in order to ensure that your personal objectives are in line with the level of time commitment required. In my own case, before I decided to commit to a high level of evangelism at INX, I first did some extensive soul searching. What I realized was that, deep down, what I really want….is to make a lot more money!