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TECH TALK: Tech Trends: 3. TCO Focus

June 30th, 2004 · No Comments

As spending on IT has increased in enterprises, there has been an increasing attention being paid to the total cost of ownership (TCO) of technology. It is not longer just the upfront cost paid for hardware and software that needs to be taken into account, but the overall cost that goes into administration of the systems deployed. As growth has slowed, increasing attention is being paid to the TCO of technology in organisations.

The four primary costs are hardware, desktop and infrastructure software, business applications and management overheads. This is where three developments can play a significant role:

  • Open-source software, especially on servers, can take care of the basic IT infrastructure in enterprises, making it especially affordable to small- and medium-sized enterprises in emerging markets like India.
  • Server-centric computing, complemented with thin clients, can help reduce the administration costs, along with simplifying the management of desktops.
  • Internet-based application service providers are making available business software-as-a-service, providing an alternative for those less willing to spend large amounts on upfront licence fees.

    Open-source software

    While open-source applications have done very well on the server, attention is now turning to the desktop. A recent story in the Wall Street Journal wrote:

    Open-source software not only is relatively inexpensive, it may require less-powerful PCs for some applications. Frederick Berenstein is chairman and chief technology officer of Xandros Inc., a New York company that sells open-source desktop software. He says one hotel customer installed his company’s desktop software on 150 reservation clerks’ aged PCs at a cost of $5,100. He says the hotel estimated it would have had to spend more than $20,000 to upgrade to Windows XP software and $115,000 for new hardware that could handle it. He declines to name the customer.

    Michael Silver, a desktop software analyst at Stamford, Conn.-based research and consulting firm Gartner Inc., says that some of his company’s large corporate clients think Linux desktops could save them substantial money and work fine for certain classes of users who don’t need the full range of desktop applications. For example, he says, Linux desktops can serve as a cheap alternative for employees who only need PCs for functions like e-mail and for checking their company’s Web sites — workers in call centers, say, who need to check product information and communicate online in-house, but who don’t create documents, spreadsheets or presentations. For these employees, compatibility issues are minimal.

    Linux also has gotten a boost over the past year from some large computer and software sellers that initially viewed it as suitable only for the back office. Among them are HP, which is starting to install Linux instead of Windows on some of the PCs it builds, IBM, and software makers Novell and Red Hat Inc., which have set themselves up recently as providers of Linux desktop programs.

    Companies and independent programmers that work on improving Linux desktop applications have made big strides in making the software look more like Microsoft’s applications, as well as in improving compatibility. With some open-source software, for example, a user has a choice between saving files in an Open Office format or saving in a Microsoft format with the familiar .doc or .xls file extension. That feature means that a Microsoft Word or Excel user can open a file created on open-source software without trouble.

    If anything, the use of open-source software across the organisation is only going to grow, especially in emerging markets where piracy and non-consumption have been the solutions so far.

    Tomorrow: Utility Computing


    TECH TALK Trends+T

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