Case de Virtualização de Desktops implementado pela Add IT o qual a Xerox economizou 4,3 milhões segundo a publicação do Gartner em anexo

1. Research
Publication Date: 19 September 2006 ID Number: G00142876
Case Study: Thin Clients Saved Xerox Brazil More Than
$4.3 Million
Luis Anavitarte
Xerox decided to move to Windows XP worldwide. In Brazil, its old PC systems could
not support this operating system, and the estimated "fat client" investment was $4.5
million, with first-year total cost of ownership of $2.8 million, so Xerox decided to go to a
thin-client architecture in Brazil.
© 2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form
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2. WHAT YOU NEED TO KNOW
As part of its worldwide adoption of Windows XP, Xerox's office in Brazil needed to invest
substantially in new PC systems to keep and maintain its old "fat client" architecture. Xerox's
estimated total investment of $4.5 million included all the outsourced management, migration,
software amortization, annual software license fees and hardware maintenance costs. It needed
to replace old Compaq Pentium II and Pentium III PCs that could not run effectively on Windows
XP.
Using thin-client technology allowed Xerox Brazil to dramatically reduce capital and operational
costs. It also increased security and manageability and provided a new PC "usage culture" in the
company, because Xerox Brazil had formerly had an unmanaged PC architecture. Furthermore,
total cost of ownership (TCO) savings was substantial during the first year of the thin-client
adoption.
Thin-client adoption costs were $1,750,000, with the following breakdown:
• Hardware expenditure was $950,000.
• Software expenditure was $550,000
• Migration costs were $250, 000, including user's hardware, uploading and downloading
into the server and the engineering solution.
• The capital expenses were $1,500,000 to buy servers, storage, Linux cards and Citrix
licenses.
• Savings on the investment in new hardware were achieved by the in-house conversion
of the systems into "dumb" terminals.
• Citrix licenses represented 25% of the total capital expenses. That amounted to
$370,000.
Thin-client TCO was as follows:
• Xerox Brazil's assessment of TCO for each thin client showed a monthly cost of $90,
which totaled $1,188,000 for a year.
• The monthly cost of a fat-client user was $210 for an annual total of $2,772,000.
• Therefore, the annual TCO thin-client savings estimated by Xerox Brazil were
$1,584,000.
Overall thin-client capital/operational costs and TCO were $2,938,000. The original and entire
Xerox Brazil cost analysis with fat clients was $7,272,000, so Xerox Brazil saved $4,334,000.
CASE STUDY
Introduction
As efficiency and cost reduction are nonstop processes in many organizations, in addition to a
more-acute control of "consumer" hardware and software penetration in the workplace, CIOs
need to find the most-effective solutions to their PC needs and architectures.
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3. That is what motivated Xerox to adopt thin clients for its entire organization in Brazil, converting
old PC systems into dumb terminals.
This case is important because Xerox saved substantially in capital and operating expenses and
TCO during the first year. At the same time, it started a new "usage culture" in the organization,
with the reduction of security threats and enhanced manageability.
This was based on an understanding of the value of server-based computing architecture, a
technology that is not commonly understood and valued in regions such as Latin America
because of lack of information. Gartner's interactions with clients indicate that many large and
midsize organizations in this region have little or no knowledge of thin-client architectures.
Therefore, the relative benefits and costs of thin clients are not understood. OEMs seldom
discuss thin clients because selling fat clients is more profitable.
Is Thin-Client Adoption More of a Cultural Change Than a Technology
Replacement?
Thin-client adoption is a major change for users, and therefore, it has the risk of creating unhappy
workers, at least in the short term. Despite proper planning, workers may wonder what happened
to some of their data when moving from fat to thin clients. Some workers use their corporate PCs
for storing personal information and for interacting with people outside their business
environment. All of that changes because dumb terminals can be used only for business
purposes. Gartner's opinion is that the risk of making some workers unhappy in the short term is
worth taking because the benefits many organizations will gain in efficiency, security and
manageability will be substantial. But there is also another fundamental point here viewed from
the perspective of the worker. It is a risk worth taking only if job market conditions and the value
of the workers dictate that the workers won't be able to leave their jobs, or that you can afford to
lose them.
The Challenge
Xerox in Brazil had the challenge of migrating 1,100 old Pentium II and Pentium III PCs to
Windows XP. It also had substantial budget constraints and needed to overcome a fat-client
usage culture. Xerox Brazil had an unmanaged client architecture in which users were relatively
free to load their systems with personal content. Xerox Brazil was at a crossroad, and it took the
correct route. It defined its new PC needs and decided it could not invest in replacing the systems
with new ones. Xerox discussed using a server-based computing architecture. That was a major
company change, and it represented the additional risk of interrupting the normal flow of business
if something did not go well during the technology change process. The server-based applications
included Windows XP, Microsoft Office, Outlook, ERP, payroll and Web.
Xerox in Brazil, like most enterprises in that country, is an established user of fat clients and it
had no direct or indirect experience with other types of PC architectures. Indeed, even though
thin clients are starting to grow in popularity in Brazil, Xerox's CIO had no reference of the
success or failure for thin clients in Brazil or elsewhere in Latin America. It was unaware of the
capabilities of server-based computing and that such an architecture was not functionally limiting.
The change was as new to the users, once adopted, as it was for the IT department when the
idea was first put on the table for discussion. No one was prepared at that time to deal with it until
budget constraints changed company's IT operations.
Xerox "Consumerization" Cleaning: An Additional Challenge
Part of Xerox Brazil's growing problem, as in many organizations worldwide, was the rapid
penetration of "consumer" gadgets in the corporate environment. This is a growing phenomenon
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4. that needs to be addressed by organizations (see "Consumerization of IT: The Gartner Analyst
Keynote, Spring 2006").
In this particular case, Xerox needed to work on the thin-client deployment first with its users, who
needed to clean their systems and provide IT with an estimate of the storage needed in the
server. They found various situations, such as a user who was offered 5GB of storage. The user
later requested 10GB and then 14GB. After a careful examination and cleaning of this user's hard
drive, it was determined that he had more than 2GB of MP3 files and substantial noncorporate
material, such as photographs. It was finally determined that he needed no more than 3GB.
Approach
Xerox first decided to do the old system cleaning and conversions in-house to keep costs low.
Without this in-house capability, the alternative was to outsource the conversion, which would
change in the overall costs and savings.
Xerox also decided to discuss the process with Citrix. After deciding on a Citrix solution, its next
decision was to use Linux in clients because Citrix supports Linux in old systems, considerably
extending the life of old PCs. That resulted in double savings for Xerox in fat-PC systems and fat-
client operating system (OS) license fees. However, the new architecture required spending
$370,000 for Citrix licenses.
Xerox Brazil also worked with a Citrix partner in Brazil, AddIT, and installed AddIT’s Linux card
"Add Client." This allowed running of the Citrix client and enabled Xerox workers to access the
organization's information and applications from anywhere securely. There is security
functionality in Citrix architecture (Secure Gateway) that creates a virtual private network (VPN)
connection during the authentication process. Every time a user connects to Xerox Brazil's
extranet, it is done through a VPN connection.
Xerox also opted for 13 IBM Windows 2000-based servers with the Citrix Presentation Server
application (formerly MetaFrame). This application continues to be a choice for most customers
with larger and more-demanding implementations, because its features allow for easier
administration, application publishing, better printing, and a more-granular management console
than Microsoft Terminal Server (see "Branch Environments Pose Issues for Server-Based
Computing").
Also, Xerox Brazil was able to meet the corporate requirement to use Windows XP, which solved
a potential conflict with worldwide corporate policies. The thin-client servers were loaded with
Windows XP. Xerox Brazil had found a solution that saved costs, increased security and
manageability, and complied with Xerox's worldwide corporate OS requirement.
Results
From an economic perspective, the decision for server-based computing saved Xerox Brazil
$4,334,000 in capital/operating expenses and TCO during the first year of the life of the thin-client
architecture. That amount would have included buying new PCs, service agreements and OS
licenses, and sanitizing and disposing of the old machines, as well as much-higher TCO. Xerox
Brazil experience also benefited from its in-house conversion capability.
Xerox Brazil's client TCO was reduced to $120 per seat a month to a total of $1,584,000.
In mature PC markets, indirect costs are higher than in emerging markets, especially with
unmanaged traditional PCs, and the TCO of server-based computing (with Windows-based
terminals) ranges between 12% and 48% less than for comparable PCs. With well-managed
traditional PCs –- which included locked-down desktops — which was not the case for Xerox
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5. Brazil, that range is between 9% and 12% (see "TCO Comparisons of PCs With Server-Based
Computing").
From a technical perspective, results were optimum. Because one single image was adopted for
all the thin-client terminals, complexity was substantially reduced. In addition, Xerox was able to
deploy thin-client technology with no "casualties" on the road, such as downtime. Critical
applications and corporate data were not lost, and the interaction with Xerox partners and
channels continued uninterrupted. IT security and overall manageability were enhanced.
From a corporate culture perspective, it took Xerox users about four months to get in
synchronization with the new architecture, status quo and IT policies. As Xerox did not have a
lockdown policy before, this was a difficult cultural aspect, but it was finally accepted by the users.
Additional Benefits
In addition, savings were also noted when the company moved locations. With fat clients, their
outsourcing company fee per seat (uninstalled and reinstalled) would have been $45, but there
was no charge for the thin-client terminals.
Critical Success Factors
It is Gartner's view that the most-critical initial aspect for an IT project of this nature is to have
consensus. The Xerox IT team agreed to adopt a thin-client architecture, and Xerox's top
management and business units entirely aligned with the idea. This consensus was fundamental
for the implementation of the project.
Beyond reducing costs, the Xerox IT team in Brazil was also clear about the business need to
enhance productivity in the company. It knew, for example, that the downtime costs under its
obsolete fat client architecture were high, and that needed to change. The IT team found a
business solution through technology adoption.
Xerox's IT team was extremely careful in the planning process, which included adapting the old
PC systems into thin-client terminals and handling users' reactions to the new status quo that was
about to be imposed.
As an obvious interested party, Citrix, became a successful part of Xerox's IT migration team
during the entire planning and execution process.
Despite some initial reactions as user's rights changed, Xerox employees eventually aligned with
the idea and collaborated with the IT team.
Lessons Learned
Xerox Brazil and Citrix, as a partner, demonstrated that converting obsolete PC systems into thin-
client devices is, in emerging markets particularly, an economically feasible project when done
with careful planning and in-house technical capabilities. But as those old machines age, Xerox
may have to replace them with new thin-client devices.
This experience demonstrates to organizations in general that thin-client architectures are
feasible for more companies than originally thought, such as government offices and specific
areas in banks, for example. Considering that Xerox is a technology provider company in which
fat clients are the standard, its successful thin-client adoption is encouraging for thin-client
vendor-related companies.
Furthermore, Server-based computing for the most part ignores mobility, and that may be a
downside for many organizations. However, connectivity, which should not be confused with
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6. mobility, is part of the architecture selected by Xerox Brazil. This was a major plus for this
company.
Because direct costs of hardware and software are higher in emerging markets, conversion of old
PCs into thin-client devices in these countries is a valid option; contrarily, in mature markets this
may not be a viable alternative because these direct costs are lower and indirect costs (mainly
services) are higher.
The Xerox experience must be understood in the context of costs of hardware, software and
services in Brazil. Therefore, in using this case as a benchmark, organizations in other
geographical areas are encouraged to carefully look into these costs and their in-house
capabilities. A keen assessment may demonstrate that migration to thin clients will save you
money or may be an effort not worth taking.
RECOMMENDED READING
"Consumerization of IT: The Gartner Analyst Keynote, Spring 2006"
"Branch Environments Pose Issues for Server-Based Computing"
"TCO Comparisons of PCs With Server-Based Computing"
"PC Images Running on Thin-Client Devices"
"Client Platforms Spotlight: Evaluating if Server-Based Computing Is Right for You"
"Thin-Client Shipments Stage Strongest Growth Since 2000"
This research is part of a set of related research pieces. See "Strategic Insights for Emerging PC
Markets" for an overview.
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