Windows Vista Projected to Help AMD Improve PC Management and Reduce Per-PC Total Cost of Ownership by 6 Percent
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1 Microsoft Windows Vista Customer Solution Case Study Windows Vista Projected to Help AMD Improve PC Management and Reduce Per-PC Total Cost of Ownership by 6 Percent Overview Country: Worldwide Industry: Microprocessors Customer Profile (AMD) is a leading global provider of innovative microprocessor solutions that enable the creation of modern IT products and technologies. AMD has a proven track record of fast, efficient manufacturing execution and has a bold vision for its business and the technology industry. Business Situation AMD has a corporate policy of upgrading its PC fleet to the current Microsoft Windows client operating system (OS) on a three-year hardware refresh cycle as each new client OS is released. This best practice ensures that the company s PC fleet remains current, which helps AMD to control PC maintenance and management costs. Solution A total cost of ownership (TCO) analysis predicted that by upgrading to Windows Vista on three-year hardware refresh cycle AMD can expect to gradually reduce its per- PC deployment, maintenance, and management costs. Predicted Benefits Lower TCO per PC per year Improved management of IT operations Better PC security, reliability, and ease of use The estimated decrease in IT and end-user labor costs enabled by [Windows] Vista combined with expected savings on power consumption by using efficient AMD processors can help us lower our PC operating costs. Clay Cipione, Chief Information Officer, As a leading global provider of innovative microprocessor solutions, (AMD) stays current with each release of the Microsoft Windows client operating system. Based on a best practice of replacing approximately one-third of its PC fleet each year, AMD s PC environment is a model of planned PC diversity. A total cost of ownership (TCO) analysis conducted by Microsoft at AMD predicted that upgrading AMD s 5,200 desktop and notebook PCs to Windows Vista from Windows XP and Windows 2000 will provide AMD with a net savings of up to $192 per PC per year, equivalent to a 6- percent reduction in the company s current annual per PC TCO. The projected savings are expected to be the result of savings in IT labor, end-user labor, and reduced electrical consumption per PC per year. IT labor is predicted to be reduced by 6 percent or $22 per PC End-user labor is projected to be reduced by 6 percent or $121 per PC Electricity consumption is estimated to be reduced by 40 percent or $49 per PC Because AMD plans to phase in Windows Vista through its existing hardware refresh cycle, deployment costs are projected to be minimal at $40 per PC. Based solely on these TCO benefits, the TCO study predicts a payback period of 7 months with an internal rate of return of 219 percent.
2 Pushing the boundaries of PC management by using new capabilities of Windows Vista should enable AMD to gain incremental value and lower not only our TCO per PC but also our overall PC budget. Definitions of Terms Hardware and Software Annual metric amortized over three years that includes PC hardware, spares, supplies, PC applications, Windows OS, and Windows OS Client Access License (CAL). IT Labor Annual IT full-time equivalent (FTE) cost for service desk services (Tiers 0 to 3) and desktop engineering. End-User Labor Annual cost for end-users maintaining their own PCs by troubleshooting, installing and configuring software or software updates, data management (backup and restore), recreating lost work, and downtime. Best Practices - IT process improvements designed to reduce costs, reduce risk, or improve IT service levels. Most best practices are designed to use new or existing technologies to improve IT operations. Situation As a leading global provider of innovative microprocessor solutions to the global computer, communications, and electronics industry, (AMD) is known worldwide for its product innovation and customer focus. AMD applies this same dedication to its own IT environment, particularly the manner in which it manages its fleet of 5,200 desktop and notebook PC s based on AMD Athlon processors and AMD Turion mobile technology. These CPUs have been designed to maximize the potential of the Microsoft Windows operating systems (OS). The Windows Vista OS takes full advantage of the performance, multi-core, power efficiency, data security, and 64-bit technologies that are built into these CPUs. AMD replaces about one-third of Its PC fleet each year, which enables its end users to have a new PC roughly every three years. As a result, some PCs run on older versions of Windows software, depending on where each PC is positioned in the AMD hardware replacement cycle. Managing an environment of planned PC diversity is made even more complex by the AMD strategy to let its users manage their own PCs. As a manufacturer of advanced microprocessors, AMD knows there is no better place to test the quality of its products than within the company s work environment. As one example of this practice, AMD users can modify their own PC settings or add new applications because user permissions for individual PCs are not managed centrally. AMD s central IT group tests only critical line of business applications for compatibility. Non-critical applications are left for the user to test in production environments. This practice helps to reduce IT costs and also enables AMD engineers to better understand what occurs in customer environments. AMD has five production OS images that support its current fleet of PCs running Windows 2000 and Windows XP across 32- bit and 64-bit environments. AMD has reduced its service desk costs by utilizing the services of an outside provider to take advantage of lower labor rates. Based on peer benchmarks, AMD operates one of the most cost effective service desk operations in the United States. Annual service desk costs are valued at approximately $51 per PC for AMD's Windows 2000 and Windows XP environments. AMD s unusually low service desk costs contribute to its low annual IT labor cost of $384 per PC. Demands on the company s IT department are also reduced significantly because its end users are highly computer literate engineers, who prefer to do much of their own PC administration. One of AMD s core objectives for its Windows Vista deployment is to reduce the time and costs associated with users supporting their own PCs. IT labor benefits are always welcome but have a lower priority because AMD's costs in this area are already quite low. Solution AMD views Windows Vista as the next logical step in refining its user experience and reducing end-user labor costs. Windows Vista self-healing capabilities can resolve many issues without user intervention. From an IT labor perspective, Windows Imaging Management (WIM) makes OS imaging hardware independent. This capability can make it easier for AMD to introduce as many PC hardware configurations as needed for product development, without adversely affecting imaging costs.
3 The TCO study predicted significant improvements. Even relatively small TCO savings gained by using Windows Vista have the potential to generate a large ROI because our deployment costs are low. Using Windows Vista to implement IT best practices plays less of role at AMD than at other organizations because AMD has already implemented most of the best practices it feels is appropriate for its unique environment. To help AMD better understand the costs and benefits of implementing Windows Vista as part of its hardware replacement cycle, Microsoft conducted a total cost of ownership (TCO) analysis in the spring of This analysis examined deployment costs and the potential for lower IT labor and end-user labor costs when Windows Vista is fully deployed in three years. Projected AMD Deployment Costs for Windows Vista Product evaluation $5 Planning and project management $18 Application compatibility testing $1 Application replacement $10 Piloting and lab testing $6 Total Projected Deployment Cost $40 Exhibit 1: Projected Windows Vista deployment costs per PC, for AMD, commented, We didn t expect to see a large improvement in our deployment and management costs by using Windows Vista, because we already operate very efficiently. Benefits The TCO study predicted significant Because IT and end-user labor costs are such improvements. Even relatively small TCO significant contributors to TCO, knowing the savings gained by using Windows Vista have estimated financial benefit in each category the potential to generate a large ROI Projected Costs and Benefits for Windows Vista [return on investment] because Labor Benefits Current Windows Windows Vista $ Diff. % Diff. our deployment costs are low. IT Labor Service desk $51 $40 $11 22% Desktop engineering $333 $322 $11 3% Low Deployment Subtotal $384 $362 $22 6% Costs End-User Labor Deploying Vista at AMD is predicted to be inexpensive because the existing hardware replacement cycle is being used and because the IT staff will conduct minimal application compatibility testing. Self-support of PCs $1,965 $1,851 $114 6% Downtime $44 $37 $7 18% Non-Labor Benefits Subtotal $2,009 $1,888 $121 6% Electricity consumption $122 $73 $49 40% Benefits Compared to Costs per PC Exhibit 1 presents a breakdown of the estimated total cost of $40 per PC for deploying Windows Vista at AMD. The TCO study did not predict any incremental hardware or software cost increases. AMD's existing hardware replacement cycle will be used to deploy Windows Vista. Total annual benefit $192 Cost to deploy $40 Exhibit 2: Comparison of estimated costs and benefits of deploying Windows Vista
4 Improved core functionality in [Windows] Vista along with improved management technologies should help us lower our end-user costs. can help AMD to fine-tune its PC operations. Exhibit 2 shows how the contribution of each cost category to TCO is predicted to change after the deployment of Windows Vista. Exhibit 2 also shows the potential benefit from reduced consumption of electricity. 6 Percent Reduction Predicted In IT Labor Costs The TCO study predicted benefits in two areas of IT labor: lower service desk costs and lower costs for desktop engineering. Fewer service desk calls. The TCO study projected that AMD s outsourced service desk costs would decrease by $11 per PC per year. These costs are projected to decline for two reasons. be resolved by the company s in-house IT staff. Winslett notes, Windows Vista is predicted to help us gain incremental savings in service desk costs, which can help us control IT costs. 6 Percent Reduction Predicted in End-User Labor Costs Many AMD end users are computer engineers, who prefer to work on their own PCs rather than seek help from the IT staff. First, Windows Vista s improved reliability and self-healing functionality is predicted to reduce costs by $7 per PC per year. Second, the WIM service is projected to enable the AMD service desk staff to reimage desktops earlier in the troubleshooting process, which can help to reduce incident resolution times and costs. This benefit is valued at $4 per PC per year. Less desktop engineering. The TCO study projected that AMD would save an estimated $11 per PC per year in desktop engineering costs. It is estimated that AMD will be able to reduce its five PC images to three (a 40 percent improvement) because Windows Vista images are hardware independent. Fewer desktop images are predicted to result in a $3 per PC savings in imaging labor. Improvements in Windows Vista code are predicted to result in another $4 per PC per year in cost savings, the result of fewer security vulnerabilities for the IT staff to track and resolve. Another $4 in savings per PC per year is predicted as a result of fewer Tier-3 support escalations from the service desk that must Exhibit 3: Projected costs compared to predicted 3-year return by deploying Windows Vista The TCO study predicts that fewer security updates and automated data back-up enabled by Microsoft IntelliMirror management technologies will save the average AMD user about 3 hours per year in PC and data management, an estimated $114 per user savings. The self-healing abilities and greater reliability of the Windows Vista operating system are estimated to save the average AMD user about $7 per year in downtime. Winslett adds Improved core functionality in [Windows] Vista along with improved management technologies should help us lower our end-user costs. Electricity Costs Can Help Reduce TCO Windows Vista Group Policies and AMD Athlon processors and AMD Turion mobile
5 For More Information For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) In Canada, call the Microsoft Canada Information Centre at (877) Customers who are deaf or hard of hearing can reach Microsoft text telephone (TTY/TDD) services at (800) in the United States or (905) in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the worldwide Web, go to: For more information about Advanced Micro Devices (AMD) products and services, call (408) or visit the Web site at: technology are predicted help to reduce PC power consumption by an estimated $49 per PC per year, enabling further reductions in TCO. The savings are projected to come from new group policies provided with Windows Vista that allow for the central management of PC power settings and the lower power consumption of the new AMD processors. Powerful Return on Investment The TCO analysis predicted that by upgrading to Windows Vista gradually over a three-year period, AMD could recoup its investment within 7 months and achieve an internal rate of return of 219 percent. Clay Cipione, Chief Information Officer for, concluded, The projected decrease in IT and end-user labor costs enabled by [Windows] Vista combined with savings on power consumption by using efficient AMD processors can help us lower our PC operating costs. TCO Analysis Methods This study was performed using Microsoft TCO methods based on industry-standard TCO models. A TCO tool from Gartner was used to set up baseline costs for Windows 2000 and Windows XP. Projected cost savings for Windows Vista were provided by Microsoft. These savings are based on new product features and experience with the Windows Vista Early Adopter Program. Early adopters are Microsoft customers, who agree to test Microsoft beta release software in their production environments. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Individual results, costs, and savings may vary. Windows Vista Windows Vista can help your organization use information technology to gain a competitive advantage in today s new world of work. Your people will be able to find and use information more effectively. You will be able to support your mobile work force with better access to shared data and collaboration tools. And your IT staff will have better tools and technologies to enhance corporate IT security, data protection, and more efficient deployment and management. For more information about Windows Vista, go to Microsoft Corporation. All rights reserved. Microsoft, Active Directory, IntelliMirror, Microsoft Server System, Windows, and Windows Vista are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. Software and Services Microsoft Server System -- Microsoft Windows Vista Windows Active Directory Group Policies Hardware AMD Athlon processor and AMD Turion mobile technology based desktop and notebook PC s Document published November, 2006
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