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A VDI calculator - one look at the possible financial benefits of a virtual desktop environment

Virtual Desktop Infrastructure -- VDI -- continues to be a hot topic. Scott Lowe shares with you one possible way to look at the financials behind this up and coming technology.

There are a number of drivers behind the rising interest in virtual desktops.  Rampant success in the server virtualization space has made IT managers look over the desktop landscape and wonder if similar benefits could be had in that realm.  In my previous posting in this blog, I talked about the overall benefits of VDI, which, among other things, include:

  • Breaking the desktop replacement cycle.
  • Improving desktop management.
  • Enhancing security.

In this posting, I'm going to concentrate on the first item and how it contributes to potentially significant financial benefits.  Warning: This will be a simplistic model full of assumptions.

Assumptions

For this posting, I'm going to make the following assumptions:

  • The organization's current desktops and servers are on a 4-year replacement cycle.
  • A replacement desktop without monitor generally cost about $500. We won't worry about figuring in monitor costs here since that cost won't be much different between solutions.
  • Thin clients that will be used in the VDI solution cost about $300.
  • The goal is to be as cheap as humanly possible. Of course, in your own scenario, this may not be the ultimate goal, but for this scenario, we'll go with it.
  • The organization in question has 400 desktop computers. 100 desktops are replaced each year.
  • We won't be looking at labor costs in this analysis. However, with the right VDI solution, it's very likely that you will find significant time savings, too.
  • The useful life of a thin client is 6 years.

We've always done it that way

Before looking at the VDI way, let's look at a twelve year period with the traditional desktop replacement cycle.  Sure, twelve years is a long time, but the numbers will generally hold.

 

Qty

Price

Total

Year 1

100

 $500 $50,000
Year 2

100

 $500 $50,000
Year 3

100

 $500 $50,000
Year 4

100

 $500 $50,000
Year 5

100

 $500 $50,000
Year 6

100

 $500 $50,000
Year 7

100

 $500 $50,000
Year 8

100

 $500 $50,000
Year 9

100

 $500 $50,000
Year 10

100

 $500 $50,000
Year 11

100

 $500 $50,000
Year 12

100

 $500 $50,000
   

Total

$600,000

The total twelve year cost for this solution would be $600,000 plus any labor costs related to replacing these PCs.

The VDI approach

Like I said, this particular organization is trying to keep things as inexpensive as possible.  PCs will be replaced with thin clients at each PC's normal upgrade schedules.  The organization will deploy VDI immediately across the board for all 400 desktops; even those not due for replacement in year 1 will use VDI.  As of this writing, the list price for ten VMware View Enterprise clients with 3 years of gold support is$2,303.35.  We'll use a price of $230 per client for our calculations, although most organizations can get much better pricing.  For the full 12 year period, we'll keep maintenance active and assume that, once licenses are purchased, maintenance costs will be $46 per 3 years (20%).  I know this is not perfectly accurate, but is close enough to begin making generalizations about the cost effectiveness of terminal-based VDI.

The table below outlines the VDI licensing cost

 

Client Qty

Client cost

Client Tot

Year 1

400

 $                300  $  120,000
Year 2      
Year 3      
Year 4

400

 $                   46  $     18,400
Year 5      
Year 6      
Year 7

400

 $                   46  $     18,400
Year 8      
Year 9      
Year 10

400

 $                   46  $     18,400
Year 11      
Year 12      
   

Total

 $  175,200

The table below outlines the client hardware cost.

 

Client Qty

Client cost Client Tot
Year 1

100

 $ 300  $ 30,000
Year 2

100

 $ 300  $ 30,000
Year 3

100

 $ 300  $ 30,000
Year 4

100

 $ 300  $ 30,000
Year 5      
Year 6      
Year 7

100

 $ 300  $ 30,000
Year 8

100

 $ 300  $ 30,000
Year 9

100

 $ 300  $ 30,000
Year 10

100

 $ 300  $ 30,000
Year 11      
Year 12      
   

Total

 $ 240,000

The total client hardware cost in this scenario would be $240,000.

There are other costs as well.  Servers are on a four-year replacement cycle at this organization.  Let's assume that ESX servers power this infrastructure and that each server costs $4,000, which is actually reasonable these days.  The total replacement cost for servers during this twelve year span would be $96,000.

Finally, let's talk about storage.  At Westminster College, the SAN we use for everything else will power our VDI infrastructure so the storage cost really won't hit the VDI project directly.  However, for our scenario, let's assume that, over the twelve year period, $50,000 is spent on storage allocated for VDI purposes.

The table below outlines the totals.

  Desktops VDI
Desktops  $  600,000.00  
Clients    $  240,000.00
Servers    $    96,000.00
Storage    $    50,000.00
Licensing    $  175,200.00
   $  600,000.00  $  561,200.00

In all, using these figures, you'd see a savings of about $39,000.  At first glance, that may not seem like a massive number, but keep in mind that you're also going to see the following:

  • Potentially, a tremendous drop in the amount of time it takes to support desktop users.
  • Energy savings through the use of thin clients vs. thick PCs.
  • It's likely that you'll see savings from monitor replacement that are not calculated here. On a cycle, you probably upgrade both the desktops and the monitors. Under the scenario outlined above, you could just run the monitors until they die.

Further, the pricing that I've used here is list pricing.  It's very likely that you can do better.  The idea here is to show you that there is likely savings to be had with VDI, depending on how you architect the environment.  To bring the costs down further, you could:

  • Not buy thin clients. Instead, repurpose the existing desktops to be used in the VDI infrastructure and simply leave them in place as long as possible. You wouldn't see as much energy savings, but you would be able to postpone a lot of hardware purchases.
  • Extend the server life by a year or two and get a third party support contract on the units to keep them supported after the manufacturer warranty expires.
  • Run the terminals until they die, hoping they last longer than six years. Remember, under VDI, a terminal failure is a simple fix.

I hope that this discussion has helped a little to understand one way to look at the financials behind VDI.

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

5 comments
tom.curtin
tom.curtin

You are ignoring Microsoft's VECD "tax". If you are running a thin client -like a WYSE box, you owe them between 80 and $118 bucks A YEAR for the right to boot Windows -EVEN though you have paid for a copy of windows to run in the data center. If you are booting from an old PC with windows the VECD tax is about $8 a year, even so, doing the math on 5-10,000 PCs give's one pause...

MWRMWR
MWRMWR

Accountant perspective? Sigh. Let's put in some costs for being unable to run courses effectively as the performance and responsiveness can be so poor for, say photoshop or multimedia work. If just doing word-processing or spreadsheets or web-based mail you can use low spec machines anyway and cut out the server. I'd like to see the calculations (factoring in reliability) of costs for example when you only ever buy 30 month-old machines and plan on getting 18 month's life out of them (as the accountants guarantee a supply of 3-year old perfectly sound machines :-} ). My guess is that just over 2 years old might be a sweet spot if you don't need to show "shiny shiny new toy" for some political reason. Virtualization is brilliant and convenient for testing behaviour against different platforms with different s/w versions (i.e. few active instances), but for thin clients (I remember X-terminals and Sun systems from years ago and their modern equivalents), you have to be very careful about identifying the costs and benefits in any particular situation. Notably over this year, there are some very green (low-power) "thick" PCs around that make power savings very marginal.

3kl
3kl

Three comments. First, I'd love to see the comparable pricing for Citrix's XenDesktop which integrates the XenApp application streaming versus the still to be proven in production VMware ThinApp product. Second, I believe that VMware's maintenance generally runs around 40% for 24x7 gold if I remember correctly (could be wrong on that.) Third, to the benefit of the cost for VDI, thin clients probably wouldn't need to be kept on the same three year replacement plan. As a matter of fact, Sun Microsystems still has some of their original thin clients running in their main office. (Yea yea, it is Sun but isn't the point to a thin client to just be a dummy end point and not do any processing?)

Scott Lowe
Scott Lowe

For these figures, I took 20% of the price on VMware's site that already included gold maintenance, so some of that 20-40% difference is already calculated in. In this scenario, the thin clients are on a six year cycle. They are phased in on the same replacement cycle as the desktop PCs and then replaced six years later.

MWRMWR
MWRMWR

I approve of that!

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