Cost/Benefit Analysis

Article
03/05/2008

The following numbers were derived using Microsoft business value tools for Windows Vista deployment and life-cycle management. All monetary amounts are stated as U.S. dollars.

Key Deployment Assumptions

Software License Costs
Users receiving upgrade	6,549
Software license cost (per computer)	$0
Training Costs
Training hours per upgraded user	1 hour
Training cost (cost to develop training per user)	$6
Desktop Deployment Costs
Desktop Imaging
Number of images currently used	13
Number of different hardware setups that require separate images	2
Number of different departmental setups that require separate images	6
Estimated IT time required to create each image	93 hours
Images required with the Windows Vista operating system	13
Application Compatibility Remediation
Number of core applications requiring testing for Windows Vista deployment	112
Average hours of testing per application	9 hours
Percentage of applications that will require remediation	15%
Average time spent per application requiring remediation	12 hours
Third-party application costs per user	-
Infrastructure Remediation
Standard hardware refresh cycle	36 months
Additional desktops replaced for Windows Vista deployment	1,119
Desktops requiring upgrades	100
Additional laptops replaced for Windows Vista deployment	197
Laptops will requiring hardware upgrades	50
Expected Hardware Costs
New desktop	$900
New laptop	$1,600
Upgrade desktop (hardware + labor)	$150
Upgrade laptop (hardware + labor)	$150
Planning & Organization
Planning and organization time required	1,000 hours
Deployment Process
End-user downtime	0.12 hour
Deployment Method Used (depends on connection bandwidth and management infrastructure)
Manual Deployment	5%
Lite Touch Deployment	15%
Zero Touch Deployment	80%

The following financial calculations are estimates based on information available through calculation tools and industry research. The final budgeting and basis for which items shall be included in this project require an in-depth audit and confirmation. Of note are the exclusions of hardware purchases intended to be refreshed during the coming year as well as hardware that is more than three years old and overdue for refresh. The costs of the Enterprise Agreement for Microsoft desktop operating systems and Office products are also excluded from this calculation. The Enterprise Agreement in place includes the software licenses associated with this project.

Key Financial Indicators

	Year One	Year Two	Year Three	Total
Cost	($1,983,000)			($1,983,000)
Operating System Benefits	$1,643,490	$1,643,490	$1,643,490	$4,930,470
Net Cash Flow	($339,510)	$1,643,490	$1,643,490	$2,947,470
Net Present Value (NPV)	($339,510)	$1,429,122	$1,242,715	$2,332,327
Discount Rate				15%
IRR				64%
Payback Period ( (Total Investment/Total Benefits) × 12)				14 months
Number of Desktops Deployed				6549
Cost per Desktop				($303)
Software				($0)
Training				($43)
Planning & Imaging				($5)
Application Remediation				($9)
Hardware				($205)
Planning				($7)
Deployment Process				($34)

Cost Breakdown

Cost Type	One-Time Amount
Software	($0)
Training	($279,000)
Imaging	($31,000)
Application Remediation	($58,000)
Hardware	($1,345,000)
Planning	($48,000)
Deployment Process	($222,000)
Total Costs	($1,983,000)

Benefits Analysis

The following table displays the main benefits from Windows Vista and Office Enterprise 2007. Operating system and additional benefits have been calculated for three years; benefit calculation assumes the years begin after all deployments are complete.

Quantified Annual Operating System Benefits

Business Benefits

IT Department Benefits	Annual Benefits
Reduced Security Mgmt	$222,000
Reduced Information Theft	$90,000
PC Recycling	$26,000
Automated Desktop Management	$100,000
Reduced Help Desk Support	$104,000
Reduced Image Management	$25,000
Third-Party Application Savings	$65,490
Performance and Reliability	$518,000
Computer Failures	$3,000
Power Management	$195,000
Application Responsiveness	$6,000
Information Management	$289,000
Total Benefits	$1,643,490

Total annual benefits resulting from this project are $1,643,490. These benefits were derived using the Windows Vista early adopter data from Microsoft and take into account the assumptions stated in the “Project Description” section.