A Business Desktop with Microsoft Windows 2000 and
Microsoft Office 2000 Delivers Measurable Gains

Equipping a business d...
Note: there could be many more subject categories within each functional area, however this analysis focuses only on the
t...
Reliability, availability, performance   •   Resilient operating system with critical file    •    File format compatibili...
applications, configuring and            •    Reuse already developed code using COM                •   Office Server Exte...
•   Time consuming collaboration          •   Offline files/folders keep important               •     Web publishing
    ...
(Note: Developer productivity improvements are addressed later in this section.)



The impact for IT operations showed a ...
It is important to note the correlation between the impact on IT operations and user productivity. The industries that saw...
Measuring Business Value
The approaches used for measuring business value used the following methology used in analyzing t...
More on Business Value
For more information on the REJ framework and published case studies, visit www.microsoft.com/value...
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October 31, 2000

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Transcript of "October 31, 2000 "

  1. 1. A Business Desktop with Microsoft Windows 2000 and Microsoft Office 2000 Delivers Measurable Gains Equipping a business desktop with Microsoft® Windows® 2000 Professional and Microsoft Office 2000 both reduces the cost of managing the desktop as well as enables increases in revenue and profitability through improved business productivity. Studies conducted using the Microsoft REJ™ framework and Gartner’s TCO Analyst tool showed a productivity improvement of up to 8 percent, an internal rate of return (IRR) of up to 259 percent, and a net present value (NPV) of up to $23 million. October 31, 2000 Scope This white paper summarizes the findings of 14 business value studies using the Microsoft REJ™, a rapid economic justification framework, and the GartnerGroup TCO Analyst tool. GartnerGroup audited the results of the studies used in the TCO analysis. Giga Information Group verifies the results of all REJ studies. Value of the Business Desktop An effective technology solution should help people in an organization improve business processes and work more efficiently, thus creating value for the organization by reducing costs or increasing revenue. Many organizations across industries are finding tangible value in upgrading to the new business desktop with Windows 2000 and Office 2000. The analysis framework and tools that were used in the studies, as described in this paper, measured tangible value by examining three major functional areas: IT operations, application development, and business functions. The following table shows the magnitude of the impact the new business desktop can have on these three functional areas: Functional Areas Application Business Value IT Operations Development Functions Increase or Protect Sales Productivity Revenue (  1.2% to 2.8% ) Support Services Reduce or ( 8% to 64% ) Developer Productivity User Productivity Avoid Cost Desktop Management (  10% to 30% ) (  0.7% to 8% ) Services (  4.5% to 60% )
  2. 2. Note: there could be many more subject categories within each functional area, however this analysis focuses only on the three categories listed in this table. As shown in the following table, the benefits that a business desktop equipped with Microsoft® Windows® 2000 and Microsoft Office 2000 bring to IT and business communities have a direct impact on an organization’s financial performance: statements: Financial Metrics Range Net Present Value (NPV) $120,000 to $23 million Payback (months) 6 to 18 months Internal Rate of Return (IRR) 102% to 259% TCO Reduction 7% to 32% Value Enablers The analysis for this paper found a similar set of critical success factors (CSFs) and business objectives across companies and industries, such as: • Asset Utilization or Operational Efficiency--Improved user productivity and reduced IT costs. • Customer Relationship--Service, sales, and marketing. • Supply-Chain Productivity--End-to-end integration. • Agility—Ability to respond to business change. Today, people in any organization depend upon information technologies and services to communicate, collaborate, and perform tasks. An IT portfolio is a set of building blocks, which includes components from the core infrastructure to specific business application, that enable people to do these tasks efficiently and effectively, and thus reach their business goals. A business desktop is a critical component of any IT infrastructure and a critical tool for any business user. This value analysis focused on the impact of the new business desktop with Windows 2000 and Office 2000 on IT and business users. The study reviewed effects on: support services, desktop management, and developer, user, and sales productivity. Support Services in IT Operations IT Support services include all levels of support and helpdesk services related to user workstations, servers, and applications. The support services reviewed in the REJ study included a service desk, online Web, dispatch, or vendor support services. This analysis also included labor costs of IT operations staff and vendor support contracts. Cost Contributors Windows 2000: Enablers Office 2000: Enablers
  3. 3. Reliability, availability, performance • Resilient operating system with critical file • File format compatibility and co-existence of hardware, protection, rigorous testing and signing of • Custom Installation Wizard remote networking, operating drivers, Plug and Play, and system recovery system, productivity tools, and console business applications contribute to • Built-in services for remote connection and the service calls and diagnostic Microsoft Virtual Private Networking (VPN) support provided by support staff. • Remote installation and diagnostic services and tools • Hot swapping • Single worldwide operating system Cost Contributors (cont.) Windows 2000: Enablers (cont.) Office 2000: Enablers (cont.) Installation and configuration of • Group policies • Self-repairing software and applications and workstation settings • Roaming user profiles install on-demand by end users, limited user training, • Support for IntelliMirror • Customizable Help and loss of data and files due to • Offline folders and files alerts insufficient backup and recovery • On-demand application installation procedures result in helpdesk calls. • Online Help and troubleshooting • Folder redirection Desktop Management Services in IT Operations Desktop management services covers that aspect of IT operations dedicated to managing and maintaining user workstations and applications. Cost Contributors Windows 2000: Enablers Office 2000: Enablers • Software deployment • Advanced scripting and Installation Wizard • Custom Installation Wizard • Hardware/software to automate software deployment and • Multi-language support configuration upgrades. • Integrated components and • User and desktop • Group policies and user profiles for services such as OLAP, administration consistent and managed desktop OLEDB, Microsoft • Capacity planning • Computer Manager and Event Viewer for NetMeeting®, and Web consolidated system information publishing • Disk quotas • Built-in components and services such as XML, indexed searching, COM+, and disk duplication • Plug and Play • Single image with multi-lingual interface Developer Productivity in Application Development Developer productivity is the percentage of the time spent designing, developing, testing, and deploying applications to support business processes. Cost Contributors Windows 2000: Enablers Office 2000: Enablers Learning new technology and tools, • Use of built-in functionality in the operating • Multi-language support installing additional tools to get the system such as scripting, installation • Built-in components and job done, developing system-level wizards, application and user profiles, XML, services such as data code to implement business TAPI, index searching, COM+, and multi- analysis with OLAP and functionality, integrating and testing language support. data access with OLEDB
  4. 4. applications, configuring and • Reuse already developed code using COM • Office Server Extensions for deploying application code from components and messaging and Internet document publishing and development to test to production, protocols collaboration maintaining an existing code • Office Web Components on the server for reporting and analysis • NetMeeting. User Productivity in Business Functions Simply put, user productivity is the percentage of time users spend on the activities necessary to perform their job function rather than the time spent learning to work with or around the tools and processes. Cost Contributors Windows 2000: Enablers Office 2000: Enablers • Time spent in dealing with • Increased system and application availability • Install features on demand. hardware and software issues, due to built-in high reliability with critical file • Detect and report system resulting in a call to helpdesk protection, certified applications, online Help files automatically or a peer with troubleshooting, power management, • Multi-language support • Downtime due to unavailability hot swapping, hot docking/undocking, and • File format compatibility of system and applications standby mode • Built-in access for • Simplified connectivity with network and databases remote connection wizards • Customizable Help and • Single environment with multi-lingual support alerts Under-utilized technology due to • PC as a companion due to hot docking and • Microsoft IntelliSense® casual or no learning, resulting in standby mode • Customized Help and rework and inefficient processes. • Offline folders for consistent and automatic alerts. refresh of documents • Personalized menus • Integrated search • Personalized menus • Infrared support In addition to increasing individual productivity, organizations can use the business desktop with Windows 2000 and Office 2000 to improve team productivity. (Note that this value analysis did not include collaborative features such as Microsoft NetMeeting®, Web publishing, in-line document discussions with Microsoft Office Server Extensions, and integrated data access and analysis. As the initial rollout of the business desktop with Microsoft Windows® 2000 and Office 2000 did not include some of these features, they were considered options; and the value of the benefits derived were accounted separately.) Sales Productivity in Business Functions Sales productivity is the percentage of time workers spend on customer-focused activities rather than on technologies and tools. Increased sales productivity results in more sales calls, more effective meetings, and more complete and up-to-date information to reduce follow-ups, which lead to satisfied customers, more revenue, and reduced cost of sales. In addition to typical issues faced by general business users, customer-facing groups in an organization must address the challenges created by their mobility and the variety of their customers. Cost Contributors Windows 2000: Enablers Office 2000: Enablers
  5. 5. • Time consuming collaboration • Offline files/folders keep important • Web publishing on documents documents in-sync between user’s • Document discussions • Unproductive travel time workstation and document server using Office Server • Waiting on others to respond • Power management, hot docking/undocking, Extensions • Working and reworking on and standby mode improve customer • NetMeeting outdated data interaction • Integrated multi- • Necessity of follow-ups, as • Indexing and integrated search allows dimensional data analysis. documents aren't available off- search for documents on local and remote • Synchronization Wizard line storage • Searching for documents • Built-in VPN and connection manager for • Remote connectivity slow or simple, reliable, and fast access to the unreliable network • Economic Impact of Productivity • To put the value of productivity improvements in perspective, a one percent increase in user productivity could mean millions of dollars in cost avoidance. For example, assuming $40 per hour fully burdened cost of an employee working 2000 hours per year, a 1000-employee organization could realize $800,000 from a one percent productivity improvement. An organization with 10,000 employees may see a bottom-line improvement of $8 million. The financial impact may be more if we consider what people could accomplish due to their increased productivity. For instance, a one percent increase in sales productivity means an additional 20 hours in customer face time per year, per sales person. If each sales person is able to close one more sale in one year, this could amount to millions of dollars in additional revenue. Similarly, if we look at the productivity improvements and savings in IT operations relative to a company's growth and profit margin year after year, even a one percent improvement in operational efficiency can have a noticeable impact on the financial performance of the company. Value Analysis The following graph shows the distribution of impact in various functional areas. Business Value by Functional Area (Business Desktop: Windows 2000 and Office 2000) 64.0% 60.0% Average Minimum Maximum Improvement 29.9% 24.4% 8.0% 8.0% 4.5% 2.4% 2.2% 2.8% 0.7% 1.2% Desktop Management Support Services User productivity Sales productivity Services Functional Area
  6. 6. (Note: Developer productivity improvements are addressed later in this section.) The impact for IT operations showed a wide range; the cost reduction or cost avoidance varied from 4.5 percent to 60 percent in desktop management services, and 8 percent to 64 percent in helpdesk services, depending upon the state of the infrastructure that was being upgraded and the best practices implemented. The companies that were upgrading from Microsoft Windows® 95 to Windows 2000 or from Microsoft Office 95/97 to Office 2000 saw significant reductions in IT operations costs. The companies with Windows NT® 4.0 who implemented most of the best practices enabled by Windows 2000 also saw above average improvements. The variation in user productivity is due to the state of the desktop as well as type of the organization. The organizations with more mobile users or knowledge workers saw a greater improvement in user productivity. The next two graphs provide a breakdown of improvements in IT operations and business function for various industries. Impact on IT Operations by Industry (Business Desktop: Windows 2000 and Office 2000) Support Services Desktop Management Services 36.0% 64.0% Improvement 39.0% 49.5% 18.0% 17.0% 17.0% 27.3% 25.0% 12.5% 17.7% 12.0% Banking and Financial Services Impact on Business by Industry Banking and Chemical and Pharmaceuticals (Business Desktop: Windows and Utilities Office 2000) Chemical and Energy 2000 and Manufacturing Retail Services Financial Services 5.1% Pharmaceuticals Energy and Utilities Industry Manufacturing Retail 3.6% Services 2.9% 2.8% Improvement 2.5% 1.7% 1.4% 1.5% 1.2% User productivity Sales productivity Productivity Note: Sales productivity was not measured in some industries due to the TCO nature of the studies
  7. 7. It is important to note the correlation between the impact on IT operations and user productivity. The industries that saw a big improvement (cost reduction or avoidance) in IT operations through helpdesk and desktop management services also saw larger than average improvement in user productivity. The data reflects the state of the infrastructure and the best practices implemented. Of course, upgrading from older software (two releases prior) results in an above average gain; it also shows the missed financial opportunities caused by not maintaining and exploiting the infrastructure. The industries that have tried to keep up with the technology infrastructure, for example, using Microsoft® Windows NT® 4.0 and Microsoft Office 97, also saw reasonable benefits by upgrading to Windows 2000 and Office 2000. Developers expect to improve their productivity from 10 percent to 30 percent due to built-in features in Windows 2000 and Office 2000. 30.0% 20.0% Improvement 10.0% Average Minimum Maximum Developer Productivity Some of the improvements in Windows 2000 and Office 2000 that contributed to increased developer productivity include: • Core system level services are integrated and installed with Windows 2000, rather than installed as individual applications. • Dynamic link library (DLL) protection in Windows 2000 allows different applications to co-exist while using their own version of DLLs. This minimizes the need for full testing with other applications. • Office components need not run on the server for report generation and data analysis, reducing the time for developing reports. Overall, the analysis shows that upgrading to the business desktop with Windows 2000 and Office 2000 enables organizations to achieve their critical success factors, thus producing significant financial benefits.
  8. 8. Measuring Business Value The approaches used for measuring business value used the following methology used in analyzing the impact that a business desktop with Windows 2000 and Office 2000 has on IT and business groups: • Gartner’s TCO Analyst Tool—estimates the impact on the total cost of ownership (TCO) in various IT groups as well as end-user indirect costs. It uses the current and target configuration and the state of best practices to determine the change in TCO. GartnerGroup audited the results of studies that used the TCO Analyst tool. • REJ™—is a framework used to align, identify, and quantify the benefits of a solution to IT and business groups. Microsoft developed the REJ framework using industry standard practices and academic research in the field of economic analysis of information technology. The REJ framework uses a business assessment for the proper alignment of the solution with business objectives; identifies and quantifies the benefits, costs, and risks of implementing a solution; and assembles a financial statement for economic analysis. Giga Information Group audited the studies that used the REJ framework. Consultants from Microsoft consulting services and partners facilitated the data collection and presentation of the results. IT groups and business management in the respective companies provided the data and approved the financial analysis. The studies were limited to identifying and quantifying how a business desktop with Microsoft® Windows® 2000 and Microsoft Office 2000 improves IT operations and end-user productivity. The scope of the study did not include measuring or quantifying benefits derived from productivity improvements such as more sales calls, quicker time to market, or increased customer satisfaction. The benefits from any technology implementation can be either direct or "option benefits". The direct benefits are realized from the direct implementation of the solution. The option benefits are the potential benefits that may be realized later if the organization decides to use new capabilities available in the solution. Only direct benefits were included in the financial analysis. Conclusion In today’s economy, successful companies create economic value through the effective use of both tangible and intangible assets. The intangible assets, such as relationships with partners and customers, knowledge, people, brands, and systems play a significant role in creating and maintaining a competitive edge. Companies need to understand and measure the impact of intangibles on business performance. They need to invest in and manage their IT infrastructure in order to capitalize upon and maximize the contribution of intangibles. The results of the analysis indicate that across various industries, whether upgrading from older versions of desktop technologies or more recent ones, companies can make a tremendous impact on their business performance by standardizing on a business desktop with Microsoft Windows 2000 and Office 2000. Companies can anticipate measurable improvement in operational efficiency through reduction in IT and end-user costs as well as a positive impact on top-line performance through the improved productivity of customer-facing employees. In financial terms, upgrading to the business desktop with Windows 2000 and Office 2000 produced a high internal rate of return (IRR) from 102 percent to 250 percent, with a payback of 6 to 18 months depending upon the current state of technologies and best practices.
  9. 9. More on Business Value For more information on the REJ framework and published case studies, visit www.microsoft.com/value. If you would like to conduct an economic analysis of the impact of the business desktop with Windows 2000 and Office 2000 on your company, or if you have questions, please send an e-mail message to value@microsoft.com. © 2000 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

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