using-tco case study

8/2/2019 Using-TCO Case Study

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Using Total Cost of Owner-ship to Determine Optimal

PC Refresh LifecyclesWritten or IT decision makers and practitioners across industry verticals

who are responsible or managing eets o laptop and desktop PCs,this paper provides: Atotalcostofownership(TCO)assessmentframeworkfor optimalPCrefreshratesbasedonEquivalentAnnualCost

analysis. The ramework takes into account PC acquisition,management, and warranty costs.

AnalysisoffurtherTCOreductionopportunitiesoeredby Intel vPro technology and a ramework to quantiythose benets.

InvestigationofpowersavingsoeredbybothoptimizingPC reresh rates and by Intel vPro technology.

AccompanyingthiswhitepaperisaWebbasedreturnoninvestmentestimatorthatoersacustomassessmentthatcanbetailored to a specic rms situation. The estimator is available at.t.c////.t

Authored by:

Timothy Morey and Roopa Nambiar

Wipro Consulting Service Product Strategy and Architecture Practice

May 2009

Sponsored by:

Intel Corporation

CopyrightWiproLtd.2009.Allrightsreserved.Noportionofthisstudycanbeusedorreproducedwithoutpermission o the author. For additional reproduction rights and usage inormation, go to www.wipro.com.Informationisbasedonbestavailableresources.Opinionsreectjudgementatthetimeandaresubjectto change.


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Using Total Cost o Ownership to Determine Optimal PC Reresh Liecycles

Table o ConTenTs

Abstract 1

Table o Contents

Executive Summary 3

Introduction 5

Maintenance and Support Costs Increase over Time 6

Cost o Resolving Security Incidents Increase with PC Age 6

Calculating the Optimal PC Reresh Cycle 8

The Added Beneft o Mobility 8

Benefts o Upgrading with Intel vPro Technology 12

What is Intel vPro Technology? 12

What is the Impact o Intel vPro Technology on User Productivity 13

Financial Benefts o Investing in Intel vPro Technology 15

Power Savings 16

Newer PCs Use Less Power 17

Laptop PCs Use Less Power 17

Intel vPro Technology Enabled Remote Shutdown 18

Conclusion and Recommendations 20

Appendix 1: Methodology 21

Data Gathering 21

Data Modeling 21

Power Modeling Assumptions 21

Intel vPro Technology Deployment Cost Assumptions 21

The Model Company 23

Appendix II: Financial Summary o Benefts 24


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exeCuTive summary

When considering ways to stretch IT budgets, it may be tempting to delay PC rereshes and extend PC liecycles. While thisallowsrmstoavoidPCacquisitioncosts,olderPCscostmoretomaintain,sothetotalcostofownership(TCO)may

actually increase.

In order to accurately assess current PC ownership and management costs, Wipro analysts gathered detailed data rom 106

rmsinNorthAmericaandEuropeincludingrepresentationfrom15dierentindustries.Eachrmhadaminimumof2,500

PCs,ofwhichatleast25%werelaptops.ThermsallmanagedelementsofPCsupportwithinternalITsta.Thedatashows

that or most rms, the optimal PC reresh liecycle or both laptop and desktop PCs is three years.

The analysis takes into account the

cost o PC acquisition, the cost o issueresolution and maintenance based on

reportedfailureratesofPCsatdier-

ent ages, and out o warranty repair

costs. For PCs that are older than three

years, the cost o maintenance and

issue resolution increases such that it

is cheaper to purchase a new system.

The research data demonstrates that

support costs increase with age -- a

ve year old PC costs twice as much to

maintainthananewone.Oneofthe

maintenance cost drivers is that act

thatoldersystemssuerfrommore

security incidents a our year old PC

has53%moresecurityincidentsthana

PC in its rst year.

FIGURE 1. For laptop PCs, the optimalrefresh rate is three years

Mobile PC Annual TCO by Refresh Rate

(Equivalent Annual Cost)

1 YearRefresh

$1,500

$2,000

$2,500

$1,000

$500

$0

2 YearRefresh

3 YearRefresh

3 YearRefresh

5 YearRefresh

$1,210

$716

$1,926

$634

$768

$1,402

$442

$824

$1,266

$347

$891

$75$1,313

$290

$969

$171

$1,430

Acquisition Costs

Support Costs

Out of WarrantyRepair Costs

FIGURE 2. For desktop PCs with an acquisition cost of$600, the optimal refresh rate is three years

Desktop PC Annual TCO by Refresh Rate


1 YearRefresh

$600

$800

$1,000

$400

$200

$0

2 YearRefresh

3 YearRefresh

3 YearRefresh

5 YearRefresh

$660

$433

$1,093

$346

$465

$811

$241

$499

$740

$189

$539

$26$755

$158

$585

$59

$802

Acquisition Costs

Support Costs



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Asidefromrefreshrates,WiproalsoassessedthepotentialimpactofupgradingtoPCswithIntelvProtechnology.Intel

vProtechnologyimprovestheabilityofITteamstomanagesystemsremotely,evenifthePCisturnedooriftheoperating

system is unresponsive. IT technicians can accomplish this by using secure, out o band communication channels enabled

byIntelvProtechnology.Basedonthesurveydata,Wiproanalystsestimatethatarmwith30,800PCsadoptingacostop-

timal three year reresh rate will save an additional $2.1 million in maintenance costs over three years by adopting Intel vPro

technology-enabled systems. This is the saving ater the cost o business and IT process change is accounted or, and most

o these savings are driven by a reduction in deskside visits to manually resolve PC issues. Expected per PC savings in this

scenario are outlined in Table 1.

FirmswithlargePCeetsareinterestedinreducingpowerconsumption.OptimizingPCrefreshesbyretiringoldersystems

anddeployingIntelvProtechnology-basedPCssupportthisgoal.Wiprossurveydatashowsthatarmwith30,800PCscan

reducepowerconsumptioncostsby$214,000ayearoncetheyoptimizeonathreeyearrefreshcyclewithIntelvProtechnol-

ogy. This savings is in addition to the maintenance savings outlined above.

ExpectedsavingsfromPCrefreshcycleoptimizationandIntelvProtechnologydeploymentwillvarybyorganization.For

instance, the number o PCs, the laptop/desktop mix, age and variety o PC eet, IT practices, and IT labor costs are examples

ofmetricsthatwillinuencePCTCO.Thiswhitepapercontainstypicalsavingsforarmbasedontheaveragevaluesofrmsthat participated in the study. However, the algorithms and assumptions have been codied into an online estimator at

www.intel.com/business/vpro/roi/demo.htm. The online estimator allows nance, IT and operations proessionals to tailor

TCOanalysistothespeciccircumstancesoftheirrm,resultinginamoreaccurateestimate.

Patch Deployment Cost Reduction $52 $24

Manual HW Malfunction Resolution Cost Reduction $15 $4

Manual SW Malfunction Resolution Cost Reduction $25 $9

Audit and Inventory Failure Resolution Cost Reduction $11 $7

Security Failure Resolution Cost Reduction $2 $2

Total $138 $92

Application Deployment Cost Reduction $33 $45

Potential Savings/PC/Year Laptop PC Desktop PC

TABLE 1. Intel vProTM

technology substantially reduces PC management costs


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inTroduCTion

Whenfacedwithcostcuttingpressures,ITorganizationsmayconsiderdelayingPCpurchasesbykeepingtheirexisting

systemsforfour,ve,orevensixyears.DelayingPCacquisitionsmayseemtobeaneectivewaytoconservecapital,but

when the cost o PC support, maintenance, and user downtime is accounted or the short term savings disappear. When

the total cost o ownership is taken into account, delaying PC reresh cycles can turn out to be an expensive mistake.

Wiproanalystsgatheredinformationfrom106ITorganizationsinNorthAmerica,GreatBritain,andGermanyinMarch2009

in order to better understand the costs associated with deploying and maintaining eets o laptop and desktop PCs. IT

practitioners and decision makers with detailed knowledge o their processes and costs each gave Wipro detailed data on

PC reresh practices, critical cost drivers, ailure rates, PC management practices, power management, and user downtime.

Wipro analysts built a nancial model based on this inormation in order to determine optimal PC reresh liecycles.

This whitepaper explores contributing actors that determine the optimal reresh rate or laptop and desktop PCs, using ex-

amples rom the rms that participated in the survey. There is an online estimator at www.intel.com/business/vpro/roi/demo.

htm which uses the same algorithms as those used to derive the analysis in this paper, and allows IT, operations, and nance

proessionals to build a business case tailored to the unique situation at their respective rms.

Asidefromthebenetsderivedfromoptimiz-

ing reresh cycles, this whitepaper also explores

the added benet o rereshing with Intel vPro

technology-enabled PCs. Intel vPro technology

impacts the cost o PC management and power

costs.Moreissuescanberesolvedremotelyas

Intel vPro technology allows IT departments toreach and service PCs, even i they are unrespon-

sive or the operating system is down. IT teams

can update PCs remotely with secure power-on

capabilities, diagnose and repair distressed PCs,

audit and track PCs remotely, and rapidly isolate

and x inected systems. Both this whitepaper

and online estimator explore the benets o

optimizingrefreshcyclesandalsocalculatethe

additionalbenetofoptimizingwithIntelvPro

technology.

FIGURE 3. Wipro PSA analysts gathered data from a wide

variety of industries in order to understand

their PC management cost structures

Survey Participant Industries

Professional Services

Number of Respondents

14

Communication 12

Process Manufacturing 12

Insurance 11

Other 9

Banking 9

Government 8

Healthcare Services 5

Retail Trade 5

Construction 5

Other Financial Services 4

Wholesale 3

Ultilities 3

Transportation 3

Education 2

0 8 16


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mainTenanCe and supporT

CosTs inCrease over Time

AsPCsage,thenumberofITissuesincreases.

Wipro gathered data on typical issues that

increase the total cost o PC ownership.

The key cost drivers are:

1. Updating PCs Typical activities include:

a.Newapplicationdeployments

b. Service pack deployment

c. Patch or minor updates

d. Scheduled security patches

e Emergency security patches

2. Diagnosis and repair o PCs Helpdesksupportformajorhardware

and sotware malunctions

3. SecurityIncidentsIsolationand

recovery o inected PCs, including:

a .Attemptedhostinfectionbyvirus,

TrojanHorseorothermalicious

attacks

b.Accidentalmis-congurationof

management agents

c. Intentional/malicious mis-congu-

ration o management agents d.NetworkorotherDenialof

Service attacks

Onaverage,theroutinetaskofupdatingPCsis

the greatest cost driver. Failures related to PC

updates are very common across the PC user

base, and manual resolution o these issues can

be time consuming and costly. The average costs

inNorthAmerica,UK,andGermanyforboth

laptopanddesktopPCsareoutlinedinFigures5

and 6. The data shows that there is an increase incosts as systems age.

FIGURE 4. As systems age, there is an increasein the cost of resolving securityincidents per system per year

Average Annual Cost of Isolating and

Recovering Infected PCs (per mobile PC)

$24$30

$40

$50

$20

$10

$0

Year 1

$28

Year 2

$32

Year 3

$38

Year 4

$46

Year 5

$54

Year 6+

Ct r sct

ict ic t pC a

AtypicalPCexperiences30securityincidentsinitsrstyear,andthis

climbssteadilyassystemsage.Moreover,surveyrespondentsreport

thatitrequiresmoreeortfrommoreseniorITstatorecoverolder

infectedPCs.Asaresult,resolving security issues in a new PC costs

hal as much as that o a fve year old system.

While old and new PCs are vulnerable to virus and spyware, older

systems have been around longer, increasing the opportunity or

exposure.Onceinfected,oldersystemsoftenrequirecostlysta

with higher levels o expertise to x them, especially i the rm

hasahighlevelofvarietyandcomplexityinitsPCeet(seeWipro

whitepaper New Insights on PC Management: Benefts o Controlled

PC Hardware Diversity).

AnalysisshowsthatPCinfrastructurecomplexityincreaseswith

longer reresh cycles. Wipro analysts believe that this may cause en-

terprises to qualiy a smaller percentage o hardware congurations

whenrollingoutsoftware(likesecuritypatches),resultinginhigher

deployment ailures rates. These sotware deployment ailures have

a tendency to occur with older hardware congurations that

are overlooked in the qualication process.

Wipro analysts ound that viruses and denial o service or other

network attacks were the most requent orm o security incident.

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ForbothlaptopanddesktopPCs,surveyrespondentsreportedanaverageincreaseinsupportcostsof59%betweentherst

andfourthyearsofPCoperation.Assystemsage,theybecomemorecostlytoupdateasnewersoftwarefacescompatibility

issues with older systems.

Several actors contribute to this rise in PC support costs. First, older PCs accumulate more sotware which impairs PC

performanceovertime.Thiscanbeduetousersdownloadingunauthorizedandnon-standardapplications,whichimpairor

interferewiththeperformanceofcorporateapplications.Itisalsotheresultofcomplexitythatresultsfromthereported35

scheduledpatchesandapplicationinstallsperyearforlaptopsand51fordesktopsi. Systems that are ve or six years old may

nothaveenoughRAMtoruncurrentversionsofsomesoftwarepackages.Thereisalsoanincreaseinsecurityincidents(see

SecurityIncidentsIncreasewithPCAgesidebarfordetails).

FIGURE 5. In its 5th year of use, a laptop PCcosts twice as much to manageas it did in its rst year

Average Annual Per PC Cost

of Supporting Mobile PCs

$716$900

$1,200

$1,500

$600

$300

$0

Year 1

$825

Year 2

$953

Year 3

$1,136

Year 4

$1,368

Year 5

$1,623

Year 6+

FIGURE 6. While desktop support costs are lowerthan laptop PCs, they show a similarincrease in management costs over time

Average Annual Per PC Cost

of Supporting Desktop PCs

$433

$900

$1,200

$600

$300

$0

Year 1

$500

Year 2

$577

Year 3

$688

Year 4

$816

Year 5

$956

Year 6+


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CalCulaTing The opTimal pC reresh CyCle

The cost data shows that due to rising support and maintenance costs there is a point where purchasing a new PC is cheaper

than maintaining an old one.

WiproanalystsselectedEquivalentAnnualCost(EAC)asthebestdecisionmakingframeworktoassessoptimalrefreshcycles

forPCs.Mostinvestmentdecisionsinvolvechoosingthebestinvestmentoptioninordertoprovidethegreatestreturntothe

rm.Financeprofessionalshavedevelopedinvestmentdecisionframeworkstomakeinformedchoicesonwhichprojects

toinvestin,oftenusingNetPresentValue(NPV)calculations.However,PCpurchasesarenotusuallyaquestionofwhether

tobuyPCs,butratherhowfrequentlytobuythem.StraightforwardNPVcalculationsareadequateformanyinvestment

decisions,butforPCrefreshcycleswheredierentlife-spansarebeingconsidered,equivalentannualcostisabettertool.

WhereasNPVshouldnotbeusedtocompareprojectswithdierentlife-spans,EACquantiesthecostperyearofowning

andoperatingaPCoveritsentirelifespan,andcanbeusedtocomparemultiplerefreshcycleoptions.BydividingtheNPV

ofaprojectbyanannuityfactor,EACallowsITdepartmentstoassesswhetheratwo,three,four,orveyearrefreshcycleiscost optimal or their business.

T a bft mt

75%ofthecompanieswhoparticipatedinthe2009WiproPCManagementsurveyclaimthatthenumberofworkersusing

mobile rather than desktop PCs is increasing. There are several actors or this. Firstly, mobile PCs are allocated based on role,

andmoreandmorerolesarebeingdenedasrequiringmobilePCs.58%ofthecompaniescitedthisasadriverofmobile

PC adoption. The composition o the workorce is also changing because remote collaboration tools increase tele-work and

the use o home ofces are

increasing.13%ofcompa-

nies cited the expansion

o tele-work programs

as a driver or mobile PC

adoption,and28%cited

the increase in home-

oceworkers.Just13%

o rms have implemented

an all-mobile PC policy,

but Wipro analysts expect

this number to increase

over time.FIGURE 7. 75% of rms see some increase in mobile PC allocation

Desktop to Laptop Migration Plans

We do not have any desktop tolaptop migration plans in place

Mobile PCs are allocated based on role, and moreroles are being classied as eligible for mobile PCs

We are allocating mobile PCs toall employees as ageneral rule

Our company is encouraging home-oce use, andwe are encouraging employees to work from home,

hence we are increasing the use of mobile PCs

13%

28%

58%

25%

0% 20% 40% 60%


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WiprohasthereforeadoptedEACastheframeworkforanalyzingtheoptimalrefreshcycleforPCs.Thismodelprovidesthe

ollowing key benets:

ExpressesPCcostdynamicsinaclearandunderstandableway

Oerstheexibilitynecessarytoperformwhat-ifandsensitivityanalysisandchange

assumptionsabout coststoviewtheir eectsonoverall TCO

Oersawaytocomparedierenttimehorizons

Inthisstudy,WiproanalystsuseEACtocomparethecostofaone,two,three,four,andveyearPClifecycle.EACprovides

awaytoassessthecashowsassociatedwithpurchasingandmaintainingaeetofPCswithdierentlifecyclesovera

specic period o timeii.

OutlinedbelowisatableofcostsassociatedwithbuyingandowningPCs.Notethatonlytheacquisition,supportand

OutofWarrantysupportcostsarefactoredintothesecalculations.AdditionalcostsincurredwitholderPCs,suchas

replacement batteries and docking stations are not actored in. Likewise energy costs and the impact o lost user

productivity are excluded rom this analysis. The ocus is purely on the PC cost items which commonly accrue to the

IT budget, namely the cost to buy and maintain PCs.

Acquisition Cost $1,100 $0 $0 $0 $0

Support Costs $716 $825 $953 $1,136 $1,368

Out of Warranty Repair Costs $0 $0 $0 $348 $661

Cash Flows for Laptop PCs

Item Year 1 Year 2 Year 3 Year 4 Year 5

TABLE 2. Nominal costs of PC acquisition, management and warranty repair costs

Acquisition Cost $600 $0 $0 $0 $0

Support Costs $433 $500 $577 $688 $816


Cash Flows for Desktop PCs

Item Year 1 Year 2 Year 3 Year 4 Year 5


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ToconvertcashowstoEACvalues,rstconvertthecostsintopresentvaluesinordertoaccountforthetimevalueofmoney

andthendividethatbyanannuityfactor.AnEACissimplyanannuitythathasthesamelifeandpresentvalueastheunderly-

ing cost stream. It allows sets o uneven cash ows to be converted into smooth, regular cash ows that can be compared in

a valid way. The calculation is quite simple it is the present value o the support costs over the lietime o the PC plus the PC

acquisition cost, divided by an annuity actor, which is related to the number o years you own the asset. In this example, we

areassumingadiscountrateof10%,sotheoneyearrefreshannuityfactoris0.91,twoyearfreshannuityfactoris1.74,the

three year is 2.49 and so oniii.

For the companies interviewed by Wipro analysts in this study, the cost optimal period to own a laptop PC is three years. I a

rmweretokeepaPCforjustoneyear,supportcostsarelow,butthePCpurchasecostmakesthetotalcostofownershipex-

pensiveat$1,926peryear.IfthesamermweretokeeptheirPCsfortwoyears,thetotalcostwouldbe$2,804overtwoyears,or$1,402peryear.Whilesupportcostshaveincreasedsomewhat,thefactthatthermcanamortizethePCacquisitioncost

over two years signicantly lowers the equivalent annual cost. The same holds true or the third year. I a rm were to keep its

laptop PCs or our years, even though the PC acquisition cost is divided over the our-year period, support and warranty costs

increasetoapointwheretheequivalentannualcostisactually$47higherthaniftheykeptthemachinesforjustthreeyears.

Five year and longer liecycles see a corresponding increase in the cost o ownership and a higher equivalent annual cost.


Support Costs $716 $768 $824 $891 $969


Total $1926 $1402 $1266 $1313 $1430

Equivalent Annual Cost Values for Laptop PCs

Cost Item 1 Year 2 Year 3 Year 4 Year 5 YearRefresh Refresh Refresh Refresh Refresh

TABLE 3. Equivalent Annual Cost is calculated by dividing the

present value of the cash ow with an annuity factor


Support Costs $433 $465 $499 $539 $585


Total $1093 $811 $740 $755 $802

Equivalent Annual Costs for Desktop PCs

Cost Item 1 Year 2 Year 3 Year 4 Year 5 YearRefresh Refresh Refresh Refresh Refresh


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FIGURE 8. The savings from reduced

support costs and avoided out

of warranty repair costs allow

the model company to quickly

recover the acquisition

Payback Period (in months)

Mobile PC

15.315.5

16.0

16.5

17.0

15.0

14.5

14.0

16.9

Desktop PC

Refresh withoutIntel vPro Technology

(Mobile PC @ $1,100,Desktop PC @ $600)

Asimilarpatternholdstruefordesktops.

Athree-yearrefreshcycleshowsthelow-

est total cost o ownership as support and

out o warranty repair costs increase in

years our and ve to such an extent that

theyoutweighthebenetofamortizing

the acquisition cost over more years.

This study demonstrates that a three-

year reresh cycle is cost optimal or both

laptop and desktop PCs, resulting in

substantial cost savings over the alterna-

tives.FortheModelCompanybased

on the average reported maintenance

costs or survey participants, the payback

period or moving to a three year reresh

wouldbe15monthsforlaptopPCsand

17monthsfordesktopPCs(assumingthe

Laptop and desktop PCs cost $600 and

$1,150respectively).

FIGURE 1. For laptop PCs, the optimalrefresh rate is three years

Mobile PC Annual TCO by Refresh Rate


1 YearRefresh

$1,500

$2,000

$2,500

$1,000

$500

$0

2 YearRefresh

3 YearRefresh

3 YearRefresh

5 YearRefresh

$1,210

$716

$1,926

$634

$768

$1,402

$442

$824

$1,266

$347

$891

$75$1,313

$290

$969

$171

$1,430

Acquisition Costs

Support Costs


FIGURE 2. For desktop PCs with an acquisition cost of$600, the optimal refresh rate is three years

Desktop PC Annual TCO by Refresh Rate


1 YearRefresh

$600

$800

$1,000

$400

$200

$0

2 YearRefresh

3 YearRefresh

3 YearRefresh

5 YearRefresh

$660

$433

$1,093

$346

$465

$811

$241

$499

$740

$189

$539

$26$755

$158

$585

$59

$802

Acquisition Costs

Support Costs



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beneiTs o upgrading wiTh

inTel vpro TeChnology

OptimizingPCrefreshcyclestolowerequivalentannual

cost has clear benets as outlined above. IT departments

can urther lower the cost o ownership by investing in PCs

with Intel vPro technology. While the extent o the savings

varybycompany,fortheModelCompanybasedonthe

results o our survey, switching over to Intel vPro technol-

ogy on a three-year PC reresh cycle saves an additional

$2.1Moverthreeyearsfortherm.

WiproConsultingServicesProductStrategyandArchitec-

ture practice has previously conducted multiple studies onthe benets o Intel vPro technology in enterprise IT and

IToutsourcersettings(seeThe Benefts o Intel Centrino

2 with vPro Technology in the Enterprise , available or

downloadatintel.com/vpro).Thesestudiesarebased

upon primary research gathered through more than 200

interviews with IT practitioners in companies o various

sizesfromaspectrumofindustries.Thendingsonthe

impact o Intel vPro technologies in these previous studies

wasprojectedontothecurrentPCrefreshstudyinorderto

assess additional benets that may be derived by reresh-

ing on Intel vPro technology-enabled systems.

wt t ict it p

Tc u pctt?

Reducing user downtime should increase user productivity.

However, not every hour o PC downtime equates to an hour

o lost productivity, as workers may do non-PC related tasks

or work longer hours. In order to quantiy typical impacts o

IT downtime, Wipro analysts asked survey respondents what

users do i PC issues mean they cant work while IT is xing

theirsystems.Answersfellintothreedierentcategories:

1. Some workers produce less work output but work

the same number o hours. I Intel vPro technology

reduces downtime this maps to better productivity

and additional work produced.

2. Someworkersworkmorehourstogettheirjob

done, and charge their company overtime. I Intel

vPro technology reduces the downtime o these

workers, it saves the company money.

3. Someworkerssimplyworkmorehoursbutdont

charge their company overtime. Reducing PC

downtime has no direct nancial benet or the

company,buttheworkersgettoenjoymorefree

time and maintain a better lie-work balance.

Wipro analysts also asked respondents average pay or

knowledge, structured task, and data entry workers. In the

ROIEstimatortool,salaryisusedasaproxyforthevalue

o the output. Clearly this understates the value o worker

output, as employees in protable rms produce more value

than their cost, but salary is inormation that survey respon-

dents can answer accurately hence it is the best proxy or

value.


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whaT is inTel vpro TeChnology?

Intel vPro technology can reduce the cost o PC management and lower power consumption costs.

The benets are as ollows:

ut pC c t t - ct tt t t

t t Intel vPro technology provides a reliable, more secure encrypted communication

tunnelforremotepowercontrolofPCs,usingAdvancedEncryptionStandard128-bitencryptionandTransport

LayerSecurity.Applicationandpatchdeploymentsincludingsecurityupdatesoccurmorerapidly,with

dramatically reduced times or recovery rom ailed deployments. Reductions are attributable to simplication

o problem diagnosis, elimination o most desk side visits, and ewer ailed deployments due to misidentication

o target systems.

Onaverage,wefoundthat80%ofdowntimehassomeproductivityimpactonthermacrossworkercategories.Therewas

some variation by industry, region and type o worker nancial services workers were most likely to absorb downtime by

working longer hours, European workers were more likely to work overtime, and data entry workers were the least likely to

absorbthedowntimebyworkinglongerhoursbutthedierenceswererelativelysmall.

AvoidinguserdowntimewithIntelvProtechnologybenetsthemodelcompanywith30,800PCsby$23.8Mayearin

avoidedovertimecosts,and$21.7Minadditionalworkproduced(seeTable4forhourlycostsbyworkertype).Ifwetake

the avoided overtime cost as being the most tangible productivity benet and apply it to the business case, Intel vPro

technology-enabledPCshaveapaybackperiodoflessthan10months.TheModelCompanycanrecouptheacquisition

costofaMobilePC(modeledat$1100)in9.4months,andDesktopPC(modeledat$750toaccountforthehighercostof

IntelvProtechnology-enabledDesktopPCs)in7.2months.

Knowledge Worker 48% 23% 29% 62.24

Structured Task Worker 41% 40% 19% 39.59

Knowledge Worker 49% 37% 14% 28.33

Type of Worker Work Same Hours, Work More Hours, Work Longer Hourly

Produce Less Charge Overtime Hours Cost

TABLE 4. Workers react dierently to PC downtime, but on average80% of PC downtime incidents have a user productivity cost


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i t t pC t Intel vPro technology allows IT to remotely access a

PC even when the operating system is unresponsive and the system will not boot. IT can test the system rom a

remotemanagementconsole,andtakeremedialaction(includingorderinganewPCintheeventthesystemis

un-repairable)withouttime-consumingdesksidevisitsoruserintervention.

dc pC t t Whether or not they are powered on, it is easier to correctly identiy PCs

with Intel vPro technology. This can result in a net reduction o inventory ailures, audit ailures, re-counts, and

misidenticationofassets.BasedonWiproresearch,upto70%ofthisremedialworkofmanuallyinventorying

PCs can be eliminated with an installed base o Intel vPro technology processor enabled laptops.

it c ct pCOftenthebestresponsetosecurityincidentssuchaswormsorvirusattacks

is the swit reconguration o ports and network connectivity by management sotware, allowing IT to isolate

theinfectedPCsothenetworkyetstillhaveaback-channeltoremotelyxthequarantinedPCs.IntelvPro

technologycanmakeITpersonnelmoreresponsivebyvirtuallyeliminatingthecaseswheremanualeortis

required to achieve reconguration. In addition, by deploying security updates more promptly with Intel vPro

technology-enabledtools,ITmanagerscanminimizethetimeittakestocloseanywindowsofvulnerability.

Intranslatingthesebenetstocostreduction,Wiproaskedthesurveyrespondentstoprovidetimeandeortestimatesfor

problem resolution techniques. Wipro analysts collected data on our techniques commonly used or solving user problems:

Userassistedviaphone

Userassisteddownthewirewithremotemanagementtools

UsershipsordeliversPCtoITservicedepot

DesksidevisitbyIT

EachtechniqueforresolutionrequiressomedegreeofITplanningandlabor,butwithIntelvProtechnology,timeandeort

isreducedforthelasttwoofthesetechniquesshippedlaptopstoITanddesksidevisit.Theeortreductionsaresignicant

or both o these techniques.


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inanCial beneiTs o invesTing in inTel vpro TeChnology

In order to quantiy the savings achievable rom Intel vPro technology, Wipro analysts created a model company derived by

averagingthesurveyresponsesfromallsurveyparticipants.Thehypotheticalrmhas11,500laptopPCsand19,300desk-

tops.Around20%ofthelaptopPCsand19%ofthedesktopPCsinthemodelcompanyareolderthanthreeyears.

The model company is airly disciplined in its purchase o PCs, and restricts itsel to ve laptop PC and ve desktop models

peryear,limitingthecomplexityofitseet.Onitsexistingrollingrefresh,themodelcompanyintendstogettoapointwhere

60%ofitslaptopPCsand50%ofitsdesktopsareIntelvProtechnology-basedsystems.Notethatthisisafairlyconservative

end-state;manycompaniesaimfor85%+oftheirsystemstobeIntelvProtechnologyenabled.

Themodelcompanysavesatotalof$3M

by moving to a reresh rate o three years.

This saving is calculated on the basis o

desktop PCs costing $600, and assumes

that none o the PCs are Intel vPro tech-

nology enabled.

What is the benet i the model company

rereshes with Intel vPro technology-

enabled systems instead? Intel vPro

technology-enabled desktop PCs tend to

be higher end systems so in this calcula-

tion Wipro analysts assumed a higher

acquisitioncostof$750.Laptopsarecalculatedataconstantpriceof$1150.

The benet o moving to a three-year

refresh,showninFigure9,dropsto$2.1M

over a three-year period due to the higher

acquisition cost. However, the lowered

support and maintenance cost o the

eet due to better remote management

through Intel vPro technology provides

anadditionalsavingof$3M.Overall,the

modelcompanycanexpecttosave$5.1M

by moving to a three-year reresh cyclewith Intel vPro systems compared with

$3Mofsavingswithathree-yearrefresh

cycle without the Intel vPro technology.

Number of Laptop PCs 11500

Number of Laptop PC Models Deployed Per Year 5

Desktop PCs

Number of Desktop PCs 19300

Number of Desktop PC Models Deployed Per Year 5

IT Sta Costs (U.S. Dollars)

Average Annual Burden Rate Per Level 1 Support Sta $75,844



Laptop PCs

Model Company Overview

TABLE 5. Model company assumptions used in the Intel vPro TM technolog

benefts calculation. The model company is a fctitious entity

derived by averaging the 106 survey responses


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The assumptions or this scenario are that

only60%ofthelaptopeetand50%

o the desktop eet will migrate to Intel

vPro technology enabled. Increasing

the percentage o PCs that move to Intel

vPro technology sees a corresponding

increase in remote management savings.

Moreover,thesesavingsonlyaccountfor

the hard dollar savings in IT management

costs that positively impact the IT budget,

and does not include the additional ben-

ets rom reduced power consumption

and increased end-user productivity.

power savings

Recent Wipro studies show that most rms have power savings initiatives in place in order to lower costs, meet government

regulations, and reduce the environmental impact o business operationsiv.OptimizingPCrefreshcycleswhiletappinginto

thenewcapabilitiesoeredbyIntelvProtechnologywillfurtherenableorganizationstoreducepowerconsumption.

NewerPCsusesignicantlylesspowerbecauseofimprovedprocessoreciency

LaptopPCsuselesspowerthandesktopPCs

IntelvProtechnologyoerstheabilitytoremotelyshutdownPCsattheendoftheworkdayandto

remotelybootthemupforpatchingandservicing.Systemsthatwerepreviouslyleftrunningcanbeturnedo

when not in use, without requiring changes in user behavior.

TheROIEstimatortoolallowsITandnanceprofessionalstocalculateboththepotentialpowersavingsfromswitchingto

newer PCs and the savings generated by remote shutdown. Both use cases are explored below but are kept separate rom

the maintenance and acquisition reresh story as IT departments are not usually responsible or power bills in their rms. For

smallerbusinessesandforusersassessingthetotalnancialimpactofPCrefreshoptimizationoftheirrms,thesavingsare

outlined in the results section o the tool.

FIGURE 9. Support cost decreasesmore than oset the higheracquisition cost of Intel vProTMtechnology-enabled PCs

Model Company: Total Benetsof a 3 Year PC Refresh with

Intel vPro Technology

Benets of a 3 year

PC refresh withoutIntel vPro Technology

(Desktop PCspriced at $600)

Benets of a 3 year

PC refresh withIntel vPro Technology

(Desktop PCspriced at $750)

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$2,000,000

$1,000,000

$0

Benets of a 3

year PC refresh

Benets of IntelvPro Technology

$2,089,841

$3,106,597

$3,053,706


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n pC u l p

NewgenerationsofIntelprocessors,suchastheIntelCore2DuoProcessorE8500,usearoundhalftheenergyofolder

processors,suchastheIntelPentium4Processor630,whentheyareinactivemode.

There is thereore an incremental benet to more requent PC rereshes, as rms benet rom lower energy consumption o

newerPCsintheireet.Whilethissavinginitselfdoesnotjustifyamorefrequentrefresh,forthemodelcompanyitcontrib-

utestothevaluegeneratedfromadoptingathree-yearPCrefreshstrategy.Forthemodelcompanywith11,500laptopPCs

and19,300desktopPCs,movingtoathreeyearrefreshcyclesavestherm$84,000inenergyconsumptionperyear(assumes

thecurrentPCeetageasoutlinedintheappendix,powercostsof$0.1perKWH,anddesktopusersrunningtheirsystems

for7hoursperday,leavingtheirsystemsidlefortheremaining17hoursperday).

lt pC u l p

LaptopPCshavebeenoptimizedforenergyecientperformance;hencecompaniesswitchingusersfromdesktoptolaptop

PCscanreapsignicantpowersavings.75%ofrmssurveyedhadsomesortofinitiativeinplacetoincreasethenumberof

workerswithlaptopPCs(seeTheAddedBenetofMobilitysidebarfordetails).Dependingonthecurrentstateofdesktop

PCpowermanagementandthescaleofusersmovingtolaptops,thesesavingscanbesubstantialandhelptoosetthead-

ditional cost o acquiring laptop PCs.

TheModelCompanycurrentlyhas19,300desktopand11,500laptopusers.Basedontheageoftheeet,andassumingthat

desktops are let on in the idle state overnight or servicing, Wipro analysts estimate that the rm pays $1,162,000 a year in

powerforthePCeet.IftheModelCompanydecidedtomove95%ofitscurrentdesktopuserstolaptops,theestimatedannualpowercostswouldfallto$463,000,savingtherm$699,000peryear.Onapersystembasisthepowerconsump-

tionfallsfrom$37persystemperyeartoamodest$15persystemperyear.Notethatthesecalculationsareconservativein

the desktop power consumption assumptions previous Intel studies show that rms using unmanaged PCs with cathode

ray tube monitors and other energy consuming peripherals consume considerably higher powerv,ofteninthe$50-100per

desktop per year range.

Energy Use When Active 110.18 watts 66.11 watts

Energy Use When Idle 69.60 watts 51.30 watts

Energy Use in Sleep Mode 3.90 watts 2.80 watts

Energy Use When Of 2.50 watts 1.50 watts

Processor Intel Pentium 4 Intel Core2 Duo

Processor 630 Processor E8500

TABLE 6. When active and in use, newer Intel PC processors

use half the power of older processors


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it p Tc e rt st

Despitetheeortsbymanybusinessestoreducetheirenergyconsumptionandcarbonfootprint,recentstudieshaveshown

that50%ofadultsemployedintheUSwhousedesktopPCsatworkdonotshutthemoattheendofthedayvi. This can

stem several actors, including:

LegacyITpoliciestoleavesystemsonovernightforpatchingandrepair

PCUserconfusionaboutthedierencesamongshuttingdown,standingby,hibernating,andscreensaving

(onlyshutdownandsleep/hibernatereducepowerconsumptionsignicantly).

PCswithIntelvProtechnologycanberemotelyturnedon,patched,andswitchedoagain.Thiscapabilityreducestheneedto leave systems on overnight or patching and has emerged as one o the most common use cases or Intel vPro technology.

Inordertoillustratethisbenet,considerthecaseofthemodelcompany.Ithasaeetof11,500laptopPCsand19,300desk-

top PCs. Laptop PCs are excluded rom these calculations as they are oten shutdown and taken home or locked away at the

end o the day. Wipro analysts assumed that currently users keep their PCs in active mode or seven hours per day, and leave

theirsystemsonintheidlestatefortheremaining17hoursofaworkday,and48hoursovertheweekend.Usersdonotturn

theirsystemso.Ifthemodelcompanypays$0.1perKWH,itscurrentdesktopPCpowerconsumptionis$990,000peryear.

OncethermhasswitchedovertoIntelvProtechnology-enabledsystemsonathree-yearrefreshcycle,ITcanremotelyshut

down systems even i users leave them on, reducing the power consumption to $776,000 per year, a saving o $214,000 per

year, a saving o $11 per desktop per year.

Current State Total Estimated Power Consumption Today $ 1,162,057

Future State Future Power Consumption with 95% Switch to Laptop PCs $ 463,259

Savings From Moving to Laptop PCs $ 698,798

Annual Estimated Energy Cost Total

TABLE 7. The Model Company saves on energy expenses

by moving users from desktop PCs to laptops


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Inadditiontopowersavings,manyutilitiesoerrebateprogramstoencouragetheadoptionofenergyecientPCs.While

programsvaryfromcountrytocountry,andbyindividualutility,Wiproanalystsfoundseveralprogramsoeringupto$15o

thepurchaseofspecicPCmodels.TheonlineROIestimatorcanaccommodatetheserebatesintheadvancedsettingstab

by lowering the purchase price o the PC to include this rebate.

Total Annual Energy Cost of Desktop PCs without a 3 Year Refresh or Intel vPro Technology $990,000

Total Annual Energy Cost of Desktop PCs with a 3 Year Refresh $915,000

Total Annual Energy Cost of Desktop PCs with a 3 Year Refresh and Intel vPro Technology $776,000

Annual Estimated Energy Cost and Energy Savings Total

TABLE 8. Power savings from remote shutdown with Intel vPro TM Technology

Total Annual Energy Savings with a 3 Year Refresh $ 75,000

Total Annual Energy Savings with a 3 Year Refresh AND Intel vPro Technology $ 214,000


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ConClusion and reCommendaTions

When considering approaches to stretching IT budgets, one regular candidate or saving money is to delay or even stop PC

rereshes or a certain period o time. While this approach will delay short term expenditures it is ultimately more costly to

theorganizationduetoanassociatedincreaseinPCmanagementcosts.Athreeyearrefreshcycleisthemostcosteective

PC management strategy because it balances up-ront capital investment rom new PC acquisition with the spike in per PC

support costs that oten occurs with older PCs.

Whileoptimizingrefreshcycles,ITorganizationsshouldalsoconsiderthepositivebusinesscaseassociatedwithdeploying

Intel vPro technology. This research study has demonstrated that Intel vPro technology reduces overhead IT management

costsbyreducingtheeortofcommonITtasks.WithIntelvProtechnology,organizationscanexpecttospendlesstime

conducting patch and application deployments, PC inventory audits, and deskside visits to resolve sotware and hardware

malunctions. In addition, Intel vPro technology will allow IT departments to respond more rapidly to security incidents.

AnadditionalbenettothermasawholeisanincreaseinuserandITproductivity.

Finally, shorter PC liecycles combined with Intel vPro technology will help companies reduce energy consumption and

carbonfootprints.Asrmstakeahardlookatenergyusageforcost,regulatory,andenvironmentalreasons,reducing

PC power consumption becomes an increasingly important consideration.

WiproconcludesthatanoptimizedthreeyearPCrefreshcyclealongwithbenetsinherentinIntelvProtechnologyis

a winning combination that will contribute to substantial nancial, operational and business benets. Potential savings

exploredinthispaper,aswellasthemagnitudeofsavingsaresummarizedinthetablebelow.

Three Year PC

Refresh Cycle

Maintenance and out of warranty support costs

increase sharply in years 4 and 5; for most rms,

three year lifecycles are cost optimal

$97 per PC over asset lifetime compared to current state

(20% of the laptop PCs and 19% of the desktop PCs in the

model company are older than three years in current state)

Intel vProTM

Technology for Cost

Optimal Maintenance

Enhanced remote PC maintenance decreases

the cost of manual resolution




Intel vProTM

Technology

for Power

Remote PC management tool signicantly

lowers desktop PC power costs as systems

are remotely powered down

$11 per desktop PC per year

Newer PCs UseLess Power

New desktop PCs are almost twice as powerecient as systems 3 years and older, when

they are in operation

$3 per PC per year

Laptop PCs Use

Less Power

Aside from the productivity benet, moving

towards power managed laptops can more

than half a typical rms PC power bill

$22 per PC per year

Item Description Impact on Model Company with

11500 Laptop and 19300 Desktop PCs

TABLE 9. Summary of savings potential and magnitude


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appendix 1: mt

dt gt

In2009,WiproPSAconsultantsandtechnicalarchitectssurveyedCIOs,ITdirectors,andseniorITmanagersat106companies

withheadquartersinNorthAmericaandEurope.50%ofrespondentswerefromNorthAmerica,25%fromtheUnitedKing-

dom,and25%fromGermany.

We selected a representative sample o rms which had:

Atleast5000PCsforNorthAmericaand2500PCsforEurope

At least25%oftheentireeetwerelaptopPCs

ThermsmusthandleatleastsomeaspectsofPCsupportwithinternalITsta

( i.e. rmswithtotaloutsourcingcontractswereexcluded)

WiproPSAselectedcompaniestorepresentadiversityofindustries,managementpractices,anduserdistributions.Allsurvey

participants are actively involved in the planning and delivery o the management processes discussed in the sur vey, and

have a granular understanding o the costs involved in service delivery. This ensured that all reporting reected direct, hands-

on experience with actual management practice.

dt m

Each survey respondent provided roughly 400 data points on current management practices, PC incidents, and costs, as well

as data on uture intentions. Wipro analysts used the raw data as a basis or calculating the current average costs o PC man-

agement, and derived the optimal PC reresh liecycles or a typical company based on that average data.

Power Modeling Assumptions

Forpowersavingscalculations,WiproanalyststookaveragepowerconsumptionbyPCtypein2009,2008,2007and2006

andcalculatedtheaverageconsumption.TheamountoftimeaPCispowered,idleandovariesbyuserandrm,andinthe

ROIEstimatorthisisauserinput.

Intel vPro Technology Deployment Cost Assumptions

TheprojectednetbenetsofdeployingPCswithIntelvProtechnologywereobtainedbybalancingtheone-timeandper-PC

implementation costs against yearly savings. Since we assume that PCs with Intel vPro technology are phased in via a com-

panys normal reresh process, yearly savings increase as the reresh cycle proceeds.


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Both one-time and per-PC implementation costs have been included in our analysis:

One-timeimplementationcosts.ThesecostsareincurredintherstyearofIntelvProtechnologyimplementation:

- TrainingofITinstallationandsupportsta

-Sta/consultingcostsassociatedwithre-engineeringtheITinstallationandsupportingprocessesto

include Intel vPro technology-specic activities

- Engineering costs to integrate Intel vPro technology eatures and capabilities with an existing inventory,

troubleticketingsystem,alert/eventdatabase(s),etc.

Per-PCimplementationcosts.ThesecostsareincurredasthePCsareinstalled:

- OEMIntelvProtechnologychargeadditionalpremiumchargedbyOEMsfor IntelvPro

technology-based PCs

- Conguration cost additional cost o conguring PCs with Intel vPro technology

- Inventory cost additional cost to install PCs with Intel vPro technology during an inventory update

ItisassumedthatthereisnoadditionallicensechargebyIndependentSoftwareVendorsforPCmanagement/security

sotware to support PCs with Intel vPro technology, as this support will be included in their normal release updates. However,

theseassumptionsarevariableintheonlineROIEstimatortoolinordertoallowuserstocapturetheuniquecircumstancesof

their rm.

Allcostsareusedconsistentintheanalysisdescribedinthisstudyforthemodelcompany.However,intheonlineROIestima-

tor, the deault estimate or the cost to redesign business processes to make use o Intel vPro technology capabilities, as well as

thecosttoqualifyandsetupitemsdiscoveredinthebusinessprocessconsultingvariesbysizeofcompany.Thiscostincludes

the cost o integrating Intel vPro technology eatures and capabilities into the existing trouble ticketing, alert/event database,

and inventory tracking systems.

The deault setting depends on the number o PCs supported as is set as ollows:

Smallorganizationswithlessthan100PCsincurnoprocessorengineeringcosts

Firmswith100-1000systemsincurafeeof$20,000

Firmswithmorethan1000systemsincurafeeof$80,000

ThesesettingsareallvariableandROIestimatoruserscanadjustthisintheadvancedsettingstabtoreecttheir

rms situation.


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T m C

WiproanalystsusetheconceptoftheModelCompanytoillustratethebenetsofrefreshandIntelvProtechnology.The

modelcompanyisaconceptualcompanybuiltfromthe106surveydataresponseswhichWiproPSAreceived.Itisbasedon

the average respondent with some outliers removed. It does not represent any specic industry or company type.

Themodelcompanyhas11500laptopPCsand19,300desktopPCswiththefollowingagedistribution.

Around20%ofthelaptopPCsand19%ofthedesktopPCsinthemodelcompanyareolderthanthreeyears.

FIGURE 10. PC age distribution in the model company

Model Company

Age Distribution of Mobile PCs

15%

20%

25%

30%

35%

10%

5%

0%

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+

28%

18%

12%

4% 3%

34%

Model Company

Age Distribution of Desktop PCs

15%

20%

25%

30%

35%

10%

5%

0%

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+

29%

19%

11%

4% 3%

33%


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appendix ii: c s bft

Designedasaone-pagetearsheetfornancialprofessionals,thispagesummarizesthekeyndingsoncost-optimal

reresh rates.

Three Year PC

Refresh Cycle

Maintenance and out of warranty support costs

increase sharply in years 4 and 5; for most rms,

three year lifecycles are cost optimal




Intel vProTM

Technology for Cost

Optimal Maintenance

Enhanced remote PC maintenance decreases

the cost of manual resolution




Intel vProTM

Technology

for Power

Remote PC management tool signicantly

lowers desktop PC power costs as systems

are remotely powered down

$11 per desktop PC per year

Newer PCs Use

Less Power

New desktop PCs are almost twice as power

ecient as systems 3 years and older, when

they are in operation

$3 per PC per year

Laptop PCs Use

Less Power

Aside from the productivity benet, moving

towards power managed laptops can more

than half a typical rms PC power bill

$22 per PC per year

Item Description Impact on Model Company with

11500 Laptop and 19300 Desktop PCs

TABLE 9. Summary of savings potential and magnitude


25/25


This study was commissioned and paid or by Intel Corporation.

i Inthisinstance,Patchesinclude1)NewBusinessApplications,2)ServicePacks(application,notOS),3)Patch,softwareoragentupgrade,4)Scheduledsecurity

patch(applicationorOS)and5)Emergencysecuritypatch(applicationorOS).Ofthese,theaveragenumberofscheduledandemergencysecuritypatches

was more or less the same or mobile and desktop systems. However, survey respondents cite almost twice as many new business application, service pack,

and patches or desktop PCs than laptops. This indicates that users load more applications on desktops, which in turn requires more patching.iiWiproanalystsusedthreeyearsastheperiodforassessment.Agoodanalogymightbethatofmeasuringtheowofwaterinariver.Thinkofthewater

owingintheriverasthePCacquisitionandsupportcosts.Iftheriverislow,waterjusttricklesdowntheriverbutifthewaterlevelishigh,theriverisa

gushing torrent. In order to measure the ow o water down the river, we need to pick a consistent time rame, be it a minute, hour, or year. The timerame

usedisnotrelevantsolongasthetimeframeisheldconstant.Theresultingmeasurementshowsanaccuratecomparisonofwaterlevelsatdierenttimes.

LikewisewithPCcosts,EACshowsdierentlevelsofcostbydierentrefreshrates.iiiEAC(EquivalentAnnualCost)=PV/AnnuityFactor,whereannuityfactoris((1+r)^n-1)/r*(1+r)^n),whereristhediscountrateandnistheyearivAMarch2009studyofindustrialandmanufacturingrmsshowedthat96%ofrmsparticipatinginthestudyhadsomesortofpowersavinginitiativeinplace.

See Reducing Industrial PC and Embedded System Support Costs with Intel vPro Technologyor details.v See Intel Capabilities Forum, Energy Efcient Perormance 2 .0 or details. http://www.intelcapabilitiesorum.net/EEP-page_all/viPCEnergyReport2009,TheAlliancetoSaveEnergy(www.ase.org)

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