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A recent study by Foster & Sullivan on the total cost of ownership (TCO)
revealed that Microsoft Windows 2003 environment across enterprises has close to
15.9 percent advantage over Linux. It constitutes lower TCO in 80 percent of the
instances encompassing application servers, network servers, and mail servers.
The research was conducted on 54 organizations (both high end and mid-tier)
across BFSI, manufacturing, public sector and government, ITeS, BPO and telecom
verticals.
The target respondents consisted of senior IT professionals (CIOs, CTOs,
heads and GMs-IT companies, senior IT managers, senior system analysts) of large
and mid-sized enterprises (500 and more employees). The report was audited by
Cap Gemini and commissioned by Microsoft.
According to Frost & Sullivan, the TCO consists of the cost incurred by an
enterprise in the course of selection (search and evaluation), installation
(capital and deployment cost), maintenance and deployment and upgrades of
software systems over the course of five years.
It also includes indirect costs associated with planning, audit, and other
incidental costs such as consulting, roll-out, configuration management,
bug-fixing and testing, and module integration. Interestingly, in India,
hardware is the largest component of TCO of Indian enterprises, where software
costs are just about 15 percent of the Capital expense and six percent of
overall TCO.
Elaborating on this study, Dr TR Madan Mohan, Director–Consulting, ICT
practice, Frost & Sullivan India, said, “While assessing the TCO, organizations
should evaluate the CAPEX and OPEX of the specific IT investment throughout the
life cycle of the asset. More often than not, the focus is just on CAPEX, which
leads to skewed decisions. Specifically while comparing proprietary software
with open source software, the CAPEX constitutes 53 percent of the TCO and OPEX
constitutes 47 percent.
Our analysis shows, while CAPEX for the Linux OS might be low but the OPEX
could be as much as 53.1 percent higher as compared to the Windows 2003 OS,
primarily due to the high cost of support and manpower. Hence, it is prudent for
an organization to capture all necessary cost components beyond just the initial
cost of acquisition.”
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