-by Forrest Smith, Dir. Product & Customer Experience
May 2, 2017

This blog post will be the final part in a series about modern Enterprise IT and how CloudReady can play a vital role no matter where along the spectrum of cloud technology adoption that organization is.

Part 1 & Part 2 each are a look into problem-solving using CloudReady: How to use a modern, secure, manageable OS to better prevent cost and emphasize good computing. In contrast, this part will be less about the journey to the cloud and the problems that drive organizations to it, and dwell more directly on arriving there and the benefits of establishing such an organization.

In it, I reference numbers pulled from Google's Chromebook Total Cost of Ownership (TCO) Calculator, which itself is researched and cited by them from Google and other customer survey data. You should be skeptical of any costs and savings figures you read about in a blog, but if the honesty of the TCO claims is all that's holding you back here, I'd encourage you to seek out your own references for the very real savings that Chromebooks, and thus CloudReady, can offer.  

 

Part 3 - Collecting the Dividends on Your Cloud Investment

When speaking about Amazon AWS, Andy Jassy tends to compare cloud-computing to electrical power, predicting that the rise of AWS-like public cloud computing will have the kind of impact that the advent of the electric power-grid did. This is a bold claim - Electricity may have been a boon for those who produced it themselves, independently, in the first days of its commercialization, but no matter how large those few companies grew, the real impact of electricity didn’t really begin until the advent of The Grid. Once electricity was a utility available to all via a pipeline, it became the lifeblood of commerce and home life. One-time luxuries like indoor lighting rapidly became absolute necessities, and our understanding of almost all technology grew to incorporate electricity as an assumed fact. Jassy wants us to think of cloud computing in these ubiquitous terms - a new æther for the computing-era.

Digital soothsaying aside, what Jassy is trying to convey is that the cloud is emerging as a general-purpose technology, meaning it is so widely applicable as to be able to impact all facets of home and work productivity. The current state of skepticism and tentative adoption, of private and hybrid clouds, is a period of growing pains: characteristic lag while we adjust long-held norms and existing infrastructure to acknowledge (and eventually fully leverage) the new and ubiquitous tool.

Big claim, yeah? If the cloud can pervade, disrupt, and improve every facet of productivity, then you are probably asking yourself: what's the payoff?

I'll leave the task of valuing the cumulative benefits of cloud computing to others, but when it comes to the total cost of owning and operating end-user devices, there's a great deal to be said about the gains of cloud computing - and CloudReady's role is not a small one there.

Rather than describe the changes, as in the first two parts of this series, I want to offer some concrete numbers here to motivate the shift - enter Google's Chromebook TCO (total cost of ownership) calculator. Google's calculator is a great fit here because:

  1. CloudReady devices offer nearly the same user-experience as Chromebooks

  2. Adopting only CloudReady (or Chromebooks) is very closely correlated with a shift to cloud-computing. Few local resources or applications can be used when these cloud-first devices are deployed and, conversely, once you deploy them little reason remains to continue using local resources.

So we can trust that the TCO difference between PCs and Chromebooks will largely reflect the advantages of not just a new type of hardware, but also of the cloud computing they usher in. I'll make some adjustments for the hardware differences, and the rest we'll keep.

For simplicity, let's use an example of a 1000-employee organization. Every employee needs a computer and is on the same hardware refresh cycle - 3 years in to start. Here's the savings Google suggests are possible:

With these numbers, Google's option offers a projected 72.6% savings compared to buying new PCs.

With these numbers, Google's option offers a projected 72.6% savings compared to buying new PCs.

 

Feel free to check things out first hand, but keep in mind that these numbers aren't quite a perfect fit for CloudReady and have some other flaws. Let's adjust the calculation to reflect the kind of devices enterprises really buy, as well as the particularities of using CloudReady instead of Chromebooks. 

Google assumes you're either buying 1000 new PCs (for $615, which is a bargain for Enterprise-grade PCs) or 1000 new Chromebooks (for $249 - about half of what an Enterprise-grade Chromebook will run you). A more realistic cost for a new PC in a large enterprise seems to be $1000 (here's a source I found - you can probably find your own with a similar estimate with 5 minutes of Googling). Let's assume some volume discounting gets us to $900. For the Chromebooks, let's do the same in proportion (if you don't like the Samsung I linked, HP's business offering can yield similar figures) and adjust to $480 (average of 90% the price on the two Chromebooks).

So here's my adjustment to Google's numbers:

This adjustment doesn't radically change things, but honesty is everything! With the assumption of realistic, high-end hardware in both categories the Chromebooks now offer 80% total savings! 

This adjustment doesn't radically change things, but honesty is everything! With the assumption of realistic, high-end hardware in both categories the Chromebooks now offer 80% total savings! 

With that settled, let's go through each category to discuss the details of what is driving the savings, and to make some additional adjustments for CloudReady, rather than Chromebooks!

 

1) Hardware Purchase Price:

Using CloudReady to convert your 3 year old PCs (your 2014 PC is still perfectly capable of cloud access, I promise!) drops the hardware purchase price from $249 to $0 (I'm adding CloudReady's cost to IT Software & Infrastructure, and will address it in section 3).

This is the calculator adjusted for CloudReady instead of Chromebooks. While the Hardware price of CloudReady is $0, "IT Software & Infrastructure" costs have increased to include CloudReady's annual cost over 3 years, along with maintenance for typical PCs. CloudReady increases the savings to 84% in total.

This is the calculator adjusted for CloudReady instead of Chromebooks. While the Hardware price of CloudReady is $0, "IT Software & Infrastructure" costs have increased to include CloudReady's annual cost over 3 years, along with maintenance for typical PCs. CloudReady increases the savings to 84% in total.

The resulting extra savings are, of course, great, but there’s more to it than just initial cost.

Your future devices will be cheaper after this kind of change. Maybe you’ll switch to inexpensive Chromebooks, or maybe you’ll keep CloudReady running across a fleet of hardware, but choose that hardware without the restriction of which local software is compatible or will run smoothly. Whether you manifest it as budget savings, added choice, quality, or something else, your organization is sure to gain in some way.

Why?

PCs have long been designed with serious compromises needed to balance optimal size, comfort, quality, and power. Moving to cloud resources dramatically reduces the need for raw processing power in your endpoints, and when power is removed from that compromise equation, you gain a degree of freedom in device choice. Chromebooks cost less for this very reason - Google relied on the low-power-requirements of web-first computing to offer lower-cost and long-lasting Chromebooks. On the other hand, your company might instead choose to buy waterproof tablets, military-grade Toughbooks, or some other specialty hardware that increases efficiency at the same price.

Imagine if you switch to cloud computing with CloudReady and, when you are next ready to purchase devices, you can trade power for durability and longevity. The TCO of those same devices now drops even more as you amortize their costs over 6 years!

 

2) Hardware Maintenance:

With $0 in new hardware, you can't stick with Google's "20%" rule to calculate maintenance costs. You’re using existing hardware, but it will likely break at a similar rate. Two options make sense here:

a) Instead of paying up front for ongoing maintenance, keep the same hardware maintenance for longer. Your devices will probably continue to break at the same rate, so 20% of the original cost is a good estimate. Assuming your new machines cost $900 three years ago,  we can set the maintenance cost equal to that of the new PC hardware on the left column, erasing the (minor) saving difference on this line item - $96k -> $180k, as reflected in the above CloudReady calculator.

b) This is a strategy inspired by real Neverware partners and customers in the Enterprise space. Instead of converting 100% of your existing devices, reserve 20% of them as backups.  Now 80% of your existing devices can be supported for +3 years with a simple swap-out policy that drops the ongoing maintenance cost to $0 for them.  
Those backup machines don't need to lay dormant either - like any good insurance pool, they can be used with in-office guests, loaned out to employees who are travelling or working remotely, or even leased to contractors to help earn back cost.

Yes, this approach will mean bringing back a net-new purchase of 200 machines and warranties, but new hardware has to be purchased on some cycle, and this approach of doing so spreads the process over 6 years.  

No matter the case, the net impact here is small compared to other concerns. Devices are devices - they break and need fixing. That cost isn’t disrupted by the cloud in the same way our next three sections are.

 

3) IT Software & Infrastructure:

Specialization is a powerful force, and cloud computing ushers it in for IT in a whole new way. Where IT was a monolithic specialization unto itself for the past two decades, now hardware, security, productivity, networking, storage - each is its own market where competition drives great products at low prices.

But aside from expert-quality becoming the norm, specialization also allows professional-grade IT services, including hardware, storage, networking, and ongoing development capabilities, to be maintained at an IBM scale but for commodity prices, benefiting smaller companies who then, in fueling a virtuous cycle, spur additional competition.

In the new PC column, costs including software licenses, servers to run that software, OS licenses to run the servers and endpoints, multiple management tools for servers and endpoints, and of course security protections like anti-virus are all factored in here. CloudReady, at only $99/device/year, covers all OS licensing, OS management, and security costs. All that’s left are cloud services. Perhaps not cheap, but so efficient that you can often pay by the hour.

In the calculator table you'll see that CloudReady costs an additional $49/device/year compared to Chromebooks in this category. That's the difference between the $50 Google Device Management License every Chromebook needs, and the $99 CloudReady: Enterprise Edition License (which includes the former). Put another way: about a quarter of a million dollars can be saved by choosing CloudReady instead of new Chromebooks, but choosing either of them over PCs is a win because they leverage the cloud in the same way.

 

4 & 5) Management & Administrative Overhead / End-user costs:

4 & 5 are combined here because they are two sides of the same coin: the cost of managing hardware and keeping it running trends directly with the loss of productivity when those endeavors are too time-consuming or disruptive.

Management & Administrative Overhead is the biggest gap of all even without accounting for end-users. It is the cost of all the day-to-day hassles, like each time IT has to answer a helpdesk call, or take a quick look at an employee’s computer. Or all those hours spent double-checking that urgent updates have been applied, or customizing a specific group of devices manually to accommodate a special task or exception. Every day lost to a rogue group policy setting that needs to be rolled back, or a security vulnerability announced in an update that just got pushed - those add up and we see them in this line item. Add to that a cost for every moment the computer is not working or is busy updating, or has been relinquished by the user for the admin’s purposes, to acknowledge corresponding cost from lost or disrupted productivity, and you have some serious company costs.

Any IT professional can tell you that somehow, these odds and ends add up to an enormous part of their job, soaking up time that could be spent improving efficiency or researching new technologies: using their expertise to drive progress. This opportunity cost isn't even accounted for here, leaving no valuation for the strategic advantage a company with a more efficient and technologically advanced workforce would have.

All the distractions of keeping a locally anchored, Windows-powered IT organization running are what drive most of the costs of IT, and prevent IT teams from leading. Instead of a group that limits liability, they can be the experts who are turned to whenever computers (an earlier general-purpose technology!) can benefit work.

That's why, for these combined categories,  both Chromebooks and CloudReady come in 88% less costly than PCs. These costs are ongoing: new devices or old, you'll see this fundamental difference in how IT departments allocate resources. In the end, this category is the justification for all the pain and change management and initial inefficiencies of adopting the cloud. The pot of gold at the end of the rainbow is transforming your IT department from an expensive damage mitigation unit into the agents of change, progress, and competitive advantage in your organization.

Here's the table once more, with all three options included:

Here you can compare all three options considered here. CloudReady offers the most savings and the least friction around new devices, but it is more profound to note that both options which are built with cloud computing in mind reflect the meaningfully lowered cost.

Here you can compare all three options considered here. CloudReady offers the most savings and the least friction around new devices, but it is more profound to note that both options which are built with cloud computing in mind reflect the meaningfully lowered cost.

 

Alright, take a deep breath and a step back.  What’s this all about? Cloud computing is worth it. General-purpose technologies (yes, I want you to remember this) come with adoption cost, often greater than more specific technologies because they improve such far-reaching infrastructure. But those extra costs are the hallmark of the big payoff; changing almost every aspect of how your work is tough, but the corresponding benefit is present in almost every aspect of how you work!


Public clouds like AWS, Azure, and Google Cloud, are the core technology here, but you can’t fully-realize their benefits unless you hunt down all the places where local computing’s inefficiencies are costing you and change. The high costs in the PC column of the table are all a reflection of those costs. CloudReady isn’t the core technology of cloud computing, but it and Chrome OS are built to prevent those local-computing inefficiencies by relying on cloud services. So without an OS designed for it, you’re investing in cloud computing without really reaping the benefits. CloudReady offers a fast, efficient way to start capturing these efficiencies regardless of your hardware requirements or where you are in your refresh-cycle. 

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