The Total Economic Impact Of Citrix XenDesktop Single-Company Analysis

Transcription

1 Prepared for Citrix Systems July 2010 The Total Economic Impact Of Citrix XenDesktop Single-Company Analysis Project Director: Michelle S. Bishop

2 TABLE OF CONTENTS Executive Summary... 3 Key Findings... 3 Purpose... 4 Methodology... 5 Approach... 5 Disclosures... 5 Citrix XenDesktop Overview... 7 Analysis... 8 Interview Highlights... 8 TEI Framework... 9 Costs Benefits Additional Benefits Not Quantified Risk Flexibility TEI Framework: Summary Study Conclusions Appendix A: Total Economic Impact Overview Benefits Costs Risk Flexibility Appendix B: Glossary Appendix C: About The Project Manager , Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to

3 Executive Summary In March 2010, Citrix Systems commissioned Forrester Consulting to examine the total economic impact and potential return on investment (ROI) that enterprises may realize by deploying Citrix XenDesktop. Citrix XenDesktop is a desktop virtualization solution that delivers a complete Windows desktop experience as an on-demand service to any user, anywhere. Whether users are task workers, knowledge workers, or mobile workers, XenDesktop quickly and securely delivers individual applications or complete desktops while providing a high-definition user experience. The Campbell Union High School District covers seven high schools in the city of San Jose, California. The district is composed of five comprehensive institutions, one continuation school, and one day school with 8,000 students. The organization has an annual operating budget of $68 million and more than 750 employees. While conducting in-depth interviews with Campbell Union High School about its use of Citrix XenDesktop, Forrester found that the organization has achieved the following benefits: Improved educational opportunities for students by providing a better user experience from any location or device Improved IT staff efficiency through centralized management. Time savings on application upgrades. Improved desktop provisioning and corresponding time savings. Desktop cost savings through cost avoidance of a PC refresh through initially repurposing desktops as thin clients. Fewer workforce interruptions and downtime issues. Ease of implementation and ease of use. Opportunities to leverage enterprise software programs Server cost savings from virtualization of infrastructure. Key Findings Forrester s study yielded the following key findings: ROI. Based on the interviews with the organization, Forrester constructed a Total Economic Impact framework for the organization as well as the associated ROI analysis illustrating the financial impact areas. As seen in Table 1, the ROI for the organization is 170% with a breakeven point (payback period) of five months after deployment. Benefits. The main quantified benefits for the organization were: 1) cost avoidance of a PC refresh; 2) server hardware cost avoidance; 3) software licensing savings; 4) improved IT - 3 -

4 staff efficiency; 5) time savings on application upgrades; and 6) improved desktop provisioning. The total risk-adjusted present value (PV) of these benefits is approximately $2.79 million. Benefits noted by the Campbell Union High School District but not quantified include better access to applications for students to enhance their education; ease of implementation; ease of use; and fewer workforce interruptions and downtime issues. Costs. The costs of Citrix solutions include: 1) Citrix XenDesktop software license fees; 2) associated hardware costs; 3) implementation costs; and 4) administrative costs. The total risk-adjusted PV of these costs is approximately $1.03 million. Table 1 illustrates the risk-adjusted cash flow for the organization based on data and characteristics obtained during the interview process. Forrester risk-adjusts these values to take into account the potential uncertainty that exists in estimating the costs and benefits of a technology investment. The risk-adjusted value is meant to provide a conservative estimation, incorporating any potential risk factors that may later affect the original cost and benefit estimates. For a more in-depth explanation of risk and risk adjustments used in this study, please see the Risk section. Table 1: ROI, Risk-Adjusted Summary financial results Risk-adjusted ROI 170% Payback period (months) 5 Total costs (PV) ($1,031,266) Total benefits (PV) $2,786,359 Total (NPV) $1,755,093 Please note that this ROI only reflects what the organization realized through the use of Citrix XenDesktop. Forrester makes no assumptions as to the potential return that other organizations will receive within their own environment. Forrester strongly advises that readers use their own estimates within the framework provided in this study to determine the expected financial impact of implementing Citrix XenDesktop. Calculation totals throughout the study may not align because of rounding. Purpose The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Citrix XenDesktop on their organizations. Forrester s aim is to clearly show all calculations and assumptions used in the analysis. Readers should use this study to better understand and communicate a business case for investing in Citrix and its XenDesktop solution

5 Methodology Citrix selected Forrester for this project because of its industry expertise in client virtualization and Forrester s Total Economic Impact (TEI) methodology. TEI not only measures costs and cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in increasing the effectiveness of overall business processes. For this study, Forrester employed four fundamental elements of TEI in modeling Citrix XenDesktop: 1. Costs and cost reduction. 2. Benefits to the entire organization. 3. Flexibility. 4. Risk. Given the increasing sophistication that enterprises have regarding cost analyses related to IT investments, Forrester s TEI methodology serves an extremely useful purpose by providing a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology. Approach Forrester used a four-step approach for this study: 1. Forrester gathered data from existing Forrester research relative to Citrix XenDesktop and the virtualization market in general. 2. Forrester interviewed personnel responsible for Citrix s product marketing, product management, and sales to fully understand the potential (or intended) value proposition of Citrix XenDesktop. 3. Forrester conducted a series of in-depth interviews with an organization currently using Citrix XenDesktop. 4. Forrester constructed a financial model representative of the interviews. This model can be found in the TEI Framework section below. Disclosures The reader should be aware of the following: The study is commissioned by Citrix and delivered by the Forrester Consulting group. Citrix reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester s findings or obscure the meaning of the study. The client contacts for the interviews were provided by Citrix

6 Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers should use their own estimates within the framework provided in the report to determine the appropriateness of an investment in Citrix XenDesktop. This study is not meant to be used as a competitive product analysis

7 Citrix XenDesktop Overview According to Citrix, Citrix XenDesktop is a desktop virtualization solution that delivers Windows desktops as an on-demand service to any user, anywhere. With Citrix FlexCast, a unique delivery technology, XenDesktop can quickly and securely deliver individual applications or complete desktops to every user in the enterprise, whether they are task workers, knowledge workers, or mobile workers. Users now have the flexibility to access their desktops on any device, anytime, with a high-definition user experience. With XenDesktop, IT can manage single instances of OS, applications, and user profiles to greatly simplify desktop management. The open architecture of XenDesktop enables customers to easily adopt desktop virtualization using any hypervisor, storage or management infrastructure. Any Device, Anytime, Anywhere Today s digital workforce demands the flexibility to work from anywhere at any time using any device they d like. Using Citrix Receiver, a lightweight universal client, XenDesktop users can access their desktop and corporate applications from any PC, Mac, thin client, or smartphone. This enables complete workplace flexibility, business continuity, and user mobility. HDX User Experience XenDesktop 4 delivers an HDX user experience on any device, over any network, with better reliability and higher availability than a traditional PC. With Citrix HDX technology, users get an experience that rivals a local PC, even when using multimedia, real-time collaboration, USB peripherals, and 3D graphics. XenDesktop offers the best virtual desktop performance while consuming 90% less bandwidth than other virtual desktop solutions. Webcam and VoIP support, improved audio, and branch office WAN optimization ensure that users get a high-definition user experience regardless of their location. FlexCast Delivery Technology Different types of workers across the enterprise have varying performance and personalization requirements. Some require simplicity and standardization, while others need high performance or a fully personalized desktop. XenDesktop meets all these requirements in a single integrated solution. With FlexCast delivery technology, XenDesktop delivers every type of virtual desktop hosted or local, physical or virtual each specifically tailored to meet the performance, security, and flexibility requirements of each user. On-Demand Applications By XenApp To reduce desktop management cost and complexity, XenDesktop includes the full range of Citrix application delivery technologies with on-demand applications by Citrix XenApp. With on-demand application delivery, IT can control data access, manage fewer desktop images, eliminate system conflicts, and reduce application regression testing, making it a requirement for successful desktop virtualization. Adding, updating, and removing applications is now simple because XenDesktop includes a self-service app store that lets users access applications instantly from anywhere. Open Architecture XenDesktop works with users existing hypervisor, storage, and Microsoft infrastructures, enabling users to leverage current investments while providing the flexibility to add or change to alternatives in the future. XenDesktop supports Citrix XenServer, Microsoft Hyper-V, and VMware ESX and vsphere, and it simplifies management of networked storage using Citrix StorageLink technology. XenDesktop also closely integrates with Microsoft App-V and System Center for application management

8 Analysis As stated in the Executive Summary, Forrester took a multistep approach to evaluate the impact that implementing Citrix XenDesktop a desktop virtualization solution from Citrix can have on an organization, including: Interviews with Citrix marketing, product management, and sales personnel. Review and analysis with a Forrester analyst whose primary focus is client virtualization, including local and hosted desktop and application virtualization. In-depth interviews with an organization currently using Citrix XenDesktop. Construction of a financial framework for the implementation of Citrix XenDesktop. Interview Highlights Forrester s in-depth interviews with the client organization uncovered the following: The Campbell Union High School District started looking into virtualization to manage desktop infrastructure costs, as it was mandated by the school district s board of directors to refresh 20% of desktop and computer equipment every year. This would mean that the organization would need to purchase 100% new inventory over five years. Apart from cost savings, the organization was also looking for better ease of use and management of desktop infrastructure through a virtual model. The organization did an extensive evaluation of various enterprise-class virtualization vendors, using criteria primarily centered on cost savings and ease of management. After gathering customer references, doing a comparative financial analysis, and conducting proof-of-concept testing for each technology vendor under consideration, the organization chose to implement Citrix XenDesktop. The organization has 2,500 desktops for the students spread throughout its seven highschool campuses as well as 500 laptops primarily used by staff. The Campbell Union High School District was initially looking for a desktop virtualization solution, but when it found that it could also implement server virtualization for no additional cost with Citrix, it decided to virtualize a portion of its server environment. The organization now has 100 virtual servers and 40 physical servers. With the initial implementation of Citrix XenDesktop, the organization is serving 2,500 students across the district with 500 virtual desktops. They run a concurrent model, with machines booting up and booting down every 90 minutes as classes are conducted. It has also virtualized approximately 200 applications that are delivered to these virtual desktops. The IT team virtualized the computer lab environment first. It wanted to recreate the nonvirtual environment in order to get users over the adoption level. The image created looked and felt like the year before. Once this was successful, it implemented virtualization to the remaining desktops

9 With the success of the first phase of implementation, Campbell Union High School District plans to implement Citrix XenDesktop for all desktops in its environment at a rate of 500 desktops every year until they have virtualized all 2,500 desktops in the district. The main features of Citrix XenDesktop that the organization cites as most valuable to it include: 1) accessibility from any location or device; 2) centralized management; and 3) shortened implementation cycles that the director of technology characterized as a dramatic decrease. The organization talked of shortened upgrade cycles, working on a couple of hundred desktops over one weekend, which it was not able to do before, and patching one image that would roll out immediately to a large group of desktops. The organization noted that improvements like these were huge in terms of maintenance and time. Another major benefit of desktop virtualization through Citrix XenDesktop that the organization cited was the ability to level the playing field by providing remote access to educational applications to all the students, regardless of the class of computer equipment that was available to these students at home. With Citrix XenDesktop, students could now access the same image on their school computers through their home machines, or through library facilities, outside of school hours. As the director of technology noted: We re trying to push the boundaries [in education for the school district] using Citrix XenDesktop. The biggest flexibility is what the kids get out of it. They re able to work remotely, save this work from home. Hopefully, this translates to better academic performance. With the flexibility afforded by Citrix XenDesktop, the organization also noted it can handle additional government requirements, such as the requirement to assume management of adult education programs within the Campbell Union High School District s jurisdiction, without incurring excessive costs. With this new requirement, the organization will have to add 11 more sites under management and 400 additional desktops. The ease of management and support afforded by Citrix XenDesktop allow the organization to take on this additional responsibility without adding headcount, given its budget constraints. TEI Framework Introduction From the information provided in the in-depth interviews, Forrester has constructed a TEI framework for those organizations considering implementation of Citrix XenDesktop. The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that influence the investment decision

10 Framework Assumptions Table 2 lists the discount rate used in the PV and net present value (NPV) calculations and time horizon used for the financial modeling. Table 2: General Assumptions Ref. General assumptions Value Discount rate 10% Length of analysis Three years Organizations typically use discount rates between 8% and 16% based on their current environments. Readers are urged to consult with their finance teams to determine the most appropriate discount rate to use within their own organizations. In addition to the financial assumptions used to construct the cash-flow analysis, Table 3 provides the fully burdened annual compensation assumptions used within this analysis. This compensation is the result of multiplying original compensation figures by a factor to normalize the figures. Table 3: Salary Assumptions Ref. Metric Calculation Value A1 Hours per week 40 A2 Weeks per year 52 A3 Hours per year (M-F, 9-5) 2,080 A4 Network engineer fully loaded $85,000 A5 Hourly (A4/A3) $40.87 Costs The key cost categories associated with implementing Citrix XenDesktop are: 1) Citrix XenDesktop software license fees; 2) associated hardware costs; 3) implementation costs; and 4) administrative costs. The financial analysis is made over a three-year period. The following are the cost inputs to the financial model. Citrix XenDesktop Software License Fees Software fees for Citrix XenDesktop include a license fee as well as a subscription cost paid annually, not including the first year of use. As government purchasing practices prefer a one-time cost, the Campbell Union High School District negotiated a one-time cost for a perpetual license for the Platinum Edition of Citrix XenDesktop. For a conservative estimate, this TEI analysis will use the

11 standard list price for the Platinum Edition of XenDesktop 4. The organization purchased an initial 500 licenses for Citrix XenDesktop. It will also purchase an additional 500 licenses in Years 2 and 3, respectively. The total of the software license fees for Citrix XenDesktop solutions for the Campbell Union High School District is $600,000. Table 4: Software License And Subscription Fees Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Total At Citrix XenDesktop license fees $175,000 $200,000 $225,000 Ato Total (original) ($175,000) $0 ($200,000) ($225,000) ($600,000) Additional Hardware Costs To support its implementation of Citrix XenDesktop, the Campbell Union High School District purchased one high-end server and associated server infrastructure at a total cost of $100,000. It also purchased an additional SAN (storage area network) system at a cost of $100,000. The total cost that the organization incurred for additional server infrastructure and storage hardware for Citrix XenDesktop in Year 1 was $200,000. In Years 2 and 3, purchase of additional server blades and storage will cost the organization $100,000 and $140,000, respectively. The total additional hardware cost for the organization over three years is $440,000. Implementation Costs Campbell Union High School District spent two and a half months or hours implementing Citrix XenDesktop to 500 computers. These 500 computers are used by 2,500 students within the district. The implementation was carried out by the project lead and one other network engineer. At a fully loaded compensation rate of $40.87 per full-time equivalent (FTE), which includes salary and benefits, the total implementation cost for the organization was $35,417. The organization will implement Citrix XenDesktop to an additional 500 computers in Year 2 and another 500 computers in Year 3 for total implementation costs of $106,250 over three years. Table 5: Implementation Costs Ref. Metric Calculation Per period Year 1 Year 2 Year 3 Total A1 Number of people 2 A2 Hourly rate per person $40.87 A3 Hours At Implementation costs A1*A2*A3 $35,

12 Ato Total (original) ($35,417) $0 ($35,417) ($35,417) ($106,250) Administrative Costs The organization also estimated that in the first year of implementation, one network engineer spent about 30% of his time on average managing the virtual environment. This was due to the need for the network engineer to create images and requirements for all applications. Going forward, the organization estimates that maintenance of the virtual environment will only take up 5% of the time for one FTE. At a fully loaded compensation of $40.87 per FTE, the total administrative cost for the first three years is $34,000. Table 6: Administrative Costs Ref. Metric Calculation Per period Year 1 Year 2 Year 3 Total A1 Number of people 1 A2 Hourly rate per person $40.87 A3 Hours At Administrative costs A1*A2*A3 $25,500 $4,250 $4,250 Ato Total (original) $0 ($25,500) ($4,250) ($4,250) ($34,000) Training Costs According to the interview with the Campbell Union High School District, user training costs for the organization were negligible, consisting of at most 5 minutes of training for teachers around remote login. Given the minimum amount of time spent on training, Forrester chose not to quantify this cost in the analysis. Professional Fees Enterprises that implement large-scale desktop virtualization projects will usually choose to enlist professional services for planning and installation. The Campbell Union High School District did not enlist professional services for implementation, as it anticipated a smooth installation for its user base. Total Costs Table 7 summarizes all the costs associated with the organization s implementation of Citrix XenDesktop

13 Table 7: Total Non-Risk-Adjusted Costs Costs Initial Year 1 Year 2 Year 3 Total Citrix XenDesktop licenses (175,000) (200,000) (225,000) (600,000) Hardware costs (200,000) (100,000) (140,000) (440,000) Implementation costs (35,417) (35,417) (35,417) (106,250) Administrative costs (25,500) (4,250) (4,250) (34,000) Total ($410,417) ($25,500) ($339,667) ($404,667) ($1,180,250) Benefits It s an unbeatable argument the three main benefits of Citrix XenDesktop have been that it s cheaper, it s easy to implement, and its usability. It s just as easy to use, and our users don t even know it s virtual. (Charles Kanavel, director of technology, Campbell Union High School District) According to the Campbell Union High School District, the main quantified benefits of using Citrix XenDesktop include: 1) desktop cost savings; 2) server hardware cost avoidance; 3) savings by leveraging enterprise software programs; 4) improved IT staff efficiency; 5) time savings on application upgrades; and 6) improved desktop provisioning. Qualitative benefits include improvement of the user experience for students, ease of implementation, ease of use, and fewer workforce interruptions and downtime issues. Desktop Refresh Cost Savings As a government institution, the Campbell Union High School District was mandated to a 20% refresh rate for its desktops. The director of technology noted, It becomes very expensive to buy 100% of new inventory every five years. With this costly requirement, the organization started looking into virtualization. The organization provided virtual desktops to approximately 2,500 students with an initial implementation of 500 virtual desktops spread across its seven high-school campuses. Without Citrix XenDesktop, the organization would have had to spend $1,100 per desktop for a PC refresh. We would need to buy powerful computers because year after year, requirements for classrooms change, Mr. Kanavel noted. With desktop virtualization through Citrix XenDesktop, the organization now only spends $600 per machine, which represents a 45% cost reduction for the organization. For the initial conversion to virtualization, it repurposed existing desktops. This will continue to be the strategy as the organization moves forward to convert existing classrooms and staff machines. As these machines become obsolete and can no longer be reused, the school district will replace them by purchasing thin clients. The organization notes that cost per asset will decrease annually as the desktop virtualization project s implementation expands

14 The organization also expects to implement 500 virtual desktops annually in Years 2 and 3. For the 1,500 desktops leveraging desktop virtualization, the organization will save $750,000 over a threeyear analysis. Table 8: Direct Cost Avoidance Desktop Refresh Ref. Metric Calculation Year 1 Year 2 Year 3 Total A1 Number of assets A2 A3 Cost per asset before Citrix Cost per asset after Citrix $1,100 $600 At Direct cost avoidance desktop refresh A1*(A2-A3) $250,000 $250,000 $250,000 Ato Total (original) $250,000 $250,000 $250,000 $750,000 Server Hardware Cost Savings The organization also noted that one of the advantages of implementing Citrix XenDesktop was that, while the organization was primarily looking at virtualizing desktops, it was also able to virtualize servers at no additional cost using the free XenServer virtualization capabilities. The organization now has 100 virtual servers and 40 physical servers. This has allowed the organization to implement disaster recovery in a more dynamic way, provide better Web services, and improve redundancy. The Campbell Union High School District is also currently investigating new educational initiatives powered by these virtual servers. These initiatives include: 1) providing online standardized testing, and 2) providing academic programs designed for remediation and recovery. The former initiative gives teachers instantaneous feedback on student progress and allows instructors to build a database for tests. The latter gives students access to a virtual environment that offers formative assessment and personalized educational modules for summer-school students aimed at achieving improved credit recovery. The organization estimated that without the server virtualization capability provided by Citrix XenDesktop, it would have had to purchase an additional 50 physical servers at a cost of $6,000 per server. This will save the Campbell Union High School District a total of $300,000 over three years

15 Table 9: Direct Cost Avoidance Physical Servers Ref. Metric Calculation Per period Year 2 Year 3 Total A1 Number of assets 50 A2 Cost per asset $6,000 At Direct cost avoidance physical servers A1*A2 $300,000 Ato Total (original) $300,000 $0 $0 $300,000 Savings By Leveraging Enterprise Software Programs By shifting to a virtual environment, the organization also realized additional savings on office productivity suite software. Implementing XenDesktop required the Campbell Union High School District to shift to virtual enterprise software licenses in order to license the virtual desktops. By entering this enterprise license agreement, the Campbell Union High School District then had access to enterprise licensing for office productivity software. As a result of this new enterprise agreement, instead of paying $42 per license, the Campbell Union High School District now only incurred a one-time cost of $5 per license for the office productivity suite software, bringing costs down over the long run. The organization also noted that with desktop virtualization, its long-term goal was to centralize and standardize applications across its environment, which would lead to additional cost savings. Total software license savings for the organization is $55,500 for 1,500 desktops. Table 10: Software Licensing Savings Ref. Metric Calculation Year 1 Year 2 Year 3 Total A1 Number of assets A2 A3 Cost per asset - previous Cost per asset - current $42 $5 At Direct cost avoidance software licenses A1*(A2-A3) $18,500 $18,500 $18,500 Ato Total (original) $18,500 $18,500 $18,500 $55,

16 Improved Efficiency For IT Staff We are driving new efficiencies because of virtualization through Citrix XenDesktop. We have one district office and seven high-school sites. We had remote eyes and ears, but when something broke, someone had to get in the car. With virtual desktops, a lot of these issues go away. (Charles Kanavel, director of technology, Campbell Union High School District) By implementing desktop and server virtualization through Citrix XenDesktop, the Campbell Union High School District has realized time savings and improved efficiency for its IT staff. Prior to the implementation, the IT team had to spend time scheduling and traveling to maintain the environment. With virtualization, the IT team only has to work and maintain one image to address any issues instead of spending time traveling to, and working on, each individual desktop. This centralized management for the 500 desktops, or 20% of the organization s infrastructure, has also helped with incident management. We ve had zero trouble tickets so far, the director of technology noted, when previously we d get 60 trouble tickets a day for the physical machines. The organization estimates that this ease of management and maintenance through implementing virtual desktops over three years translates to 60% time saved for its IT team. This is equivalent to 1,248 hours annually for each member of the organization s five-person IT team. For a conservative approach, Forrester estimates that only 50% of these labor savings are used for productive work. At an annual fully loaded compensation of $85,000 per IT engineer FTE, this results in savings of $382,500 over three years. Table 11: Improved IT Staff Efficiency Ref. Metric Calculation Per period Year 2 Year 3 Total A1 Number of workers 5 A2 A3 Hourly rate per worker Number of hours (saved) $ ,248 A4 Percent captured 50% At Improved IT staff efficiency A1*A2*A3*A4 $127,500 Ato Total (original) $127,500 $127,500 $127,500 $382,500 Time Saved On Application Upgrades The organization also noted that implementation cycles have decreased dramatically. Every summer before the start of the school year, the organization upgrades the applications on all the machines. The IT team supports 500 applications in the Campbell Union High School District. By implementing desktop virtualization through Citrix XenDesktop, the organization has seen cost savings on time spent upgrading these machines. The organization estimates that 20 minutes or

17 0.33 hours are saved per application upgrade. At an average of 100 applications virtualized for 500 machines, the organization saves more than 15,000 man-hours. This increases each year as more desktops are virtualized. For a conservative approach, Forrester estimates that only 50% of these labor savings are used for productive work. At a fully loaded compensation of $40.87 per FTE per hour, this results in savings of $2,043,269 over three years. Table 12: Time Saved Application Upgrades Ref. Metric Calculation Year 1 Year 2 Year 3 Total A1 A2 A3 A4 Number of applications Hourly rate per worker Number of hours (saved) Number of machines 100 $ ,000 1,500 A5 Percent captured 50% At Time saved for application upgrades (in dollars A1*A2*A3*A4*A5 340, ,090 1,021,635 Ato Total (original) $340,545 $681,090 $1,021,635 $2,043,269 Improved Desktop Provisioning Another IT management area that improved with the organization s implementation of desktop virtualization was desktop provisioning. The district s IT engineers traditionally would need to spend 2 hours building physical images, but with Citrix XenDesktop s use of virtual images, that time has been shaved to an hour. As the IT team is building images for hundreds of machines, the organization estimates that it has saved at least four weeks in desktop provisioning. As these images are updated every six months, the total cost savings from improved desktop provisioning is $39,231 over three years

18 Table 13: Improved Desktop Provisioning Ref. Metric Calculation Per period Year 2 Year 3 Total A1 A2 A3 Time savings per image (in weeks) Number of image updates per year Hourly rate per worker 4 2 $40.87 A4 Number of workers 1 At Improved desktop provisioning A1*40*A2*A3*A4 $13,077 Ato Total (original) $13,077 $13,077 $13,077 $39,231 Total Benefits Table 14 illustrates the total three-year benefits as a result of implementing Citrix XenDesktop for 1,500 units in the Campbell Union High School District. Table 14: Total Benefits, Non-Risk-Adjusted Benefits Initial Year 1 Year 2 Year 3 Total Direct cost avoidance desktop refresh Direct cost avoidance physical servers Direct cost avoidance software licenses 250, , , , , ,000 18,500 18,500 18,500 55,500 Improved IT staff efficiency 127, , , ,500 Time saved for application upgrades Improved desktop provisioning 340, ,090 1,021,635 2,043,269 13,077 13,077 13,077 39,231 Total $1,049,622 $1,090,167 $1,430,712 $3,570,

19 Additional Benefits Not Quantified The organization also identified the following qualitative benefits of using Citrix XenDesktop. Improved Educational Opportunities For Students One big benefit of virtualization on Citrix is that it allows students to log on to virtual desktops from home. Everybody gets the same experience. In terms of the economic divide, it makes a big difference in education. (Charles Kanavel, director of technology, Campbell Union High School District) With desktop virtualization, the students of the Campbell Union High School District can now access virtual desktops remotely through an SSL VPN gateway. Students can work from home or from public libraries to access expensive applications through a Web browser. This levels the playing field. You get the same experience from an e-machine or an expensive laptop, the organization noted, as cost is no longer a limiting factor for student access. Applications that only educational institutions get access to, as well as applications that students could not afford to purchase for home use, are now also available to students after school hours. This allows the students to spend more time working on projects and homework outside the classroom and enhances their educational experience. Ease Of Implementation The organization also noted that one benefit of using the Citrix XenDesktop solution was the ease of implementation. From the proof-of-concept testing conducted the previous year to the rollout of the project over 2.5 months, the organization was able to plan and implement using only its internal resources. As it noted, It s been easy to manage and support and easy to roll out. Usability The district s training costs were negligible for the students and teachers because the user experience through Citrix XenDesktop remained consistent for the most part. They don t even know it s virtual was one common observation by the IT team. Implementing new technology was considered a risk for the organization, so effort was made by the IT team to recreate the exact environment for its users in the virtual space. Fewer Workforce Interruptions And Downtime Issues Apart from IT efficiency savings, desktop virtualization also improved the user experience. Teacher and student time spent on desktop maintenance issues was minimized. With the reduced number of daily trouble tickets due to improved ease of maintenance through desktop virtualization, users at the Campbell Union High School District experienced fewer downtime issues and interruptions during school hours. Risk Risk is the third component within the TEI model; it is used as a filter to capture the uncertainty surrounding different cost and benefit estimates. If a risk-adjusted ROI still demonstrates a compelling business case, it raises confidence that the investment is likely to succeed because the risks that threaten the project have been taken into consideration and quantified. The risk-adjusted numbers should be taken as realistic expectations, as they represent the expected values considering risk. In general, risks affect costs by raising the original estimates, and they affect benefits by reducing the original estimates

20 For the purpose of this analysis, Forrester risk-adjusts cost and benefit estimates to better reflect the level of uncertainty that exists for each estimate. The TEI model uses a triangular distribution method to calculate risk-adjusted values. To construct the distribution, it is necessary to first estimate the low, most likely, and high values that could occur within the current environment. The risk-adjusted value is the mean of the distribution of those points. For example, take the case of additional hardware costs. The $440,000 value used in this analysis can be considered the most likely or expected value. Hardware costs may vary based on size of implementation, environment, and other factors. This variability represents a risk that must be captured as part of this study. Forrester uses a risk factor of 105% on the high end, 100% as the most likely, and 100% on the low end. This has the effect of increasing the cost estimate to take into account the fact that original cost estimates are more likely to be revised upward than downward. Forrester then creates a triangular distribution to reflect the range of expected costs, with 102% as the mean (102% is equal to the sum of 105%, 100%, and 100% divided by three). Forrester applies this mean to the most likely estimate $440,000 to arrive at a risk-adjusted value of $448,800. The following risks were considered in this study: Hardware costs. These may increase depending on the size of the enterprise and the implementation. Implementation risks. These are due to the variability that may occur in the planning and execution phases. Administrative costs. A slight risk adjustment was made for variability in administrative costs in the early and later stages of the implementation. Variability of labor savings. Productivity savings and other time savings for internal resources may be variable, so these benefit categories are risk-adjusted. The following tables show the values used to adjust for uncertainty in cost and benefit estimates. Different cost and benefit estimates have different levels of risk adjustments depending on variability and other factors. Readers are urged to apply their own risk ranges based on their own degree of confidence in the cost and benefit estimates. Table 15: Risk Factors Costs Costs Original estimate Low High Mean Citrix XenDesktop licenses 100% 100% 100% 100% Hardware costs 100% 100% 105% 102% Implementation costs 100% 100% 115% 105% Administrative costs 100% 100% 105% 102%

21 Table 16: Risk Factors Benefits Benefits Original estimate Low High Mean Direct cost avoidance desktop refresh 100% 100% 100% 100% Direct cost avoidance physical servers 100% 100% 100% 100% Direct cost avoidance software licenses 100% 90% 100% 97% Improved IT staff efficiency 100% 90% 100% 97% Time saved for application upgrades 100% 75% 100% 92% Improved desktop provisioning 100% 85% 100% 95% The risk factors in Tables 15 and 16 are applied to the benefits and costs listed earlier, resulting in the risk-adjusted cost and benefit values in Tables 17 and 18. Table 17: Total Costs Cash Flow, Risk-Adjusted Costs Initial Year 1 Year 2 Year 3 Total Present value Citrix XenDesktop licenses (175,000) (200,000) (225,000) (600,000) (509,335) Hardware costs (204,000) (102,000) (142,800) (448,800) (395,585) Implementation costs (37,188) (37,188) (37,188) (111,563) (95,860) Administrative costs (26,010) (4,335) (4,335) (34,680) (30,485) Total ($416,188) ($26,010) ($343,523) ($409,323) ($1,195,043) ($1,031,266)

22 Table 18: Total Benefits Cash Flow, Risk-Adjusted Benefits Initial Year 1 Year 2 Year 3 Total Present value Direct cost avoidance desktop refresh Direct cost avoidance physical servers Direct cost avoidance software licenses 250, , , , , , , ,727 17,945 17,945 17,945 53,835 44,627 Improved IT staff efficiency Time saved for application upgrades 123, , , , , , , ,904 1,879,808 1,508,836 Improved desktop provisioning 12,423 12,423 12,423 37,269 30,894 Total $1,017,344 $1,030,646 $1,343,947 $3,391,937 $2,786,359 Flexibility Flexibility, as defined by Forrester s TEI methodology, represents an investment in additional capacity or agility today that can be turned into future business benefits at some additional cost. This provides an organization with the right or the ability to engage in future initiatives but not the obligation to do so. Forrester identified the following areas that present flexibility options for the organization through Citrix XenDesktop: Management Of Additional Sites Expanding Citrix XenDesktop Implementation The Campbell Union High School District has also been tasked with absorbing various adult education programs in the area, which number 11 sites in total, into its management. This will expand the number of sites that the district s IT team is currently managing from seven to 18. The organization estimates that prior to Citrix XenDesktop, the organization would have had to hire three more engineers to its headcount to manage these sites. With the management benefits of desktop virtualization under Citrix XenDesktop and working with the current budget constraints, the organization estimates that it will not have to add these additional FTEs. Expanding its desktop virtualization project to desktops in the adult education programs in its district will also bring added benefits such as desktop refresh and software savings to the organization. The total benefit or asset value of implementing desktop virtualization to these additional PCs is conservatively estimated as a function of headcount saved, cost avoidance of desktop refresh, and software savings

23 The estimated quantified benefit of management of additional sites is estimated as three headcount saved. At an annual fully loaded compensation of $85,000 per FTE, the labor savings is valued at $255,000 per year. For the benefit of savings on desktop refresh and software savings, at a $500 cost avoidance savings for a PC refresh plus an additional $37 in software cost savings, the total benefit for the 400 additional desktops for virtualization is $214,800. The estimated labor cost of implementing desktop virtualization to these 400 additional desktops is one month for three FTEs. At an annual fully loaded compensation of $85,000 per FTE, the implementation labor cost is $21,250. In addition to this cost, the organization also incurs the cost of the Citrix XenDesktop licenses. At $350 per Platinum Edition license, the total licensing cost for the 400 computers is $140,000. The total cost for implementation to these additional desktops is $161,250. The flexibility component of TEI captures that value using either the financial industry standard Black-Scholes or the binomial option pricing models. With a two-year time frame to use this option, as the composite organization will only start considering this opportunity after Year 1, Forrester values the above flexibility option at $327,013. This value exists in addition to risk-adjusted benefits and ROI described in this analysis. Table 19: Flexibility Analysis Management Of Additional Sites Ref. Metric Calculation Per period A1 A2 Asset value (benefit headcount savings, cost avoidance for PC refresh and software licenses) Cost to acquire (labor implementation and software licenses for 2,000 PCs) $469,800 $161,250 A3 Expiration (time to expire, in years) 2 At Flexibility management of additional sites and expanding Citrix XenDesktop implementation Black-Scholes Model $327,013 Server Virtualization By implementing Citrix XenDesktop, the organization has also invested in core pieces of infrastructure such as servers and storage, which allows it to be more flexible in adding capacity to meet growth requirements. It is now easier for the organization to configure its infrastructure to add more capacity, representing additional implementation and labor savings. We ve become more dynamic over the long run as we add more servers or more desktops, the director of technology noted, [and] we now have a plug-and-play type of environment. While not quantified at this time, this particular flexibility component may provide additional benefits should the organization choose to exercise this option

24 The value of flexibility is unique to each organization, and the willingness to measure its value varies from company to company (see Appendix A for additional information regarding the flexibility calculation). Please note that the values calculated above exist in addition to risk-adjusted benefits described in this case study analysis; Forrester has not included the option value in the ROI calculations. TEI Framework: Summary Considering the financial framework constructed above, the results of the Costs, Benefits, Risk, and Flexibility sections using the representative numbers can be used to determine an ROI, NPV, and payback period. Table 20 shows the consolidation of the numbers for the organization. Table 20: Total Costs And Benefits, Non-Risk-Adjusted Ref. Project cash flow Calculation Initial cost Year 1 Year 2 Year 3 Total PV/NPV E1 Total costs ($410,417) ($25,500) ($339,667) ($404,667) ($1,180,250) ($1,018,347) F1 Total benefits $0 $1,049,622 $1,090,167 $1,430,712 $3,570,500 $2,930,081 G1 Net savings $1,024,122 $750,500 $1,026,045 $2,390,250 $1,911,734 H1 ROI (F1-E1)/E1 188% P3 Payback period 4.8 months Table 21 below shows the risk-adjusted values, applying the risk-adjustment method indicated in the Risk section. Table 21: Total Costs And Benefits, Risk-Adjusted Ref. Project cash flow Calculation Initial cost Year 1 Year 2 Year 3 Total PV/NPV J1 Total costs ($416,188) ($26,010) ($343,523) ($409,323) ($1,195,043) ($1,031,266) K1 Total benefits $0 $1,017,344 $1,030,646 $1,343,947 $3,391,937 $2,786,359 L1 Net savings $991,334 $687,123 $934,624 $2,196,894 $1,755,093 M1 ROI (K1-J1)/J1 170% P4 Payback period 5 months

25 It is important to note that the values used throughout the TEI framework are based on in-depth interviews with the organization. Forrester makes no assumptions as to the potential return that other organizations will receive within their own environments. Forrester strongly advises that readers use their own estimates within the framework provided in this study to determine the expected financial impact of implementing Citrix XenDesktop

26 Study Conclusions Based on information collected in interviews with the Campbell Union High School District, a current client of Citrix XenDesktop solutions, Forrester found that organizations can realize benefits in the form of the following: Improved IT staff efficiency through centralized management. Time savings on application upgrades. Improved desktop provisioning and corresponding time savings. Desktop cost savings through cost avoidance of a PC refresh. Savings from opportunities to leverage enterprise software license programs. Server cost savings from virtualization of infrastructure. Other benefits not quantified, including better education opportunities for the students through improved user experience from any location or device; ease of implementation; ease of use; and fewer workforce interruptions and downtime issues. The financial analysis provided in this study illustrates the potential way an organization can evaluate the value proposition of Citrix XenDesktop. Based on information collected in the in-depth client interviews, Forrester calculated a three-year risk-adjusted ROI of 170% for the organization, with a payback period of five months. This ROI mainly represents the ongoing incremental savings for the organization for using Citrix XenDesktop. All final estimates are risk-adjusted to incorporate potential uncertainty in the calculation of costs and benefits. Based on these findings, companies looking to implement Citrix XenDesktop can see savings from cost avoidance of desktop refresh and hardware and software costs, as well as productivity gains and time savings for upgrades and desktop provisioning due to centralized and easier management of the IT environment. Using the TEI framework, many companies may find the potential for a compelling business case to make such an investment. Table 22: ROI, Original And Risk-Adjusted Summary financial results Original estimate Risk-adjusted ROI 188% 170% Payback period (months) Total costs (PV) ($1,018,347) ($1,031,266) Total benefits (PV) $2,930,081 $2,786,359 Total (NPV) $1,911,734 $1,755,

27 Appendix A: Total Economic Impact Overview Total Economic Impact is a methodology developed by Forrester Research that enhances a company s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders. The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility. For the purpose of this analysis, the impact of flexibility was not quantified. Benefits Benefits represent the value delivered to the user organization IT and/or business units by the proposed product or project. Often product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization. Calculation of benefit estimates involves a clear dialogue with the user organization to understand the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established between the measurement and justification of benefit estimates after the project has been completed. This ensures that benefit estimates tie back directly to the bottom line. Costs Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units may incur costs in the forms of fully burdened labor, subcontractors, or materials. Costs consider all the investments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are created. Risk Risk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two ways: the likelihood that the cost and benefit estimates will meet the original projections and the likelihood that the estimates will be measured and tracked over time. TEI applies a probability density function known as triangular distribution to the values entered. At a minimum, three values are calculated to estimate the underlying range around each cost and benefit. Flexibility Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the initial investment already made. For instance, an investment in an enterprise wide upgrade of an office productivity suite can potentially increase standardization (to increase efficiency) and reduce licensing costs. However, an embedded collaboration feature may translate to greater worker productivity if activated. The collaboration can only be used with additional investment in training at some future point in time. However, having the ability to capture that benefit has a present value that can be estimated. The flexibility component of TEI captures that value