ROI / Savings obtained when switching to Linux

The core of the Linux savings proposition is no software license fees, reduced hardware costs and less unplanned downtime. Companies changing their systems over from Windows to Linux are reporting massive cost-savings from software licenses alone.

This formula allows you to calculate how much you could be saving by switching to Linux. Take the number of PCs that you will replace by thin clients and the number of servers on your network and apply the following formula. X represents the number of PCs replaced and Y the number of servers in your organisation.

The result shows how much lower the TCO (total cost of ownership) is when using Linux as opposed to Windows and gives an idea of the ROI to be obtained. How we arrived at these amounts:

^*1 Savings using Linux as a server OS
The saving on the first server is $3,462, additional servers at $500 per server. This was based on the fact that as well as the Windows Server license, you will need a license for Exchange Server, SQL Server and Microsoft ISA Server which add up to $3,811 compared to $349 for a server license of RedHat or SUSE Linux. Whilst the additional license cost of a Windows server compared to a Linux server is about $250, we have doubled this to $500 because you need to include management software and possible additional server installations (Mail, SQL, IIS, etc) as you scale beyond a single server installation. These are all included in Linux. Furthermore you can also choose free Linux distributions for some servers.

^*2 Savings on Microsoft CALs (client access licenses)
Beyond the actual server license, each user that accesses the server requires the purchase of a client access license. The total client access license was calculated at $165 per PC. This is made up of one Windows Server CAL @ $70, one Exchange Server CAL @ $80 and one SQL server CAL @ $150 per 10 users, making it $165 per PC. There are no CALs when using Linux.

^*3 Savings by using Linux on the desktop
We calculated the saving at $500. This is built up as follows: Microsoft Office license of $300, $100 for the Windows license and $100 for miscellaneous software required, such as anti-virus, patch management, PDF converter and other software. Even though most PCs ship with the Windows license, the upgrade cost to a new version of Windows will be high. Therefore we have allocated $100 as an operating system cost. There is no per desktop license fee when using a Linux terminal server.

Notes

The formula and the amounts specified may vary for different organizations. Large organizations might be able to obtain better pricing from Microsoft, whereas smaller companies might not be able to obtain the prices listed. Furthermore, companies operating outside of the US often have to face higher Microsoft licensing prices.

The prices quoted above are without software assurance. This would increase the Microsoft prices by 20% per year. Linux on the other hand includes 1 year of updates in the price. This presents a significant saving over a period of, say, 5 years.

There will be a retraining cost for staff to get acquainted with OpenOffice, Thunderbird and Firefox. The actual cost is often exaggerated by Windows proponents. OpenOffice, Firefox and Thunderbird are very similar to their Windows counterparts. However, 2 to 3 days of training for all staff would undoubtedly be beneficial. In addition, because OpenOffice, Firefox and Thunderbird are open source, employees can take the software Home and use it there too.

There is also a retraining cost for System Administrators. A 2-week intensive Linux course is recommended.

Big savings can be made beyond the standard server applications such as mail, database and firewall. Most companies will require CRM and content management at some point. On Linux, quality applications can be found for free or for a low fee. Compare this to Microsoft CRM at $10,000 per server and $7,000 for the content management server! Add to that maintenance, upgrades and client access licenses, and the savings can be huge.

Analysis does not take into account yearly running costs.

To find out how much you could save by switching to thin clients, use the fat2thin calculator!