In a salute to Gartner Group’s new Total Value of Opportunity methodology for assessing the potential of information technology investments, Microsoft Corp. is offering to fund TVO studies that will help large organizations prove the value of upgrading to Windows XP.
Organizations that have more than 5,000 PCs running Windows 95, 98 or NT 4.0 can invite Microsoft consultants in to conduct these assessments, which Gartner will also review to ensure the methodology is followed consistently. Microsoft has set aside $1 million for the program, which it expects will cover 40 evaluations that will cost it about $25,000 each.
The program is Microsoft’s way of acknowledging that there is no way corporate executives can justify a desktop operating system upgrade without some numbers to support the change. “We have to account for the value we’re providing,” said Rogers Weed, a corporate vice president of Windows product management.
Microsoft has been criticized recently for its new Software Assurance licensing plan, which for many companies tends to inflate the cost of Microsoft software by requiring annual payments toward future upgrades. Weed said there was no direct connection between the TVO studies program, known as the Microsoft Business Value Proposition program, and the backlash against Software Assurance. However, he said it does combat some negative perceptions generated by the controversy. “We’re in a situation where most people don’t think we’re providing the value that they’re paying for,” Weed said.
TVO is one of the new concepts Gartner emphasized at last week’s Symposium/ITxpo conference in Orlando, and Microsoft embraced the approach with its own announcement. TVO is a follow-up to the Total Cost of Ownership (TCO) methodology Gartner has promoted for several years, which takes a long term view that includes long-term support and maintenance costs in addition to the initial purchase price of hardware and software.
Gartner says TVO is an equally rigorous attempt to look at the potential gains from adopting a new technology and balance that against the cost assessment. It borrows from many other management accounting frameworks, such as the Balanced Scorecard, for measures of corporate performance that non-technical executives will recognize and provides a road map for making the connection to improved technology.
A few years ago, Microsoft was in the position of disputing Gartner’s TCO analysis of the cost of Windows PCs, which were singled out as an example of a product for which the long-term costs of ownership dwarfed the purchase cost. Promoters of Web-based network computers seized on this as an argument for a simpler desktop client computer.
But this also prompted Microsoft and PC manufacturers to focus more attention on manageability and usability. The reaction in the market ultimately supported Microsoft’s contention that many users value the local processing power of a PC and weren’t willing to trade it in for device that would be entirely dependent on server-based computing power.
Microsoft says a study conducted by BearningPoint Inc. (formerly KPMG Consulting) showed the upgrade is particularly valuable for enterprises that are still predominantly using Windows 95 and 98, equating to an annual savings of $187 per desktop or $387 per laptop. Besides letting each enterprise get an analysis specific to its mix of PCs, the TVO studies are supposed to show how productivity improvements and other benefits produce value beyond the savings in administration and maintenance.
By backing this program, Gartner is not saying that every corporation will see TVO benefits, only that this provides a rigorous approach to figuring out whether it makes sense, according to Michael Smith, one of the analysts who devised the methodology. “We don’t know what the analysis will look like until it’s done,” he said. The results of the analysis will be different from company to company, depending on whether the features Microsoft has added to XP are important to that organization, he said.
Microsoft customers can get enrollment details by writing to [email protected].