4-page Case Study - Posted 6/1/2005
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London Borough of Newham Chooses Microsoft Solution Over Open Source as Best Overall Value Option
Newham Council, an innovative and leading-edge local authority in the United Kingdom, was faced with the need to lower cost and risk, while providing a financially predictable, stable, and innovative information and communications technology (ICT) platform to support its ambitious long-term transformation plans. A multi-disciplinary team under the lead of Capgemini was brought in to evaluate the best possible solution for the borough, comparing the costs, business benefits, and risk profiles of a Microsoft solution (incorporating Microsoft Windows XP and the Microsoft Office System on the desktop, with Microsoft Windows Server 2003) with equivalent Open Source solutions. The analysis showed that by standardizing on a Microsoft solution, the borough could lower ICT operating costs, derive additional significant business benefit, and secure the desired predictability and stability. Specific benefits of an all-Microsoft solution included the potential for a 13.5 per cent reduction in ICT support and operation costs and double the productivity benefits of an Open Source solution.
Situation
As one of the more deprived and socially needy boroughs, yet regarded as an innovator and leader of local authorities in the UK, Newham Council is faced with considerable pressures to cope with the extensive social regeneration of the borough, while meeting statutory requirements for service delivery targets, performance indicators, e-government targets, and legislation changes. In addition, the borough faces funding pressures and challenges in terms of improved resource and asset management.
The Information and Communications Technology (ICT) function within the borough is also faced with strong pressures to reduce costs, provide better services, and support improved ways of working through collaboration and remote/home working capabilities.
An evaluation of a potential solution was completed by Capgemini and identified the following key drivers for ICT within the borough:
- Reduce cost (and deliver better value for money).
- Deliver business advantage.
- Be predictable, sustainable, and long term.
In an effort to reduce ICT infrastructure and operations costs, the borough considered migrating its desktop and server environments to an Open Source solution that would encompass the desktop operating system, productivity suite, and server operating system environment. The borough reasoned that if they could reduce their initial upfront ICT infrastructure costs by using Open Source desktop and server products, they would be able to lower selected ICT operating expenses and the overall total cost of ownership. Also, the borough could then gain technical knowledge of Open Source technologies that are being discussed in local government environments.
Apart from cost, Newham was also looking for a solution that would provide a sound long-term platform for growth and stability. By minimizing risk and providing predictability of future costs and opportunities, it could then develop a long-term roadmap for ICT for the council, and ensure a predictable and stable cost model, and sustainable funding.
Newham also wanted to maintain its position as an innovator and leader of local authorities in the UK, by making a sound and defensible decision on a future ICT platform, which could then become a role model for other local authorities.
Newham had two principal challenges: lower ICT operating costs while providing a secure, stable, and predictable infrastructure that would support long-term plans for transformation. The essential question confronting the council was how to evaluate which solution provided the most effective forward strategy when taking risk management, cost, product and market maturity, flexibility, systems integration, and business process re-engineering capability into account.
In essence, Newham needed to determine which solution was best positioned to support the achievement of business advantage given the long-term needs of the council.
Solution
Microsoft® Services proposed a 12-week consulting engagement to Newham, to assess the most value-added combination of Microsoft products to provide operational and commercial benefit to the council. Capgemini were invited to lead this process in order to:
- Provide an objective view of the feasibility and effectiveness of the Microsoft solution.
- Provide an independent view of the benefits to be gained from the refresh program.
- Identify opportunities to further utilize the Microsoft environment to deliver additional value in support of Newham's operational performance and to support key objectives.
The study focused on the following key aspects of the solution:
- Understanding the ICT needs of the borough, and the strategies and plans of the council.
- Identifying the solution and defining an appropriate architecture.
- Examining the total cost of ownership of the proposed solution for the council.
- Identifying other potential areas of business value and advantage arising from the solution.
- Addressing Newham's risk and financial predictability issues.
The solution ultimately recommended by Capgemini consisted of: the Microsoft Windows® XP Tablet PC Edition operating system and Microsoft Office Professional Edition 2003, including the Microsoft Office InfoPath® 2003 information-gathering program. In addition, several products from Microsoft Windows Server System™ integrated server software composed the solution. These Windows Server System products included the Microsoft Windows Server™ 2003 operating system, Exchange Server 2003, BizTalk® Server 2004, Internet Security and Acceleration (ISA) Server 2000 Service Pack 1, Content Management Server 2004, Commerce Server 2002, and Identity Integration Server 2004.
Benefits
The cost analysis made use of the Gartner Total Cost of Ownership Analyst tool as a starting point, and was then customized and adapted through a series of workshops and interviews with key Newham ICT and New Deal IT Services (the council's outsourcing partner) staff, to Newham's unique situation.
It was recognized that Newham was already performing operationally well ahead of comparable organizations, before the model was applied.
ICT Support Costs Reduced by 13.5 Per Cent
The customized Total Cost of Ownership (TCO) analysis showed that when benchmarked against best practices, a desktop migration to Microsoft Windows XP Tablet PC Edition and the Microsoft Office System and a server migration to Microsoft Windows Server 2003 could allow ICT to provide the same level of service to Newham as is currently being provided through Open Source, but reduce ICT support costs by 13.5 per cent.
This equated to a cost saving of approximately £650,000 (U.S.$1.2 million) per annum, which could be realized by either lowering the ICT operating costs for Newham while retaining the same levels of service, or reinvesting to improve service levels without increasing cost. Over a five-year time frame this would amount to a cost saving or deferred investment of £3.2 million (U.S.$5.8 million).
These savings were partly as a result of the reduced complexity in the new environment (standardization) and partly because of the improved desktop and server management capabilities of the Microsoft solution.
Benefits on Microsoft Environment Significantly Better than Open Source
Based upon the Gartner TCO tools, the study also indicated that an Open Source solution would provide approximately half of the cost savings of a comparable Microsoft solution, but would cost three times more to implement due to significantly increased migration costs.
The estimated cost savings for the Open Source solution, based upon Linux desktop and server operating systems and either StarOffice or OpenOffice as the productivity application, were in the region of 7 per cent, per annum, as compared to the 13.5 per cent saving per annum on ICT support costs with the Microsoft solution. The Microsoft solution had potentially double the productivity associated cost savings of an Open Source solution.
Microsoft Migration Costs 68 Per Cent Lower than Open Source Migration
In addition, the migration costs for the Microsoft solution were estimated to be 68 per cent lower than the switching costs of migrating to an Open Source platform. This was because of the higher costs of training ICT and users, the need for additional testing on the new platform, increased support levels for the users subsequent to the migration, and the costs for converting, testing macros and the 120 office-based custom applications that exist within Newham.
Key Additional Areas of Business Advantage
The study further highlighted a number of areas of business advantage for Newham that would be derived from the new infrastructure. These were:
- Flexible Working Benefits. Tablet PCs, wireless connectivity, and improved remote access capabilities within the new solution would facilitate mobile working and allow Newham to use skilled resources far more effectively. This would result in reduced administration support, reduced travel to and from the office, and the reduced need for office accommodation—with the possibility of introducing "hot desking" within the council.
- Unified Identity Management. Improved identity management, single sign-on, and user/e-mail account management will improve the integrity of the user accounts, and result in lower administration costs and improved security for ICT, as well as improved productivity for the user.
- Communicating with the Public. The new platform could also be used to improve communications with the public via e-mail and Microsoft Systems Management Server (SMS) 2003, thereby lowering communication costs, improving public satisfaction, and encouraging greater levels of feedback.
Risks of Migrating to Open Source
Capgemini further identified a number of additional risks for Newham if they decided to migrate to an Open Source platform. These were:
- Security Issues on Open Source. Open Source vendors are currently experiencing more vulnerabilities and receiving more security advisories than Microsoft. In addition, Microsoft has made a substantial investment in further improving security levels with its Trustworthy Computing Initiative.
- Issues around Compatibility. An Open Source platform is likely to reduce Newham's ability to exchange documents both inside and outside the council, which could lead to unhappy customers and increased costs.
- Lower Productivity. The need to re-learn the desktop productivity suite and the issue of document incompatibility with customers, other Local Authorities, and colleagues, could lead to lower overall productivity.
- Problems with Language Support. The Microsoft Office System supports over 40 languages, which is important to a borough with such a degree of cultural diversity. In comparison, Open Source solutions support only 11 languages, which could cause issues for Newham.
Newham's Mayor Sir Robin Wales said: "The fact that we can provide a familiar, secure, and stable desktop environment for our staff, which will enable us to communicate quickly and easily with our stakeholders, is equally important as the cost reduction benefits for ICT."
Microsoft as a Partner for Local Authorities
A key decision point for Newham, even given the lower cost, improved business value, and lower risks of the Microsoft solution, was the ability to establish a secure predictable, sustainable, and long-term funding model with the chosen vendor(s).
Newham found that Microsoft Services was willing to support them in this goal, by providing the following:
- A Local Government Partnership Programme that provides close associaiton with a select number of local authorities and influencers that provide detailed knowledge
- Use of Microsoft Local Government User Forum to allow a broader market contact and feedback
- A solution reference programme to promote uptake of Microsoft technology
The appropriate licensing mechanisms, coupled with an active role for Newham in these mechanisms, demonstrated that Microsoft Services was willing to step up to the challenge of assisting Newham in reaching its transformation goals, by working as a partner, rather than purely a vendor.
The study conducted by Capgemini proved that the Microsoft solution better fulfils customers demands than Open Source, and would satisfy Newham's needs as a stable, low risk, cost-effective, financially predictable, and innovative platform, able to support the ambitious transformation plans of the borough, as well as the constant evolution of business needs and IT innovation.
Other local authorities in the UK look to Newham for technology leadership. The council's adoption of a current and more sophisticated desktop and server infrastructure will no doubt help to influence the technology decisions of its counterpart authorities.
Richard Steel, Head of Newham's ICT, said: "While using Open Source might provide some short-term cost benefits, the longer term benefits related to technology and thought leadership of standardizing on a Microsoft platform are significant. While not easily quantifiable, these benefits are nonetheless a vital component of our decision-making process. We are confident that a standard Microsoft desktop and server infrastructure will reap great dividends for the council and its constituency."
Microsoft Windows XP Professional delivers the new standard in reliability and performance. This operating system is designed for businesses of all sizes and for users who demand the most from their computing experience.
For more information about Windows XP Professional, go to:
www.microsoft.com/windowsxp/pro
Microsoft Office is the business world's chosen environment for information work that provides the software, servers, and services that help you succeed by transforming information into impact.
For more information about Microsoft Office System, go to:
www.microsoft.com/office
Microsoft Windows Server System is a comprehensive, integrated, and interoperable server infrastructure that helps reduce the complexity and costs of building, deploying, connecting, and operating agile business solutions. Windows Server System helps customers create new value for their business through the strategic use of their IT assets. With the Windows Server operating system as its foundation, Windows Server System delivers dependable infrastructure for data management and analysis; enterprise integration; customer, partner, and employee portals; business process automation; communications and collaboration; and core IT operations including security, deployment, and systems management.
For more information about Windows Server System, go to:
www.microsoft.com/windowsserversystem
For More Information
For more information about Microsoft products and services, call Microsoft Ltd. in the United Kingdom at +44 0870 601 0100. Outside the UK, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to the UK site:
www.microsoft.com
For more information about Microsoft Services visit the Web site at:
www.microsoft.com/services/microsoftservices
For more information about London Borough of Newham, visit the Web site at:
www.newham.gov.uk
© 2004 Microsoft Corporation. All rights reserved.
This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.
Microsoft, BizTalk, FrontPage, InfoPath, Windows, the Windows logo, Windows Server, and Windows Server System are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other trademarks are property of there respective owners.
