Need/Opportunity.doc

Copyright ©1995-2005 CNET Networks, Inc. All rights reserved.

ZDNet Make the Case

Linux Migration

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General IntroductionOver the past few years, Linux has become a viable contender to Windows, UNIX, and NetWare in the data center. With the potential for licensing fees starting at the zero dollar mark, many organizations have begun to either seriously consider or actually implement Linux-based solutions in their organizations. Indeed, according to a recent article at the AlwaysOn Insiders Network, UNIX/Linux market share is projected to grow from 28.3% of server sales in 2004 to more than 37% by 2008. This is at the same time that the worldwide server market itself is growing at a rate of 5.6%, according to an IDC survey. Further, this survey has directly confirmed explosive growth in the overall Linux server market According to the survey, in the most recent year, Linux server shipments are up by more than 32% while Windows server shipments grew by only 10.9%. While Linux still trails Windows in overall server deployments, these numbers show that the gap is narrowing during this time of significant worldwide server market growth.

On top of the growing Linux market, there is a growing community of open source developers that focus on Linux first and all others second. Hardly a day goes by when there isn’t some new or updated open-source application available that can help an organization meet a business need. Already, many organizations make some kind of use of open-source software, which includes Linux itself, somewhere in their environment. Often times, upper management—even the CIO—is unaware that this kind of software is being used in the organization. Moreover, many organizations make significant use of open-source software on a daily basis, and even the IT staff is blissfully unaware. For example, because of its ability to be freely used, Linux has found its way into many commercial appliances, such as the Barracuda Networks spam firewall.

What this means for the enterprise is that Linux has fairly quickly evolved from a hobbyist operating system into a powerful enterprise-level solution capable of tackling a myriad of business problems. Further, it can be as well supported as any commercial operating system and enjoys broad support from a ferociously loyal development community. With its potential price tag of “free” from a licensing perspective, Linux at the server-level can appear to be an extremely attractive option to replace UNIX and Windows servers. Further, with a plethora of open source software available to seemingly replace every conceivable application in your organization, the process may appear to be simple.

However, with all the obvious benefits associated with Linux, there still remain some risks and complications. Many organizations make significant use of software that relies heavily on a Microsoft infrastructure, thus lessening the potential for a complete Windows replacement with Linux. Further, there are literally dozens (and maybe hundreds) of Linux distributions available for use or purchase. While an organization can easily test the waters with a free distribution, it’s not advisable to continue this practice in a production capacity. Companies such as Red Hat and Novell generate a significant percentage of their profit by selling licenses for commercial, supported, stable Linux distributions. The need to pay for a yearly support contract and licenses for Linux, and to completely retain IT staff may turn some organizations away from the solution. Finally, with a wide, varied developer community and significant growth and expansion of Linux, things are moving fast, and software dependencies under Linux can sometimes be quite difficult to resolve. However, organizations sticking with software directly supported by their commercial Linux vendor can generally avoid this problem.

So, is Linux right for your company? For an IT executive the waters can become quite murky when considering the risks and rewards of implementing this technology. Use this Make The Case document to help you organize your thoughts on how a Linux solution might impact your organization.

This business case explores the opportunities and benefits that can be realized in the deployment of VoIP product(s) or solution(s), as well as the costs and associated risks involved. However, the template may need customization. Each organization is likely to have unique challenges and opportunities that the business case should address.

http://distrowatch.com/

http://www.infoworld.com/article/04/05/14/20TCbarracuda_1.html

http://www.stromian.com/Book/Chap3.html

http://news.softpedia.com/news/IDC-Worldwide-Server-Market-Shows-Growing-IT-Investment-7017.shtml

http://www.alwayson-network.com/comments.php?id=P5013_0_6_0_C


I. Need/OpportunityKey technical and business objectives for Linux:

A. Tangible goals or objectives

Lower recurring licensing fees Deploy supporting software as needed, also with low licensing fees Deploy superior solutions to improve service and communications Reduce operating costs Consolidate servers Reduce cost of ownership Enable new features, services, and capabilities Reach new customers

B. Scope

Impact and benefits from deploying Linuxo Determine what services are being provided with the existing infrastructureo Provide identical or expanded set of services with new and higher-value

offerings based on open standardso Identify risk factors

Systems affected upon deployment of Linuxo Define project size and market opportunity o Manage complexity of technologyo Select proper standardso Interoperate with other operating systemso Improve server utilization


II. Stakeholders

A. Primary

Executives looking to expand market opportunities Managers who want to maintain high level of customer satisfaction and reduce

customer churn

B. Secondary

IT staff who manage these key systems End-users like employees that make regular use of IT services and applications Customers that may be positively or negatively impacted by a change


III.Alternatives

A. No change

No change may be the best option if there is a strong relationship between ERP, CRM and other software and the existing network operating system or if the existing IT staff is not equipped to support, much less implement, a Linux infrastructure.

1. CostWhile the cost for the Linux service is eschewed, other costs may be incurred: Inability to deliver expanded services to customers Inability to make use of expanded and inexpensive offerings available on the

Linux platform Inability to enjoy the potentially less expensive Linux infrastructure

2. Return on savingsSavings can be derived from the following: Based on the costs, the potential return on investment for not implementing

Linux may be zero or a negative number

3. Risk Risks include those mentioned in the “cost” section

B. Delay Procurement/Implementation

1. CostWhile the cost of Linux is postponed, other costs may be incurred: Costs may be similar to a No Change alternative. However, these costs will

decrease once the service is implemented at a later time

2. ROIThe short-term savings of not implementing Linux are weighed against the costs of waiting and avoiding other costs to determine length of time to break even and see a return on the initial expenses. Several implementation timelines may be used to show the incremental costs of

waiting shorter or longer periods

3. Risks Future Linux services may have higher costs if implemented Future Linux rollouts may need to be completely replanned due to the quickly

changing nature of the software

C. Outsourcing

List possible vendors for outsourcing services. Solutions may be layered and come from multiple vendors, or may be a single solution from one vendor. For each vendor, consider:

1. Costs Initial and monthly/ annual costs paid directly to the service provider for

proposed solutions Cost of ongoing maintenance Costs related to make existing hardware or software compatible, such as

upgrades, replacements, reconfigurations, and additional tools/ facilities


Labor costs for installing and/or implementing Linux Issues with associating costs with operational budget rather than capital budget Cost of additional training and hardware

2. ROI Short-term savings of outsourcing over buying Short-term savings of not implementing the Linux service are weighed against

the costs of outsourcing to conclude the length of time to break even and to see a return on initial expenses

Weigh the trade off spending operational budget versus capital budget

3. Risk Quality of vendor-provided services may not be reliable Less control over the technology Interoperability issues with other vendor systems Lack of expertise and experience in alternative operating systems Inability to finish the proposed solution at specified time

D. Build

1. Cost Cost of IT Department to evaluate, design and build a Linux infrastructure. Costs

cover both employees’ salaried times and returns not being recognized by other IT projects because resources are diverted; may also include the cost of consultants and contract programmers.

Cost of training and education for Linux technical staff Issues with associating costs with capital budget rather than operating budget Costs related to make existing hardware or software compatible, such as

upgrades, replacements, reconfigurations and additional tools/ facilities Cost of maintenance and support agreements Cost of commercial Linux software licenses Cost of achieving complete interoperability with other required environments and

applications

2. ROIThe cost of using in-house resources to build and maintain a Linux infrastructure plus initial investments are weighed against the savings found in: No Change Waiting Outsourcing Buying

3. Risks Lack of expertise and experience in Linux technologies Interoperability issues with other systems Unforeseen maintenance, problems and cost may lower ROI

E. Buy

Possible vendors of Linux products and solutions:

1. Cost Initial and monthly/annual costs paid directly to vendors for proposed solutions Costs related to make existing hardware or software compatible, such as

upgrades, replacements, reconfigurations and additional tools/ facilities Labor cost for implementing the service


Cost for Technical staff or system administrator Cost of maintenance and support agreements Cost of commercial Linux software licenses Cost of achieving complete interoperability with other required environments and

applications

2. ROIThe cost of buying are weighed against the relative savings of: No Change Waiting Outsourcing Building

3. Risk Inability to deal with system level challenges Being pre-maturely “locked-in” to a given vendor’s supported platform Quality of Service (QoS) may not be reliable Interoperability issues with other systems. Structure of corporate technology staff


IV.Business values for the alternatives

A. ROI

Costs/Savings in terms of:

1. Tangible returns Weigh the alternatives to discover which best meets the objectives specified in

the alternatives section.

2. Incremental revenue The increase in revenue likely to be seen from each alternative The actual time period for the company to receive the additional revenue

stemming from alternatives

3. Return on capital Aside from the Linux returns projected from the capital investment, other

benefits may be realized as a result of the investment. This will increase productivity thereby yielding more profit for the company

4. Cost of capital Short-term costs may include:

o Hardware (if necessary) and operation systemso Training for employees and technical staff

Long-term costs includeo Depreciation of capital investments o Cost of maintenance including monthly/annual charges, if any

B. Customer satisfaction

The criteria for customer satisfaction for the stakeholders include: Overall response of employees within the organization Reduced customer churn Reduced long-term network ownership costs

C. Resources and roles

In-house resources involved in each solution, if applicable Outsourced resources involved in implementing each solution, if applicable

D. Timetable/Time to market

The timeline specified in the project implementation to fulfill the solutions in the company


V. RecommendationWeigh recommendation against the business values of the alternatives based on:

A. ROI

Costs/Savings in terms of:

1. Tangible returns Explanation of how the recommended solution meets the objectives specified in

Section I

2. Incremental revenue The additional revenue is likely to be seen from each alternative, if any The time period in which the organization will see additional revenue from each

alternative

3. Return on capital In addition to the returns expected from capital investments, other benefits may

be realized as a result of the investment

4. Cost of capital Short-term costs may include:

o Hardware (if necessary) and operation systems.o Training for employees

Long-term costs include:o Maintenance costo Depreciation of capital investment

B. Customer satisfaction

The criteria for customer satisfaction for the stakeholders include: Overall response of employees within the organization Reduced customer churn Reduced long-term network ownership costs

C. Resources and roles

In-house resources involved in the implementation, if applicable Outsourced resources involved in the implementation, if applicable


The timeline specified in the project implementation to fulfill the solutions in the company


Product Description

[product or system image and specs]


Glossary

Introductory paragraphThe introduction gives a brief background or overview of the product/service being evaluated.

I. Need OpportunityThis section explains why the product or service is needed, including productivity and cost issues.

A. Tangible goals or objectives

The purpose or desired end-result. In the business case this section identifies what company needs, problems or issues the proposed product or service can address.

B. Scope

This defines the reach or extent of the topic or idea being discussed. In the business case, this section identifies the potential impact of the proposed product or service on existing systems and staff. Potential benefits and risks associated with project deployment are also identified.

II. StakeholdersThose individuals who have a share or interest in a particular endeavor or organization. In the business case, this section identifies those individuals and departments within the organization that will be directly and indirectly affected by the product or solution being discussed in the business case.

A. Primary

The stakeholders who directly realize efficiencies, revenues and/or a competitive advantage are considered Primary stakeholders. Those departments or individuals implementing the new systems and services are also Primary stakeholders.

B. Secondary

The Secondary stakeholders are those who depend on, or will be affected by, the actions of the Primary stakeholders.

III.AlternativesThe Alternatives section weighs the various routes to reaching the specified goals and fulfilling the needs of the stakeholders


A. No Change

This section observes the costs and benefits of not addressing the issue(s) outlined in the Needs/Opportunity section.

1. Cost

The price to be paid or resources to be expended. Measured by identifying and quantifying the price or resource expended (example is time consumed or money spent).

2. Return on Savings

Measure of income the company is able to earn from money not spent or expended. In this particular section, the savings realized by not implementing the product or service is weighed against:

Whether the issue to be addressed is expected to become a larger or smaller problem

The length of time it would take to break even or to see a positive return with the No Change alternative.

3. Risks

Expected loss. Risks may include issues detailed in the Cost section as well as intangible risks, such as employee annoyance with current system or morale issues.

B. Delay Procurement/ Implementation

This option explores the costs and benefits of implementing a solution at a future date, rather than as soon as possible.

1. Costs

While there are no direct purchasing costs in the short-term, deferring implementation can potentially create similar issues found in the Cost section for the No Change alternative.

2. ROI

Income earned from company assets. In this section, the short-term savings of not implementing the product or service are weighed against the cost of waiting to determine the break-even point and length of time to see a return on investment.

3. Risks

This section explores the likelihood that serious problems would arise while waiting to implement the new product or service and cost the firm would need to absorb if problems did occur.


C. Outsourcing

Have the work done by an outside service provider or manufacturer usually to cut costs or realize greater efficiencies.

1. Costs

For this section examples would include upfront and monthly/annual costs to be paid to vendors, the cost of making existing systems and/or processes compatible and the cost of the company’s implementation time.

2. ROI

To evaluate the ROI for this alternative costs and benefits of the other alternatives must be examined and compared with Outsourcing’s costs and benefits.

3. Risk

The potential weaknesses of the service provider/vendor’s solution and additional costs that may be incurred because of those weaknesses are examined in this section.

D. Build

Developing the product or service in-house.

1. Costs

The costs in developing include the organization’s time to evaluate, design, build and operate the product or service.

2. ROI

The ROI result weighs the cost of using in-house resources to build and maintain the product/service plus the initial capital cost against the savings realized from the other alternatives.

3. Risks

This includes the quantifiable likelihood of loss, the possibility that the project will go unfinished or take extra time because of unforeseen or competing priorities.

E. Buy

To purchase outright and have the company manage the product or service on their own.

1. Cost

The charges in buying a product/service, such as upfront monthly/ annual costs paid to the vendor, the cost of implementation time and others.


2. ROI

The ROI is the cost of buying weighed against the relative savings from other alternatives.

3. Risks

Risks may include the possible losses that may be incurred from the purchased product or service and unforeseen maintenance and upgrade costs.

IV.Business Values for the Alternatives

A. ROI

1. Tangible returns

These are the measurable or quantifiable benefits from each alternative.

2. Incremental revenue

The additional revenue or income that may be earned from each alternative is discussed in this section.

3. Return on Capital

The income that may be earned or savings that may be realized from the investment (in this case the proposed product or service).

4. Cost of Capital

The cost of the funds used to finance the company’s investment (such as interest). The goal is to invest in assets that offer a higher return than the cost that may be incurred to finance those assets.

B. Customer Satisfaction

Measure of how the company is able to meet or exceed customer’s and/or stakeholders needs and expectations.

C. Resources and Roles

Defines the in-house and/or outsourced resources needed for each alternative.


Based on each alternative, the time line to launch the product or service is planned.


V. Recommendation

A. ROI

This section includes the

Costs and savings in terms of tangible returns

Incremental revenue

Return on Capital

Short-term costs

Long-term costs

B. Customer Satisfaction

Criteria to determine customer satisfaction may speak to the needs of Company’s internal stakeholders as well as external customers. However, the criteria may be unique to each business case.

C. Resources and Roles

This section designates the in-house and the outsourced resources needed for each alternative, if applicable.

D. Timetable/ Time to market

Based on each alternative, the time line to launch the product or service is outlined.


Intel Corporation in Summary

For over 35 years, Intel Corporation has developed technology enabling the computer and Internet revolution that has changed the world. Founded in 1968 to build semiconductor memory products, Intel introduced the world's first microprocessor in 1971. Today, Intel supplies the computing and communications industries with chips, boards, systems, and software building blocks that are the "ingredients" of computers, servers and networking and communications products. These products are used by industry members to create advanced computing and communications systems. Intel's mission is to do a great job for our customers, employees, and stockholders by being the preeminent building block supplier to the worldwide digital economy.

Making Moore’s Law Real

For nearly four decades, Intel innovation has made Moore’s Law a reality, changing the way the world lives, works and plays.

Explore how.

Principal Products and Services

Microprocessors, also called central processing units (CPUs), are frequently described as the "brain" of a computer because they control the central processing of data in personal computers (PCs), servers, workstations, and other devices.

PCs and Enterprise Systems:

Microchips used in high-performance and value desktop and mobile PCs, PC tablets, and entry-level to high-end servers and workstations

Chipsets, which perform the essential logic functions surrounding the CPU, for computers, servers and workstations

Motherboards, which combine Intel microprocessors and chipsets to form the key subsystem of a PC or server

Networking and Communications:

Microchips used in the systems that transmit and direct traffic across the Internet and corporate networks

Networking devices and equipment that provide access to the Internet, local area networks and home networks

Hardware and software for integrated voice and data networks Wireless networking products for home and business Hardware components for high-speed, high-capacity optical networks

http://www.intel.com/technology/mooreslaw/index.htm


Embedded control microchips designed to perform specific functions in devices such as laser printers, factory floor automation instruments, cellular phone base stations, and network communications hubs, routers and switches

Wireless Communications and Computing:

Applications processors, which process data functions such as calendar and email programs, for wireless handheld devices and cellular phones

Baseband chipsets, which enable voice communication functions, for wireless handheld devices and cellular phones

Flash memory, which retains data when a device's power is turned off

Operational Overview

ManufacturingIntel is a leader in semiconductor manufacturing and technology and has established a competitive advantage through its scale of operations, agility of its factory network, and consistent execution worldwide. Intel has 11 fabrication facilities and six assembly and test facilities worldwide. Intel produces the silicon for its high-performance microprocessors, chipset and flash memory components in its fabrication facilities. After the silicon-based products are created, they are sent to Intel's assembly and test facilities where each wafer is cut into individual microprocessors, placed within external packages, and tested for functionality.

In 2003, Intel spent $3.7 billion on capital investments to help build manufacturing capacity and increase manufacturing efficiency. Intel has completed the manufacturing conversion from 200 mm silicon wafers to 300 mm silicon wafers. Chip fabrication costs on 300 mm wafers are at least 30 percent lower than on 200 mm wafers. By the end of 2004, four fabrication facilities will use 300 mm silicon wafers.

Research and DevelopmentIn 2003, Intel spent $ 4.4 billion on R&D. The company's technology investments differentiate Intel from competitors and provide the foundation for future growth. Intel is conducting advanced research to overcome technical barriers so they will not impede the company's future manufacturing and product plans. Intel Labs, the R&D arm of Intel, is comprised of more than 7,000 researchers and scientists in labs around the world.

e-BusinessIntel's mission is to be a worldwide, 100 percent e-Corporation that maximizes profitability, responsiveness and innovation. The company has built its internal infrastructure and practices around its own products and technologies. Intel handles everything online, from order processing to materials management to accounts payable. More than 60 percent of Intel's materials transactions and 85 percent of customer orders are processed electronically.

Additional information about Intel is available at www.intel.com/pressroom.

Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at http://intel.com/business.

* Other names and brands may be claimed as the property of others.

http://intel.com/business

http://www.intel.com/pressroom


Why Red Hat?

Red Hat is the recognized leader in enterprise solutions that take full advantage of the quality and performance provided by the open source model.

With Red Hat, enterprise hardware and software vendors have a standard platform on which to certify their technology. We assure the necessary scalability and security of open source software. We make mission-critical Linux deployments possible.

And together with our partners, we bring the vast benefits of open source computing into an enterprise environment where cost-effective performance is absolutely at its most critical.

In June 2002, CNET survey asked more than 2,200 IT professionals were asked which companies would be most relevant to their business in the next five years. They ranked Red Hat #2. Ahead of IBM, Sun, Dell, Cisco, HP, Oracle, Apple.

How has Red Hat surpassed so many technology heavyweights so quickly?

Red Hat's unique vision and leadership in the open source community. The high value of open source technology. The enterprise momentum toward flexible, open infrastructures. The technology industry demand for choice--no longer satisfied with overpriced,

underperforming proprietary platforms.

Enterprises simply can't afford software that doesn't come with full assurance of stability and a 24x7 support organization they can trust. They require comprehensive technology integration. All the pieces need to fit.

That's where Red Hat comes in. We deploy, integrate, update, manage, train, support. Just as we do for companies like Amazon.com, Credit Suisse First Boston, DreamWorks, Reuters, Lehman Brothers. When companies look to Linux, they look to us. We make Linux predictable.

From deployment, to development, to management--organizations can rely on Red Hat expertise at every step. We offer a full range of Enterprise Linux operating systems, backed by Red Hat Network and comprehensive services:

We feature Red Hat Enterprise Linux, the first enterprise-class family of business operating platforms. Enterprise Linux combines the performance, ISV support, features, and, extended release cycle required by the world's largest organizations. Enterprise performance of Enterprise Linux has been proven through recent TPC-C, TPC-R, and ECperf benchmarks.

We have key industry relationships with top hardware and software vendors like Dell, IBM, Intel, HP, and Oracle. In June 2002, Red Hat, Oracle, and Dell formally launched a combined Linux effort that includes joint development, support, and hardware and software certification.

http://www.redhat.com/solutions/partners/

http://www.redhat.com/software/rhel/


It was an emphatic declaration that Red Hat Enterprise Linux was truly ready for the enterprise.

We help customers keep their systems current, managed, and secure with Red Hat Network, our Internet mechanism for software delivery and systems management. It's the pipeline that lets our customers tap open source innovation in real-time.

We deliver 24x7 enterprise support globally in seven languages. Our support organization has won praise from customers like Amazon.com and British Petroleum.

We offer a wide range of consulting and engineering services to make enterprise open source deployments successful--from complete Linux migration to client-directed engineering to custom software development.

We have broad expertise in open source technology. Red Hat is a significant contributor and maintainer of major open source software including Linux, GNU, and Apache Web server. Several Red Hat engineers are prominent open source developers and members of the open source community.

Why work directly with Red Hat? We know open source. We know Linux. We know the performance, reliability, control, and cost savings it delivers. And better than anyone else, we can use this technology to build complete, cost-effective infrastructures for the enterprise.

Balance

Balance means building a successful company without sacrificing customer trust. And creating shareholder value without severing our ties to the open source community.

The sharing inherent in open source allows Red Hat to not only provide a level of flexibility that proprietary software never allows, but also lets us return innovation to the community of open source users and developers. The cycle of creation is continuous.

Extending this commitment, we also believe strongly that open source can provide cost-effective technology access to educational institutions. Many schools, society's poorest in particular, can take advantage of open source software to allow students to participate in an Internet-connected world.

The open source model is built on the premise of allowing the best technology to win in an open, competitive environment. This is why we're vigilant in matters of intellectual property and consumer rights. Because we've found that an open environment is not only the best way to build technology, but the best way to spur innovation across our industry.

UNIX is a registered trademark of The Open Group in the U.S. and any other countries.

Copyright © 2005 Red Hat, Inc. All rights reserved.

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Need/Opportunity.doc