Novell's Link to the Microsoft TCO Linux Message
Last week, Novell got caught in a press release with Microsoft in which an HSBC IT operations manager makes appropriate noises about TCO of Windows over Linux per the Microsoft messaging of the past 5 years. This is too bad really. It emphasizes the points Brent Williams made in his presentation with respect to Novell:
- Novell thinks the problem is catching Red Hat: They need to formulate a brand identity for SuSE other than "We're not Red Hat." (slide 14)
- Shows that even Novell believes it can't stop Red Hat alone. (slide 15)
Here's a slightly different way to look at the messaging:
Red Hat began messaging at least a year ago around the use of Red Hat linux in value creation. Here's how the logic flows from a Michael Tiemann presentation at the 2006 Red Hat Summit:
- Companies spend on average 4-8% of income on IT (Financial companies 8-12%)
- So regardless of how you carve up the cost savings, you're messing around with something that will NOT move the stock price anytime soon.
- IT focusing on the value creation side of the bar can help by delivering better customer service (and retention), market growth, competitive advantage.
This is actually backed up nicely by studies over the past couple of years around ROI and TCO, where executives are more interested in the ability of IT to improve customer satisfaction and business information access than ROI, and recognize that they can't measure TCO particularly well.
So to bring it all home for Novell readers: If you were a billion dollar financial services company, you're arguing over saving the customer some money on a $100M IT budget, BUT the sort of money you're really talking about is 10% (according to old IDC Windows vs. Linux numbers) over several years for particular workloads, so $10M, and the reality is it's smaller than that because they're running a heterogeneous environment and aren't about to swap it all out soon. And that assumes you can accurately measure the cost savings.
Red Hat is pitching value creation on the other $900M in revenues. Moving the ball by 10% there (i.e. $90M) is a whole lot more interesting than 10% on the cost side. As the CIO, do you want to help save a bit of money, or grow the business? Which one moves the stock? Which one makes you a hero and grows your bonus?
The message is all about the customer as hero.