The power of "desktop-as-a-service": Virtual IT offers a broad range of benefits for companies in all industries

Desktop virtualization (or ‘desktop as a service’) allows companies to operate their IT function with greater flexibility and at lower cost than with traditional desktop computers. More important, the right solution also helps employees become more productive, by giving them remote access to all applications, work in progress, and corporate data and systems — from any device and on any operating system.

Show transcript

The power of “desktopas-a-service” Virtual IT offers a broad range of benefits for companies in all industries

Contacts

Boston John Plansky Senior Partner +1-617-521-8801 john.plansky @strategyand.pwc.com Chicago Mike Connolly Senior Partner +1-312-578-4580 mike.connolly @strategyand.pwc.com Mike Cooke Partner +1-312-578-4639 mike.cooke @strategyand.pwc.com Michael Farley Partner +1-312-578-4655 michael.farley @strategyand.pwc.com Carl Hugener Partner +1-312-578-4897 carl.hugener @strategyand.pwc.com Yuri Goryunov Principal +1-312-578-4791 yuri.goryunov @strategyand.pwc.com

Dubai/Frankfurt Olaf Acker Partner +49-69-97167-453 olaf.acker @strategyand.pwc.com Düsseldorf Jens Niebuhr Partner +49-211-3890-195 jens.niebuhr @strategyand.pwc.com Florham Park Mike Mariolis Principal +1-973-410-7690 michael.mariolis @strategyand.pwc.com Frankfurt Rainer Bernnat Partner +49-69-97167-414 rainer.bernnat @strategyand.pwc.com

Kuala Lumpur/Sydney David Hovenden Partner +60-3-2095-3188 david.hovenden @strategyand.pwc.com London Richard Rawlinson Partner +44-20-7393-3415 richard.rawlinson @strategyand.pwc.com Melbourne Mark Johnson Principal +61-3-9221-1931 mark.johnson @strategyand.pwc.com Munich Johannes Bussmann Partner +49-89-54525-535 johannes.bussmann @strategyand.pwc.com Nicolai Bieber Principal +49-89-54525-545 nicolai.bieber @strategyand.pwc.com

São Paulo Ivan de Souza Senior Partner +55-11-5501-6368 ivan.desouza @strategyand.pwc.com Sydney Peter Burns Partner +61-2-9321-1974 peter.burns @strategyand.pwc.com Zurich Alex Koster Partner +41-43-268-2133 alex.koster @strategyand.pwc.com

2

Strategy&

About the authors

Carl Hugener is a partner with Strategy& based in Chicago. He focuses on IT strategy, IT effectiveness, and technology and operations transformation in financial services and healthcare. Michael Farley is a partner with Strategy& based in Chicago. He focuses on defining IT strategy for large company and IT transformation programs to enable strategic capabilities in the healthcare industry. Yuri Goryunov is a principal with Strategy& based in Chicago. He focuses on technology strategy and effectiveness in the healthcare industry. Alan Pawlak is an executive director and head of client services at Aetna. He focuses on leading IT transformation, mergers and acquisitions, security program design, and financial operational efficiencies at the company.

This report was originally published by Booz & Company in 2014.

Strategy&

3

Executive summary

Companies looking to cut costs, gain flexibility, and attract top talent should consider desktop virtualization, or “desktop-as-a-service” (DaaS). At its most advanced, DaaS allows employees to gain remote access to everything they do on their computers — their applications, work in progress, and corporate data and systems — from any device and on any operating system. The concept of desktop virtualization isn’t particularly new, but advances in cloud computing and other technologies have now enabled companies to capture real value. The cost of the software and especially ongoing maintenance can be significantly lower today because these systems can be updated and managed centrally. IT departments can become more efficient thanks to the inherent scalability and dynamically managed performance of these systems. Productivity, too, can be dramatically enhanced, with employees able to work anytime, anywhere. And as the example of Aetna makes clear, the flexibility of these systems allows companies to quickly match IT resources with critical new business capabilities and to work more closely with affiliated businesses, outsourcing vendors, and other partners. No technology is perfect, and CIOs continue to have legitimate concerns about the security and ease of implementation of desktop virtualization systems. But the technology has already given companies the agility needed to succeed in an increasingly competitive business environment.

4

Strategy&

Closing the value gap

In the current business environment, IT faces a number of challenges, including reduced spending, tight security, go-anywhere mobility for employees, and “bring your own device” (BYOD) computing. To address these challenges, one potential solution is desktop virtualization technologies. Consider the advantages: Desktop virtualization can significantly lower both the up-front costs and the maintenance and support expenses incurred through traditional client computing, whether on desktop or laptop computers. It can actually alleviate many of the security concerns inherent in mobile computing applications, while improving business continuity and disaster recovery. It need not be a one-size-fits-all solution; rather, many companies find that desktop virtualization significantly boosts the flexibility and agility needed in today’s fastmoving business world by rapidly enabling and supporting the present and future capabilities companies need to compete. And it can help support employees’ desire to “bring your own device,” thus offering a more employee-friendly workplace as the competition for talent heats up. Doubters remain, of course. More cautious CIOs, along with those in industries with stringent security requirements, will continue to worry about the risks involved in desktop virtualization. And there will always be users who don’t want to give up their “fat” clients — meaning laptops or desktop computers that come preloaded with their own operating system and all required applications and software — or who will resist the changes in their work processes that virtualization may demand of them. Moreover, getting desktop virtualization right isn’t as easy as many have made it out to be. For all these reasons, many companies haven’t yet jumped in. But thanks to advances in the underlying technologies, and in other critical areas such as cloud computing, desktop virtualization has reached the point where no large company — and few smaller ones — can afford to ignore its virtues. That doesn’t mean companies can make the move without considerable analysis of the value proposition and what it will mean for their particular circumstances. How does desktop virtualization work, where does its value lie, and how can companies embarking on the effort ensure that they capture that value?
Strategy& 5

Recent advances in virtualization

The roots of desktop virtualization run deep in corporate computing — all the way back to the days of time-sharing on mainframes in the late 1960s. Since then, of course, much has changed, most notably the advent of terminal server computing, which enabled clients’ computers to connect to server-based assets like data and printing, and then the Internet. Beginning in the early 2000s, vendors began offering desktop virtualization solutions that gave users remote access to corporate systems, and then to the applications and files on their full desktops. Ten years later, different flavors of desktop virtualization have proliferated. “Remote desktop virtualization” maintains the operating systems and applications on servers connected directly to the client network, ensuring an operating system–agnostic environment that allows access to applications, data, and corporate systems from any device, anywhere. Users’ personal profiles determine what they can access, and the device they’re currently using determines how they can interact with their information. Some systems allow users to maintain a “persistent” digital record of their desktops, including all the personalized tweaks to the operating system and applications they have introduced to boost their productivity, but this approach presents challenges, as each instance of the desktop must be stored separately. More recently, so-called desktop-as-a-service (DaaS) technologies have emerged that maintain a single, generic “nonpersistent” record of the desktop, separate from the user’s personal settings, which are integrated with a fresh version of the desktop that appears whenever he or she logs in. Both versions can be hosted in privately maintained or hybrid clouds, or remotely, through public clouds — either in-house or through partners. But nonpersistent virtualization demands less storage space and offers more dynamic monitoring of capacity requirements and greater flexibility for mobile users (see Exhibit 1, next page). Unfortunately, companies can’t simply turn on desktop virtualization with a switch and move immediately to the most mature and flexible

6

Strategy&

technology. Instead, each of these areas — remote access, device interoperability, and desktop-as-a-service — must be implemented separately and integrated with care if companies want to ensure that they have the most mature overall system possible.

Exhibit 1 The present and future of desktop virtualization
Today
Computer gathers everything: “fat” client
External websites (e.g., Google)

Tomorrow
Cloud gathers everything: “thin” client
Microsoft Office applications, IM Antivirus software External websites (e.g., Google)

A computer with: – powerful CPU – large hard disk – full operating system – multiple software packages (e.g., Microsoft Office, Symantec antivirus) – specialized applications the Web
Internal enterprise websites, corporate portals, etc.

A device with: – simple CPU – no hard disk – light, fast operating system virtualization and cloud computing … can connect to the cloud to: – perform all functions needed for the role – store all data Personal device with connectivity software – access internal and external Web-based services … … using a very fast and reliable broadband connection

Internal enterprise websites, corporate portals, etc.

… connects to the Web for: – access to internal and external applications – content repositories – centrally maintained databases

Internal business applications (call center, ERP/CRM applications, etc.)

Source: Strategy& analysis

Strategy&

7

The value proposition

No matter what form the technology takes, the potential value to companies lies in its capacity to accomplish several objectives: reduce costs, make IT management more efficient, boost employee productivity, improve security, and support new business capabilities. Reduce costs The push to virtualize corporate desktop and laptop environments is being driven primarily by the real potential for savings — at every stage of the virtualization process. In terms of up-front costs, a key virtue of desktop virtualization is that the traditional fat client, with all of its accompanying applications preloaded, is no longer necessary. Instead, employees can use either their own devices or much simpler and less expensive thin clients, which rely on centralized operating systems and applications that are accessed remotely instead of being stored permanently on the device. This can mean real savings in up-front costs, though the net savings will likely be less, given the increased costs for the hardware needed to provision the clients, handle data storage, and support disaster recovery. Software costs, too, can be somewhat higher, due to the need to provide extra security, business continuity, and disaster-recovery solutions. Ultimately, however, new open source solutions and the continuing evolution of hosting architecture will further reduce software costs. Additionally, companies can reap significant savings in maintenance and support through desktop virtualization. Given their simplicity, thin clients and personal devices do not require the level of maintenance that fat clients do, and support of applications can be centralized. That means real savings in terms of the labor costs typically incurred in purchasing, provisioning, updating, and fixing computers and staffing help desks. One large company succeeded in reducing its overall costs to buy and maintain its employee computing needs by 30 percent (see Exhibit 2, next page). Because these activities are now centralized,
8

The push to virtualize corporate desktop and laptop environments is being driven primarily by the real potential for savings — at every stage of the virtualization process.

Strategy&

Exhibit 2 Among the financial benefits of IT virtualization, the largest cost reductions typically come from lower support and labor costs
Relative costs by category (client example) Laptop = 100 Support/labor
Laptops

Hardware 24

Software 23

Other 7
100

46

Desktops

33

11

23

7

74

Virtual workstations

9

30

29 1

69

–30%

Note: Enterprise-grade laptops and desktops were used for cost comparison. Hardware costs include thin client and hosting costs by a third-party vendor based on the expected volume of 20,000 hosted virtual machines.

Source: Strategy& analysis

Strategy&

9

companies have the flexibility to either maintain them in-house or outsource them to external partners. Make IT management more efficient Beyond the quantifiable cost savings, desktop virtualization offers IT departments a range of opportunities to streamline operations. Because both the operating system and work-related systems and applications are now centralized, IT professionals can manage and upgrade their company’s technology assets from one location. The underlying infrastructure is much more easily scaled, when needed, to add computing power and storage and to increase the number of end-users. IT managers can monitor and adjust performance dynamically when particularly power-hungry applications are in heavy use. And they can implement changes in IT policies and business processes in an integrated manner, with the effects taking place throughout the company. Boost employee productivity For employees, the upside is obvious — the ability to access their work from any device, anywhere, anytime. They can log into company systems such as ERP, CRM, and call center applications easily, picking up wherever they left off, with full access to corporate databases. With the advent of sophisticated “developer clouds,” even software developers, who require particularly powerful and expensive computers, can operate in a more flexible manner through virtualization, while the business also benefits, through increased productivity and better quality. And desktop virtualization offers much greater reliability; the computer problems endemic to fat clients need not slow down workers to the degree they have in the past. Improve security Though many IT professionals remain wary of the risks associated with desktop virtualization, the technology has advanced to the point where it should now be seen as even more secure than traditional systems. By maintaining all the sensitive data in a central location, companies avoid the many risks involved in storing data on stationary desktops or mobile laptops, both of which are subject to data corruption, hacking attacks, loss, and theft. In addition, aside from mitigating the financial and reputational risks associated with such data loss, centralized data storage also lets
10 Strategy&

companies update, cleanse, duplicate, back up, and recover data at a single point, ensuring common, consistent information for all users. User authentication for entry into the system allows secure connections with little risk of unauthorized use, no matter what device is being used. And companies in highly regulated industries like financial services and healthcare can comply more easily with rules regarding data location and access. Support new business capabilities Thanks to desktop virtualization, companies can quickly add to their suite of applications and flexibly modify business rules and processes. That in turn allows them to strengthen current capabilities and build new ones as required by strategic goals and competitive pressures. More broadly, one capability almost every company will need in the future is the ability to attract the best talent from around the world. And that new talent — particularly younger workers — now has very different expectations about how work should be conducted, and what the workplace itself should be like. For this new generation, flexible work environments and the ability to mix work with their personal lives are key. By enabling the trend to BYOD and complete mobility securely and cost-effectively, desktop virtualization can play a major role in attracting and keeping top talent. Desktop virtualization can support more purely business-oriented capabilities as well. A company whose strategic goals require operational flexibility in the service of customer-centricity at the lowest possible cost, for example, might see desktop virtualization as a means not merely to cut costs, but also to enable its mobile employees to move about at will where customers need them most and to collaborate with one another, all the while maintaining full access to the corporate information needed to serve those customers.

Strategy&

11

Aetna goes virtual

When health insurance giant Aetna recently switched to a virtualized computing environment, the move was largely driven by a desire to boost flexibility both in its daily business operations and in the IT department. In the past, Aetna depended on a relatively standard client-server approach, with some degree of remote data access through central servers when the business need arose. The company’s IT function was already partly automated — new software, for instance, could be pushed to remote users — but it was managed regionally, which made it difficult to ensure consistency throughout the organization. And with half of Aetna’s employees working from home, and a quarter traveling regularly, the company realized that it would need to change how it addressed everyone’s computing needs. The key lay in developing a business case for the change. The company’s IT team had lots of ideas, knew what it wanted to do, and understood the impact the changes would have on how employees worked. But the company also needed to understand the impact in terms of business risk and business value. So the team looked at the full cost, the full business impact, the implementation methodology, and the technology changes and investments that would be needed to begin realizing the value of the new technology. This exercise enabled the team to go to Aetna’s top executives and explain clearly the benefits of full desktop virtualization. The business case was not solely dollar-driven. Instead, the company determined that a move to complete virtualization would solve a range of business issues, proving far more valuable than the dollar savings alone. For example, the project would enable Aetna to respond much more quickly in working with partners for specific business functions. Virtualization would also allow it to flexibly manage its office real estate, change out computers and other equipment, and even integrate new acquisitions. And in a highly regulated industry like health insurance, it would bring the added benefit of tighter control over the location and distribution of sensitive data.

With half of Aetna’s employees working from home, and a quarter traveling regularly, the company realized that it would need to change how it addressed everyone’s computing needs.

12

Strategy&

Have those benefits been realized? Very much so. In terms of user flexibility, employees can now shut off their office computers, go home, turn on their home machines, and finish up the email they were in the middle of typing. And that greater degree of flexibility has helped Aetna develop a much more agile operating model, since both employees and IT assets themselves can be moved around with greater speed. As a result, Aetna has been able to engage more effectively with external business partners in order to develop and sell new services. Virtualization has also enabled the company to partner more quickly and effectively with third-party service providers, since partners can now more easily gain secure access to its systems. A final benefit of greater flexibility is rapid integration of new acquisitions, such as Aetna’s US$5.7 billion purchase of Coventry Health Care in 2013. After the deal closed, the integration phase went much more smoothly than most executives thought possible. Instead of performing a traditional site-by-site integration, the new system allowed the Aetna team to integrate Coventry’s employees across multiple sites and lines of business at once. Still, Aetna faced two challenges in its move to DaaS. The first was technical: Putting 50,000 CPUs into the data center and ensuring both availability and disaster recovery was a major concern, because a failure would now affect 50,000 users. The IT team overcame that in large part by providing adequate hardware failover — such as redundant systems that could be accessed in the case of any problems — and by making sure the impact of a failure would be limited to a single line of business. The second concern involved getting buy-in from the business. The IT team needed to convince business leaders that desktop virtualization could save them money and give them greater flexibility and access, and that these benefits would outweigh any risk of system outage. Then the team had to help business leaders better understand how their employees performed their work and what applications they used. Here, making sure workers spelled out their workflow clearly was critical, and a great deal of work went into understanding how users do their jobs. Once the IT team achieved those objectives, it engaged in a major marketing effort to sell the new platform to the thousands of employees who would actually be using it. The team faced a great deal of misunderstanding throughout the company about the nature of the new system and how it would affect workers. Starting with top executives and moving down, the IT team members worked hard to make clear what the new platform would accomplish. They had to convince employees that the new system wasn’t just IT telling them

Strategy&

13

how to do their work. Instead, it was — and continues to be — a joint partnership that will save money and increase flexibility and security. Setting realistic expectations was also critical. The key to success in a project like this is to ensure that the new platform can accurately profile every employee’s desktop — what applications that person uses and how they work. Buy-in is unlikely if too many users are forced to change their workflow too dramatically. At the same time, too many exceptions to business rules and standardized processes can also derail the effort and limit the benefits of reduced cost and complexity. The goal is to find the right balance.

The key to success is to ensure that the new platform can accurately profile every employee’s desktop — what applications that person uses and how they work.

14

Strategy&

Why now?

The success of desktop virtualization at companies like Aetna suggests that, over the next few years, more and more workers will be using multifunction devices instead of a traditional laptop or desktop computer. Whether their employees edit text, work with spreadsheets and data, or interact with corporate help-desk software, companies will be able to provision the hardware required for their particular job, while taking into account the appropriate cost structure. Ultimately, advances in desktop virtualization, in combination with improvements in cloud computing, will lead to a work environment that’s much more dependent on apps. The prevalence of large enterprise applications will likely decline, given their expense and lack of customization. Instead, workers will be able to pick and choose business apps just the way they do now on mobile devices and at home. Depending on their jobs, workers will have access to particular sets of apps, and be free to choose how they organize and combine them. Flexibility and usability will be the rule. Companies like Aetna are already capturing considerable value through desktop virtualization. The combination of flexibility, lower capital and maintenance costs, greater efficiency, and increased productivity is compelling. To be sure, some companies are better candidates for the technology than others; large, complex companies with multiple units and ways of doing business will likely benefit more than smaller organizations with single lines of business and less mobile workforces. Still, the CIO at every company should start considering desktop virtualization options. DaaS is a sure way to gain the flexibility demanded in our global, mobile, and highly competitive business environment — and it is clearly the wave of the future.

Strategy&

15

Strategy& is a global team of practical strategists committed to helping you seize essential advantage. We do that by working alongside you to solve your toughest problems and helping you capture your greatest opportunities.

These are complex and high-stakes undertakings — often game-changing transformations. We bring 100 years of strategy consulting experience and the unrivaled industry and functional capabilities of the PwC network to the task. Whether you’re

charting your corporate strategy, transforming a function or business unit, or building critical capabilities, we’ll help you create the value you’re looking for with speed, confidence, and impact.

We are a member of the PwC network of firms in 157 countries with more than 184,000 people committed to delivering quality in assurance, tax, and advisory services. Tell us what matters to you and find out more by visiting us at strategyand.pwc.com.

This report was originally published by Booz & Company in 2014.

www.strategyand.pwc.com
© 2014 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Disclaimer: This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.