Building the Business Case for Capacity Planning and Management

Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL

BUILDING THE BUSINESS CASEFor Capacity Planning & Management


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The business case in a nutshell…

~30%

~$30Bn

Even on critical systems a third of all outages are still capacity-related1

1. Populus, 20152. Anthesis, 20153. Freeform Dynamics, 20164. Gartner, 20145. Beaming/Opinium, 2016

‘Overprovision & forget’ remains the

most common approach (~75%) 3

90% rely on ad hoc tools/practices &

instinct/vigilance of IT staff 3

~60% Most businesses are still

experiencing capacity-related outages & service degradation3

~50% Half experience costly & disruptive emergency procedures as a result3

~$5.6K/minThe cost of datacenter downtime will vary depending on your business – but the numbers are big!4

~$12Bn Overall the annual cost of outages to businesses, even just in the UK, is huge5

Most businesses are failing at Capacity

management

The outcome…

Despite a massive overspend on server capacity2

‘Capacity management? We

just order more than we need…’


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Taking a proactive approach to capacity management using the latest automated technologies can add significant business value:

Outage avoidance– Proactively assuring service performance by avoiding service degradations and outages

Infrastructure efficiencies– Rightsizing by identifying areas of under and over provisioning for optimization– Maximising the use of infrastructure resources while assuring customer performance is protected

Operational efficiencies – Automation of data gathering, analysis and reporting– Freeing up staff headcount and time for other value-add activities (e.g. proactive action and business liaison)

Cost avoidance– Improved investment profile, by only investing in what’s really needed, at the right time and right cost– Reduced power, cooling and software licensing costs through rightsizing as part of investment program

Change management– Accurate scenario modelling and impact assessment ensuring planned change is de-risked


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Let’s run through an example calculation for outage avoidance

First, we need to gather the relevant data or make some assumptions:

No. of outages each year: Let’s assume an estate experiencing 350 critical outages in a year. No. of these that are capacity related: we know from market research that around 30% of all critical outages are capacity-relatedCost of an outage: let’s also assume each outage costs roughly $56,000 (this takes the cost of downtime from the first slide ($5.6K per minute) and assumes an ave. downtime of around only 10 mins –an extremely conservative estimate given the revenue levels transacted on online systems for example, where downtime of even a few minutes could cost millions).


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Now the calculation…

No. of outages/year = 350Average duration = 10 minutesNo. of capacity-related outages/year = 350 x 30% = 105Average cost of an outage = $5.6K per minute x 10 = $56KAve. cost to the business of capacity-related outages/year = $56K x 105 = $5.88M

Even if we make a really conservative assumption that by investing in a new Capacity Planning and Management capability you will only avoid 50% of these – i.e. just over 50 outages a year - that’s still: A financial saving of nearly $3M/year


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Now let’s look at the potential savings from driving infrastructure efficiencies

Using the latest capacity planning technologies customers typically identify improved infrastructure consolidation ratios of between 24% and 40%

Let’s assume current infrastructure spend levels (including hardware and software costs, and datacenter space, cooling and power costs) are $6M annually

And let’s assume we can identify a 30% consolidation opportunity (the midpoint of typical ratios found)


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The calculation

Current infrastructure costs/year = $6MConsolidation opportunity = 30%Potential savings = $6M x 30%

Infrastructure cost savings = $1.8M/year


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There are also operational efficiency gains to be made…

By taking an automated approach and integrating capacity management with your ITSM platform and workflows, for example ServiceNow, there are obvious gains to be made through team productivity and operational efficiency.

For example, especially in these days of highly complex IT environments and massive data volumes, it can take a whole team of people just to collect data, model and analyse the relevant data, and then to produce capacity reports.

And then there’s the support costs associated with all that fire-fighting and trouble-shooting trying to work out if issues are capacity-related or not and get to root cause and resolve the ones that are.


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Example calculation…

FTE cost = $80K/yearSize of current team = 5 peopleEfficiency gain = assume just 30%

Saving = [$80K x 5] x 30% = $120K/year


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Often in IT, when refreshing technology platforms or migrating to cloud, etc., the low risk approach is taken of ‘lift and shift’ – i.e. enterprises make the assumption that they need and use everything they already have and so they replicate the same levels of resource in the new environment.

However, as we’ve already outlined, most enterprises are massively over-provisioned. In fact, some server estates are only 20% utilised – with 80% lying dormant!

Next let’s take a look at cost avoidance


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Using the latest capacity management solution customers can quickly identify where they are over-provisioned and understand their real levels of utilization

This means that when they are planning a refresh or migration they no longer need to take that ‘lift and shift’ approach but can rightsize at the same time and avoid unnecessary investment in hardware that they don’t really need

More importantly, they can also avoid those much higher ongoing operational costs associated with software licenses, power ,cooling and datacenter space. In fact, they may even be able to avoid building a new datacenter altogether (saving millions in capital investment)!

Cost avoidance continued…


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Example calculation

Planned investment: let’s assume a technology refresh costing $5M in capital investment with associated operating costs of $10M a yearProjected savings: now let’s assume by applying capacity planning we can identify a very conservative 10% saving

Capital saving = $5M x 10%Operating cost saving = $10M x 10%

Total saving = $500K capital investment and ongoing operating costs of $1M a year avoided


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In addition to all the cost savings already identified, there is significant value to be gained by de-risking change

In today’s enterprise IT environments change is a constant – and with change comes business risk. Risk of things not getting to market on time, systems not performing properly and impacting customer satisfaction and revenue, the list is endless

By applying the latest capacity planning solutions all proposed IT change can be quickly and accurately modelled

For example: cloud migrations, physical to virtual migrations, technology refreshes, datacenter consolidation, supporting business growth


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The value…

Planned changes can by optimized and costs reduced

Potential risks can be identified early and mitigated

Timelines can be optimized – working through the best order in which to do things to keep costs and risk to the business to a minimum


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Bringing it all together…

Value category Example value quantification

Outage avoidance $3M/year

Infrastructure efficiencies $1.8M/year

Operational efficiencies $120K/year

Cost avoidance $500K$1M/year

Reduced risk -

Total $6.42M (year 1)$5.92M/year (year 2…)


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It’s a no-brainer!

Not all the categories we’ve gone through may be relevant to you, but you can see that even just taking 1 on it’s own – building a convincing business case for capacity planning and management is a no-brainer!

If you’re interested in learning more about the value the latest capacity planning and management solutions can deliver, visit www.sumerian.com or give us a call on +44 (0)131 226 9300

http://www.sumerian.com/


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WK 1 WK 2 WK 3 WK 4 WK 5 WK 6 WK 7 WK 8Kick off

Set up CPaaS Set up data collection Add any additional data sources Establish Baselines Set up reporting

ITSM Integration

CPaaS go live

Sumerian CPaaS offers rapid benefits realization

Quick to implement, low impact• SaaS cloud-based solution• No agents to deploy• Uses existing data sources

Fully integrated with market leading ITSM platform, ServiceNow

• Automated integration across all key ITSM workflows

Flexible service• Range of value-add expert services to

augment your in-house capability as required

Building the Business Case for Capacity Planning and Management

Technology

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