HP TCO & ROI Analysis · • Increasing resistance to security attacks • Improving the...
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HP IT-Symposium 2006 1 www.decus.de © 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice HP TCO & ROI Analysis Ralph Schirmeisen Senior Presales Consultant Business Critical Server Division TCO - Kostenbetrachtung des RZs HW Kosten, Buchwerte, Klimakosten, Anzahl Mitarbeiter zur Administration, Gehälter usw… ROI – Kostenbetrachtung neuer Investitionen Breakeven, Payback-Berechnung, Aufstellung der Projektkosten gegenüber Benefits usw…
Transcript of HP TCO & ROI Analysis · • Increasing resistance to security attacks • Improving the...
HP IT-Symposium 2006
1www.decus.de
© 2004 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice
HP TCO & ROI Analysis
Ralph SchirmeisenSenior Presales Consultant Business Critical Server Division
May 16, 2006 2
TCO - Kostenbetrachtung des RZs
HW Kosten, Buchwerte, Klimakosten, AnzahlMitarbeiter zur Administration, Gehälter usw…
ROI – Kostenbetrachtung neuerInvestitionen
Breakeven, Payback-Berechnung, Aufstellungder Projektkosten gegenüber Benefits usw…
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• Decreasing IT spend as a percentage of revenue• Reducing costs by consolidating and optimizing
computing resources• Increased flexibility by virtualizing computing resources• Achieving utility availability• Increasing resistance to security attacks• Improving the productivity of IT personnel
IT industry trends
Return on Server Virtualisation InvestmentRequire Rapid ROI: Return within 0 to 18 months critical due to commoditising prices
Deploy With Hardware: Hardware refresh is thebest time to deploy – usually results in immediate ROI
Count on Hardware Savings Only:well-managed, virtualisation can reduce hardware serviceability costs; hardware savings can be significant - 50-70% savings possible
Disaster Recovery: Consider virtual machines are a useful tool for disaster recovery (source capture and target systems), and cold restart
Chargeback: Virtual machines introduce the possibilityto start shifting the chargeback model to usage-based
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HP-UX 11i drives down TCO
TotalCostOf
Ownership~75%
~25%
Lower costs through:• Virtualization; optimized
asset utilization, availability & control lowers cost & risk of unplanned downtime
• Utility pricing; increased capacity & bandwidth on-demand
• Availability; dynamic tunables, clustering, disaster tolerance & recovery
• Security; prevent, detect, and contain
• Management; seamless single asset view & control
• Engineering: relentless design focus to lower power, cooling, and space
• Agility
Direct one-time Costs• Hardware acquisition• Software acquisition• Support contracts
+ On-going Costs• Support costs• IT Operations & Admin• Facility Costs• Change Costs• Downtime planned• Downtime unplanned• Security• Business impact &
opportunity
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Reducing TCO for a superior return on IT investment
Typical IT Spending
Data Center, Servers and Client Computers
7%
Purchased Software9%
Purchased Services and Communications
12%
Application Development
8%
Change Costs4%
IT Operations16%
IT Administration, Facilities & Overhead
11%
Availability21%
Security Risks12%
•Simplified management reduces operations and admin costs −Increasing sys admin productivity
by 8% with HP SIM and Integrity can save 2% of total IT spending
•Secured availability reduces the cost of downtime−Reducing planned and unplanned downtime by 10% with Integrity can save 2% of the total IT spend−Reducing security risks by 17% with HP-UX 11i security can save 2% of overall IT spending
•Flexible capacity reduces costs−Increased server capacity via
consolidation and VSE by 1/3 can save 2% of total IT spending
The IT Value Experts
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Level 5
ROI SLA
Level 4
Post
Implementation ROI
Level 3
Enterprise Wide Framework
Level 2
External Tools & Content (20%)
Level 1
Spreadsheet (75%)
No ROI Analysis (5%)
Market Current State
Market Best Practices
A trend is rapidly emerging towards external ROI analytical tools, driven by CIO and CFO demands for credible analysis based on objective facts
Fact-Based engagement drives better IT investments
Today – Most use Internal Templates
Conduct TCO/ROI Assessments with
Analyse Tool
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Alinean ROI tools leader
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Alinean ROIAnalyst EnterpriseSolution Areas Currently supported:
Unified MessagingEnterprise PortalSQL on Win 2003 and HP Integrity
Field ServiceIT Help DeskShared Service Centers
Microsoft Office Applications
e-CommerceSAP on Win 2003 and HP Integrity
Enterprise Security Management
Windows Systems Administration
Managed Desktop Services
Financial ManagementIP TelephonyHP-UX vs. Windows
Customer Relationship ManagementMicrosoft Office Apps.OpenVMS Enterprise ROI
Business Intelligence and Data Warehouse
HP OpenView Service Desk
Blades versus Rack mount
Human Resource Management
Security Policy Management
HP-UX 11i vs. Linux, Solaris, and AIX
Business ProcessIT ProcessInfrastructure
w1
Folie 10
w1 Jon / Bob,
I need to do more work on this but I want to get the slide to you before my long weekendwilkesly; 16.02.2005
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Project Questionnaire
Business application describes the project to analyze
•Drop-downselection
•Custom
•Workloadfactors
•Storagecalculated
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TCO Analysis
Change CostsAS IS to B
BenefitsAS IS to B
Cash Flow
ROI NPV RA ROI PaybackIRR
AS IS Solution A Solution BTCO
Comparison
ROIAnalysis
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Sample Costs• IT Costs
− Software and Hardware− Support and Maintenance
Contracts− Planning and Deployment
Labor− Application Development
and Porting− Professional Services− Managed Services− Training and Learning− On-going Management and
Support− Application evolution− Existing asset write-offs
• Business Unit Costs− Planning and Deployment
Labor− Subject Matter Design Labor− Change Management− User Training
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Where to find Benefits? • Increasing productivity
− Reducing the number of tasks− Reducing time per task− Reducing skill level needed− Increasing resource utilization− Reducing need to add headcount− Reassigning headcount to more
productive tasks• Reducing costs
− Reducing overhead expenses− Avoiding planned purchases− Improving asset utilization
• Generating revenue− Creating new revenue sources− Reducing time to market− Reducing lost revenue such as
downtime avoidance− Optimizing current opportunities
$100 in cost savings vs. $100 in revenue benefits
$0$10$20$30$40$50$60$70$80$90
$100
Net RevenueBenefit
NetIncremental
Profit
Cost Savings
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TCO Analysis•Customized Benefits
•Defaults calculated fromQuestionnaire andSolution Selection
•Source Documentationprovided to explainwhat solutions
•All metrics shown and customizable
•Add / Remove Benefitsas Needed
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ROI Details
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ROI – Cash Flow Analysis
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Flexible Reports
Reports can be built from available sections
Executive Summary
17+ page complete reports
Export to PDF or WORD
Copy any table or graph to PowerPoint
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Adaptive Enterprise--multiple projects
Customized dashboard for more complex offerings•Empowers multi-solution proposals•Empowers multi-division selling•Empowers multi-year planning•True Portfolio analysis of multiple projects•Time shift projects for what-if analysis
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TCO/ROI case study
Current IT situationServer: 12 HP N-classesRemaining book value: $ 0
Future IT environmentSolution A: 9 HP rx7620 (no virtualization)Solution B: 3 HP rx7620 (full virtualization)
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Infrastructure virtualization levels
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TCO for Solution A vs. Solution BTCO Comparison (cumulative 3 -
year)
Solution A: BEA Systems and Oracle on
HP Integrity running HP-UX 11i
Solution B: BEA Systems and Oracle on
HP Integrity running HP-UX 11i
Difference (A - B)
Difference (A - B)%
IT Costs
Direct Costs Server Hardware $2,598,645 $1,142,795 $1,455,850 56.0%Server Software $4,319,436 $1,224,788 $3,094,648 71.6%IT Operations $329,538 $120,459 $209,079 63.4%IT Administration $38,088 $12,696 $25,392 66.7%Facilities $87,636 $29,211 $58,425 66.7%Change Costs $179,794 $132,381 $47,413 26.4%
Total IT Costs $7,553,137 $2,662,330 $4,890,807 64.8% Business Operating Costs
Indirect Costs Unplanned Downtime - Business Hours $53,571 $53,571 $0 0.0%
Planned Downtime - Non Business Hours $183,375 $171,012 $12,363 6.7%
Security Business Impact $467,712 $467,712 $0 0.0%Total Business Operating Costs $704,658 $692,295 $12,363 1.8% Business Strategic Costs
Indirect Costs Business Agility - Opportunity Cost $3,946,155 $3,946,155 $0 0.0%
Time to Solution - Opportunity Cost $1,280,763 $1,228,841 $51,922 4.1%
Total Business Strategic Costs $5,226,918 $5,174,996 $51,922 1.0% Total $13,484,713 $8,529,621 $4,955,092 36.7%
IT-Costs: 64,8%for Virtualization
TOTAL: 36,7%for Virtualization
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ROI from current vs. Solution BROI Analysis (Solution B) Initial Year 1 Year 2 Year 3
Benefits (to Solution B from Current (AS IS)) $0 $2,635,991 $2,825,393 $2,825,393 Cumulative Benefits $2,635,991 $5,461,384 $8,286,778 Costs (Solution B) $1,960,426 $132,381 $217,076 $190,081 Cumulative Costs $1,960,426 $2,092,807 $2,309,883 $2,499,964 Cash Flow ($1,960,426) $2,503,610 $2,608,317 $2,635,312 Cumulative Cash Flow ($1,960,426) $543,184 $3,151,501 $5,786,814 ROI 231% Risk Adjusted ROI 187% NPV Savings $4,508,537 IRR 117% Payback Period 6 month(s) Risk Adjusted Discount Rate 9.5%
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TCO against IBM
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Total IT Costs
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TiCAP
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Discount IBM H/W 50%!!!
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We Still Win IT Cost Battle
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The Bottom Line = 4% Advantage
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TCO Advantages of Transitioning fromHP Tru64 UNIX® to HP-UX 11iversus to
Solaris (+32,1%)
Linux (+20,2%)
AIX (+13,8%)
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ROIAnalyst shows customer value• Comparison Value− Integrity vs. PA-RISC− Integrity vs. ProLiant−HP-UX 11i vs. Linux, Windows, competitive UNIX
• Transition value−Alpha to Integrity−K, L etc. machines to Integrity−Tru64 to HP-UX 11i
• Competitive value− Integrity vs. IBM Power 4, 5− Integrity vs. SunFire xx
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HP TCO & ROI AnalysisBuilding the next generation of IT
