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Edward Mann Greg Wass, Illinois Government
Demonstrating ROI for Technology Investments
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Return On Investment
Why factoring in ROI for the storage enterprise is a requirement for
success.
Modern storage infrastructure should address several key issues foryour enterprise. It should also bring a measurable and calculable returnon your investment.
ROI for your data center should create benefits for your enterprise inthe following ways:
Solve key business problems
Improve IT efficiencies
Increase business agility
Enable rapid development/deployment
Enable business growth
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Setting Goals
In order to initiate a study for determining ROI a number of goals
should be elucidated. Goal setting permits defining a clear path.
Examples of goals are:
Overall IT cost reduction
Strategic business advantage
Operating efficiency
Mandated
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Initiators
There are some initiators (first factors that begin the process) in
considering storage consolidation.
Performance problems
New systems and technologies
Expansion
Need to be competitive
Spend it or lose it
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A Value Chain
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Four key measures Determine Outcome
ROI Return On Investment: ratio of net gain divided by total cost
NPVNet Present Value: net benefit in todays currency terms
IRR - Internal Rate of Return: discount rate needed to drive the NPVto zero. OR the value some other investment would need to bring inorder to be the equivalent to the outflow in cash of the investmentbeing considered.
Payback Period (Break even) time frame to yield a positivecumulative cash flow
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Calculations that help determine ROI
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Tangible Benefits Measurements
Cost of implementation measured against possible savings and gains:
Capital expenses
Implementation and training On-going management and support
Operations and contracts
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Tangible Benefits Realized
Labor savings
Capital expense reductions
Productivity benefits
Business benefit
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Intangible Benefits
Brand recognition ( your brand) reinforce, advance, change
Competitive advantage - get stuff out there quicker, meet changingdemands faster, scale easily and more effectively, gain market share
Intellectual capital - relevant knowledge gained
Organizational advantage - efficiency and corporate culturally
Risk avoidance - cost of not implementing
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Risk Assessment
Labor resources not available, lack of required skills
User acceptance not all are happy with change, may see changeas a threat, I.E. you have implemented a UNIX solution, and someonly understand Novell.
Vendor- may not be capable of delivering what they promised in thetime-frame that was promised (think about an SLA)
Management commitment and funding
Market or strategic either the company changes its strategicdirection or market forces change in an unanticipated direction
Organization employee morale or organizational dynamics (some
may be down-sized)
Other dependencies other projects may not be complete and arerequired for completion (power, cooling, space, resources, budget)
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A Parting Thought
Jim Collins in his excellent book,Good to Great
articulates well the rolethat technology should play in the enterprise. E.G. new technologyshould not be the motivation to upgrade; rather it should be a tool todrive the business to meet its goals. He gives several illustrations ofthis concept, which I will leave to his book.
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QUESTIONS AND
DISCUSSION