ROI AND TCO: TWO WINNING FACTORS FOR ANY DEAL · 2020-05-10 · ROI and TCO Common Factors ......

ROI AND TCO: TWO WINNING FACTORS FOR ANY DEAL

Randeep SinghAshwani Kumar SinglaHCL Commet

2012 EMC Proven Professional Knowledge Sharing 2

Table of Contents Abstract ........................................................................................................................... 3

Introduction ..................................................................................................................... 5

Return on Investment (ROI) ......................................................................................... 5

Total Cost of Ownership (TCO) .................................................................................... 6

ROI and TCO Common Factors ................................................................................... 6

Compute/Server Technology (Rack, Blade, and Cisco UCS) .......................................... 7

Network ......................................................................................................................... 13

Storage and Backup ...................................................................................................... 18

Virtualization ................................................................................................................. 24

Data Center Facilities and Hosting ................................................................................ 38

Cloud ............................................................................................................................ 45

Conclusion .................................................................................................................... 55

Appendix: Bibliography .................................................................................................. 56

Disclaimer: The views, processes, or methodologies published in this article are those of the authors. They do not necessarily reflect EMC Corporation’s views, processes, or methodologies.


Abstract Technology, the lifeblood of today’s business, is undergoing rapid and constant change

with a plethora of technologies being launched every day. As a result of this rapid

evolution, today’s IT environment has grown much more complex while business

objectives and expectations have remained the same. Economies associated with

today’s information demand that IT managers enhance the business value of existing

and planned IT investments while simultaneously reducing the costs of IT operations.

However, the challenge remains the same; how to reduce business cost and business

pressure driving the technology for IT.

IT is facing immense pressure to reduce costs without impacting critical services

delivery. IT has taken some recent initiatives by introducing activities that will reduce

cost that will result in operating expense savings very specific to the infrastructure

(compute, network, storage etc.). Thus, it becomes a need of hour to reduce the

inefficiencies that result from the growth of distributed infrastructure, thereby resulting in

more and more demand for high cost resources. We need to address this distributed IT

infrastructure management issue to reduce the overall operating expenses of IT.

Lowering IT costs does not equate to purchasing low cost solutions to reduce OPEX or

improve TCO. Purchasing cheaper solutions to reduce short-term CAPEX can produce a

negative long-term impact on OPEX. It’s important to understand that price never

equates to cost. Solutions that are centralized and managed in a consistent and well-

structured manner are less expensive. Even when compared against widely distributed

solutions, management of such solutions is cheaper.

Solutions—whether they are enterprise, modular, or small—will continue to experience

price erosion, but OPEX-sensitive architects and managers are looking with interest at

total solutions that can reduce ownership costs, while enabling the deployment of new

solutions and strategies to support business requirements. A holistic approach toward

different technology and cost components is important and there is significant potential

to impact the bottom line by controlling these technology levers.

In this Knowledge Sharing article, we present a comprehensive methodology that will

help IT organizations reduce Total Cost of Ownership (TCO) and ensure higher Return

on Investment (ROI) by implementing any of the technologies and solutions mentioned


below. This will help us to quantify the cost drivers of IT infrastructure and analyze how

much savings remain hidden in the IT infrastructure. We hope this article will help IT

professionals reduce TCO of their IT solutions using techniques that will be described in

detail in the following categories.

• Compute

• Network

• Storage and Backup

• Virtualization

• Data Center and Hosting Costs

• Cloud

The fact is that most of the IT budget is spent on infrastructure costs and most of this

spending goes into daily operations, migrations, upgrades, and so forth. On average,

less than 20% of budget goes toward innovation. Thus, it is very critical to utilize this

remaining average (<20%) as best we can and optimize the infrastructure utilization by

consolidating assets, improving utilization, and making the business more resilient and

agile. That will ultimately achieve results; ROI reduction and achieving better TCO for

the IT environment.

This article will focus on concepts and experiences rather than products, so that when

applying the fundamentals or principles mentioned on any technology, business can

drive benefits.

Figures associated with TCO and ROI are derived from a sample of business cases the

authors have worked on in the past. The numbers represented are sometimes case-

specific and are derived from these business cases with specific factors taken into

consideration. There can be more factors that might vary the cost depending on the

priority and scale of each environment; however, efforts have been made to cover

maximum factors per author’s experience and study that are essential for delivering a

good combination of TCO and ROI.


Introduction What is the difference between TCO and ROI? They appear quite similar. However,

these two terms fundamentally differ based on decisions one is actually going to make.

Let’s first understand the ROI and TCO definitions and their comparison before going

further into details.

Return on Investment (ROI) First, ROI becomes an efficient process whenever existing technology or processes or

activities are going to be replaced by new or next generation technology/ process/

activities. CEOs have always paid close attention to ROI, asking how much ROI they are

going to get against the investment they are going to make. No matter how much cash is

in a CEO’s pocket, CEOs typically claim a limited cash amount for investment.

Additionally, even with that limited cash, the CEO wants every benefit for the

organization, making it even more difficult to convince a CEO to make the investment.

However, if you can show the return on investment that your solution can provide, the

CEO becomes ready to invest to enhance the IT environment. Hence, it becomes

necessary to define each of the investment options to the respective return on

investment.

New IT infrastructure requests must be considered in light of its ROI. No matter the

multiple technical solutions to the same problem (such as different topologies or

protocols), each option will exhibit different return on investment. Basic ROI analysis

always has to answer the following three questions:

1. How much investment?

2. When will I get payback?

3. Total or net savings against investment?

It becomes very necessary to demonstrate to the business management team of any IT

organization that even with the ability of existing infrastructure to meet existing needs

(Case of Existing Customer), changing existing architecture to new architecture can

provide positive ROI because of the reduction in OPEX in many cost-sensitive areas.

Consequently, ROI demonstration is becoming crucial for existing or new customers. If

one must reduce OPEX costs associated with components, ROI analysis becomes the

justification point.


Total Cost of Ownership (TCO) Total cost of ownership (TCO) is reactive, the opposite of ROI (proactive). To calculate

projected costs of competitive solutions that need to be compared, TCO is the obvious

choice. TCO is a financial estimate whose purpose is to help consumers and enterprise

managers determine direct and indirect costs of a product or system. When determining

TCO, several costs associated with an infrastructure solution must be considered that

will cater over coming years. A few are highlighted below:

• IT components and services such as hardware, software, installation, migration, and so

forth that need to be purchased from the vendor.

• Installation and training costs associated with new solutions.

• Write-off costs if the systems being replaced are not fully depreciated or are not at the

end of the lease term.

• Data Center Hosting costs such as power, cooling or air conditioning, and floor space.

• Maintenance costs associated with expired warranty hardware and software.

• Ongoing management, labor costs, and vendor fees not otherwise covered.

TCO becomes more effective in scenarios/cases where we are doing a like-to-like

comparison of two or more solutions which are compared in terms of vendor, topology,

or technical architecture. Looking at best practices mentioned in various TCO analyses,

95-98% indicate that TCO requirements are included in all competitive bid situations,

while deciding parameters for TCO cost analysis will be chosen by the customer.

One-time cost or CAPEX has never been a deciding factor in a way that one can say

that I assume low TCO since the purchase price is lower. One-time cost can never

define TCO. Not only must lowest price be considered, competitive solutions always

need to be considered as well when doing TCO analysis since this will allow

management to choose a solution with confidence since, based on the same parameters

set for different competitors, it is known which solution is going to lower TCO.

ROI and TCO Common Factors While doing ROI and TCO calculations, we come across many calculation parameters

common across both terms. This article will outline the areas or parameters where we


need to apply the costs while performing TCO/ROI calculations/analysis. Once the areas

or parameters are identified, defined, and described, they can be used to compare

different-different solutions/topologies/vendors and select the best one.

In today’s IT environment, IT managers are under great pressure to evaluate all areas of

IT solutions to gain improvements, increase efficiency, and reduce cost. Investment in

people/labor/capital/ processes is always required to achieve benefits such as reduced

costs; however, these costs can be identified, prioritized first, and recovered against the

investment made. Technology specific- and operationally efficient-specific investments

have always been smaller than against ROI they deliver. At the same time, it enables IT

with new IT infrastructure solutions that offer technical benefits.

Compute/Server Technology (Rack, Blade, and Cisco UCS)

For the typical enterprise, growth in customer base, staff, and revenues strains existing

IT infrastructure. Companies expanding their infrastructure to meet the needs of

customers and employees alike look for solutions that solve their immediate needs and

prepare them for long-term expansion. Organizations need affordable solutions that are

easy to manage and easy to grow, yet allow control of IT costs for years to come.

Most mid-sized businesses are aware of blade server technology and know that blade

servers have been widely adopted by enterprises to save space in the data center. What

they don't realize is that the same blade technology that's helping large companies

increase density and save space may be just the solution they've been looking for to

address their own IT expansion needs.

In this article, we'll explain what blade servers are. We'll discuss the unique benefits they

can deliver to medium-sized companies, and help them determine whether or not they're

the right solution for their specific business.

The term "blade server" is often misused and frequently misunderstood. A blade server

is a compact, high-density server that has its own CPU and memory, but that shares

networking cables, switches, power, and storage with other blade servers in an

enclosure designed specifically to house and manage them. The servers, the enclosure,

and all the components of the integrated rack work together to provide seamless, unit-

increasing efficiency and reduce costs by eliminating many of the overlapping resources

often required to run stacks of individual rack servers. So, although the term "blade


server" is often used when talking about blade technology, the reality is that the servers

themselves are just one part of a larger system, sold as a unit and designed to provide

businesses with greater density, simplified management, and easy, affordable

expansion. Benefits of blade servers are:

Figure 1: Blade Server Benefits

While large enterprises initially adopted blade servers as they fulfilled high performance

computing (HPC) requirements, medium-sized businesses often considered blade

technology as either more complex or more expensive depending on their needs.

However, this thinking is exactly opposite. Enterprises have benefited from blade servers

because their high density enables efficient use of data center space, and can be easily

clustered as well. The primary benefits of blade servers to the enterprise are a

combination of simplicity, flexibility, and affordability, making them the best components

to consider in any IT infrastructure solution for business. Many businesses have relied

on rack-mount servers as well—and have for years—to meet their IT infrastructure

needs However, when taking needs/circumstances into consideration, blade servers

offer a better solution. Business enterprises with the following constraints find that blade

servers fulfill their needs in a way that no way rack-mounted server can achieve.

This is because the underlying function remains the same for blade servers as for rack

servers.

Additional advantages are much greater for growing businesses if they opt for blade

servers: Some of the benefits are:

Physical Space LimitationsIT Resource RestrictionsCommercial Constraints


Physical Advantages Shared resources—for example, power, cooling, and cabling—are examples of physical

advantages offered by blade servers.

Power: Power consumption per unit is significantly reduced. Chassis offer reduced

power consumption and higher availability; reduction in power cables required for server

and network architecture.

Cable complexity: Network connectivity within the shared enclosure has reduced the

cabling requirement significantly, roughly around 85% less cabling compared to rack

servers, and per 10/100/1000 network port, saving around $120-$330. At the same time,

storage port cabling and switching costs are also reduced as are future modification

costs. Graphical user interface is another benefit offered by blade servers eliminating

keyboard, mouse, and video (KVM) requirements. All told, reduction in cables and

switches saves roughly $30000 (USD) per rack server.

Size and Density: Compact and small, blade servers require less floor space compared

to rack servers; integrated design offers higher density, making blade servers easy to

deploy and service.

Operational cost savings Easier to manage. Reducing the number of physical resources with which to physically

interact requires fewer staff—and less staff time.

Combining networking components, servers, and shared storage, blade servers can

reduce the need to physically interact with the growing number of individual devices in

your environment, enabling existing staff to do more in less time.

Less Floor SpaceLess Power

Lesser Operating CostEasier ManagementIntegrated Approach

Easy to Deploy and ChangeAffordable

ScalableIdeal for Limited Resources Business Units


A few of the specific ways blade servers streamline system management include:

Setup: Expanding blade servers is easier and saves time; typical time is around 20-30

minutes compared to 8-12 hours for rack server.

Ongoing Operations: Advanced management tools, single screen, quickly create and

deploy resources to automate, and simplifying administrative tasks based on business

requirements make blade servers an obvious choice.

Remote Operations: Remote office administrative tasks, i.e. management; adding

blade servers can be handled from a centralized location, eliminating need for a

dedicated person at each remote site.

Availability Redundant power subsystems, VLAN switches, backplane data paths, storage

interconnects, cooling fans, and hot swap power are examples of improved availability

compared to rack servers. Upgrading components in blade servers (RAM, CPU, even

physically replacing a server) does not require recabling as they can be individually

removed from the enclosure, upgraded, repaired, and replaced, reducing downtime.

Acquisition cost Blade servers offer an integrated system for components such as management

software, OS, SAN components, mouse, keyboard, monitor, and other redundant

features, resulting in lesser acquisition costs as compared to rack servers.

Figure 2 and Figure 3 provide an example business case we had designed for a SMB

customer. The figures show a comparison of the total cost of using rack mount versus

blade servers over a period of five years. Please note that we have not specified the

technology implemented in this case as this article is more oriented across principles

rather than technology:


Figure 2: Blade Server TCO Figure 3: Blade Server Cost Savings

As scale increases, so do savings. Cost effectiveness will be greater if the IT

environment is bigger itself, thereby yielding maximum benefits. There is no doubt that

blade servers play a cost effective role in today’s environment deriving the maximum

benefit one can get out of its IT environment.

To further enhance cost effectiveness, Cisco’s Unified Computing Platform (UCS)

reduces TCO by providing a unified environment; a combination of compute, network,

storage, and virtualization. Business agility also increases with the Cisco UCS solution.

A high-level example of traditional server and networking architecture comparison

against Cisco UCS—which came out while creating a business case for another

customer—is shown in Figure 4.

Figure 4: Cisco UCS Benefits

Component Servers CablesTraditional Server And Networking Architecture 6 Rack Servers 30

Cisco UCS Architecture 24 Blade Servers 32Aditional 8 blade servers will only require 4 additional cables


Benefits Associated with Cisco UCS

Benefits DescriptionIT Adminstrative and Hardware Costs Reduction Time and effort reduced to manage the data center

Network port and Switch Cost

Reduction of IP and FC ports is one of the major savings that are required to connect into the data center using UCS. Its simplified structure reduces time and effort, at same time reducing capital expenditure. This category focus is

on measuring the capital expenditure reductionRefresh Cost Indicate the hardware refreshes cost that was avoided

Power and Cooling Costs Reduction Indicate the comparison in power and cooling costs between the UCS architecture and traditional server-network architecture

Reduction in Electrical circuits deployed Indicate reduction in power outlets necessary for the new UCS hardware versus the outlets required to support the original environment and growth.

Data center Space Cost Savings Indicate the reduction in data center space after implementing UCS.

End user Productivity Savings Indicate an improvement in end user productivity when organizations reduced the number of planned and unplanned downtimes

UCS hardware, License, and Annual Maintenance Costs Indicate the investment in UCS hardware license fee and the annual maintenance cost

UCS Port and Switch Costs Indicate the investment in switches and ports required to run UCS.

Implementation Costs Indicate the IT staff time allocated to discovery, testing, and deployment of Cisco UCS.

Training Costs Indicate the investment made to attend third-party training course for UCS.

Professional Services Investment Indicate the investment for a member of the Cisco professional services team to be on-site during initial implementation of UCS


Network In today’s business environment, underlying complexity managed by one, right network

can be a powerful base for growth and competitive differentiation compared to traditional

network. The right network will keep expanding across the users, devices, applications

and locations even beyond anything.

In the past, IP was considered the technology to bring together multiple distributed

networks. Consolidation of multiple networks onto a single IP-based network has

enabled organizations to streamline their business along with IT operations. While

significant benefits and savings were notable, the changes required significant effort as

well.

In today’s IT environment, network evolution is becoming necessary to intelligently and

efficiently support new business objectives and user requirements. To flexibly adapt to

new technology trends, efficient operations must be introduced via next-generation

network architecture, similar to what the IP network did when it came into existence. A

good TCO model should include costs associated with hardware and software,

installation, licensing, and support and maintenance, as well as financing options. It must

also include operational expenditure (OPEX) costs—for example, deployment, power,

training, testing, training costs, and upgrade costs. Additionally, the impact of service

growth and the network expansion over the coming years required to support the growth

must be covered by a TCO model.

Traditional data center networks may require up to eight discrete ports and cables for

each physical server in a VMware-type deployment. Meanwhile, the blade chassis has

evolved over quite some time as well. However, when comparing blade servers with

traditional architecture, they are still the same in that they require multiple separate

Ethernet-FC connectors and cables from the chassis. Such is not the case with Cisco’s

unified architecture approach.

Cisco enables converged networking using its Unified Fabric offering, which allows traffic

for all server requirements (also FC, FCoE, iSCSI, NAS, and HPC) using a single cable

that provides a low latency, no-loss Ethernet connection. TCO is lowered by a reduction

in cabling complexity, installation, maintenance, configuration costs, and ports required,

resulting in a lesser number of switches required.


Unlike traditional blade server architectures, Cisco UCS blades eliminate the

requirement of buying extra switches along with the chassis. This results in significantly

reducing cost and complexity associated with management. Unified Fabric interconnects

make the entire management domain look like a single system to upstream Ethernet and

FC switches, simplifying Layer 2 management and FC network configuration. This virtual

blade chassis concept is a compelling architectural differentiator for Cisco UCS. This

architecture also delivers predictable and dependable network latency between all

servers (rack and blade) throughout the “virtual chassis’” versus current competitive

designs which have variable latency between blades depending on where they reside in

the various multiple chassis. Converged networking results in increased network

performance through the elimination of protocol conversions between FC and Ethernet

devices in addition to predictable latency that is vitally important for critical application

performance.

Consider this example: Compare 3-year costs associated with a 500 server data center.

Costs for an unconsolidated environment approximate $4.5M; whereas a consolidated

network based on a Nexus 5000 would cost an estimated $3.0M, resulting in a total of

$1.5M savings over 3 years (Figure 5). These calculations take into account network

hardware, cable installation, and power costs.

Figure 5: TCO Comparison

Various organizations have used the concept of ROI and TCO fundamentals to calculate

the costs associated with infrastructure components (network/other), and at the same

time show business the associated benefits and cost savings against the investment

business is going to make. There has always been pressure from the business side in

any IT environment. This pressure is primarily to reduce costs associated with


infrastructure, with more than 50% of the total cost of ownership going toward

management and labor costs. A good point of Cisco’s approach is that it does not

evaluate its TCO itself; instead it uses a third-party to develop a TCO model for them

that will help them measure benefits that a business will derive from a Cisco network

solution.

The results were categorized into four areas, summarized in Figure 6.

Figure 6: Total cost of Ownership Considerations

If we look at results, they clearly indicate that purchase price is always higher for the

Cisco solution. However if we look at associated labor costs, there are significant labor

savings that offset these costs. Architectural benefits associated with Cisco TCO have

been significant as well.

CapEx and Network TCO Network TCO comprises the initial purchase price of a standardized, basic network

design, plus the lifetime costs of labor, maintenance services, and energy costs. The

baseline network TCO considered the lowest-cost solutions to meet network

requirements from Cisco and other vendors. In this baseline, the research revealed that

despite a Cisco price premium, the TCO difference over the lifetime of the network was

at most 7%. These comparisons assume equal and undifferentiated functionality—a

network that is “good enough.” But Cisco networks deliver far more capability: capability

that is only captured in an architectural TCO.


Architectural TCO Architectural TCO takes into consideration the measurable advantages that a next-

generation network can deliver. Analyzing customer data in the TCO model revealed

that Cisco delivers up to 13% lower TCO than competing networks. TCO savings in this

model included IT savings related to labor and operations, as well as non-labor savings

such as reduced energy costs and longer deployment lifespans.

Some IT decision makers interviewed indicated that not all TCO savings could be

credited to their organization. For example, some IT departments indicated they

operated on fixed asset depreciation schedules or product refresh cycles. Cisco TCO

was 1% lower than other solutions when extended lifecycle investment protection was

taken into consideration. Some customers also indicated that energy savings could not

be considered because IT doesn’t assume responsibility for energy costs. Energy

savings from network-integrated power management provided 3% savings for endpoints,

and up to 9% additional savings when including building integration. These variations in

business practices resulted in a network architecture TCO model where Cisco TCO

varied from 4% more expensive to 13% less expensive.

One key highlight of the research was investment protection. Many customers indicated

that their Cisco investment was expected to last 6 to 7 years. In contrast, non-Cisco

customers indicated a 4- to 5-year lifecycle for comparable competing products. A “good

enough” network is often sufficient for today’s needs, but does not provide the flexibility

or investment protection to carry the business beyond years 4 or 5. Roadmap inspection

(studying product end of sale/end of life announcements) shows that Cisco products

have significantly longer life spans than similar competing products.

Architectural Benefits Architectural TCO captures the business benefits a customer can realize from Cisco

innovations embedded in the network infrastructure. Key highlights of the customer

research included:

1. While Cisco CapEx costs are higher, overall TCO is at worst 4% to 7% higher.

When extended lifecycles and labor savings are taken into account, Cisco TCO

is up to 13% lower than other vendors.

2. Cisco offers significant labor savings versus the competition—on average,

customers reported 5% to 10% labor savings when compared to similar


solutions, attributed to the benefits of unified wired and wireless platforms and

integrated security.

3. The cost of sourcing and/or training network engineering talent on non-Cisco

networks outweighs the CapEx savings of a “good enough” network.

Labor savings derived from an architectural approach offer compounded annual savings

when compared to onetime CapEx savings.

Many of the benefits noted are derived from innovations introduced in the Cisco

Borderless Networks portfolio in 2010 and 2011. Cisco customers highlighted the

increased value realized from architecture-wide network services and management

platforms. These innovations streamline the mobile user experience and facilitate “bring-

your own-device” business policies, enable delivery and management of real-time

multimedia traffic, and reduce IT overhead when performing user access troubleshooting

and wired-wireless integration. Professional services from Cisco and its partners help

customers accelerate their ROI and manage TCO by predictably managing the health

and stability of their networks, reduce costs related to outages and operations, mitigate

security and business risks, and drive innovation.

Beyond TCO In addition to offering architectural TCO benefits, a Cisco network provides many

additional business benefits that help drive down TCO and increase ROI. These benefits

are often measured in terms of higher business growth rates, increased customer reach,

or new business processes that streamline operations and increase employee

productivity.

Some examples of these benefits include:

● Improved network update (broader global support structure, network resiliency

innovations)

● Higher user productivity (IT and end-user productivity)

● Lower threat of security breach (Cisco SIO and SenderBase)

● Comprehensive professional and technical services offers that free IT resources for

strategic projects, help improve network health and stability, reduce cost, and mitigate

risk


Storage and Backup It is rare to find IT organizations that willingly increase their budgets, even considering

the significant storage volume growth in today’s IT environment. IT organizations began

streamlining their strategies by adopting storage consolidation solutions. Based on their

previous experiences, these organizations have come to realize that a flexible and

consolidated infrastructure will be the best environment to help them manage the

increased data availability demands and application requirements, and at the same time,

keep the budget within limits or minimal. The traditional practice being followed by IT

organizations of today’s environment is to allocate budget for overall IT infrastructure, a

part or percentage of which is associated with storage hardware, services, and software.

Of course, everyone wants the budget to remain the same year after year. It’s necessary

to control or utilize this budget efficiently because, if not controlled, costs will invariably

increase to match business requirement complexity.

Many IT managers who are responsible for storage decisions have misinterpreted that

that a low price disk solution or lesser per Gig price solution is sufficient to meet their

objective to lower the TCO associated with storage. They must recognize that TCO

results can only improve if we look at long term and short term plans. Purchasing

cheap/inexpensive solutions always lead to higher TCO if we look long term over a 3 to

5 year period. While low per Gig price for disks is helpful in short-term plans where

CAPEX turns out to be lower, if we factor in OPEX costs, it turns out be quite a bit higher

over longer duration/term. OPEX costs associated with storage and considering the cost

deciding parameter is becoming crucially important to achieve better results or savings

in IT infrastructure solutions.

Technologies come and go, with new ones still coming; however, pressure on CAPEX

and OPEX will always remain the same. It’s necessary to have a vision beyond the

acquisition costs associated with technologies and search for ways to provide additional

savings. IT organizations have started creating business cases to win management’s

support for making planned calculated investments that will result in reducing not only

CAPEX, but also OPEX costs.

Return on Investment (ROI), Return on Assets (ROA), TCO analysis and measurement

along with cash flow analysis should always be considered while doing strategic

planning to meet technical and operational objectives. Why? Because adding basic cash


flow analysis helps to measure ROI, ROA, and TCO. This analysis can then be used by

IT managers to undertake initiatives, helping them to create a well-planned strategy. A

crucial activity required from IT is to first identify the parameters on which analysis is

going to be performed. Only then do payback and savings analysis showing cost

reduction initiatives to be undertaken become visible.

There are well-planned calculated, certified solutions available for storage (from

individual technology areas to organization level changes, management, storage

provision, and so on) that help reduce costs associated with storage infrastructure. Many

SMB IT companies have achieved benefits and costs savings such as reduction in

power, space, cooling, floor space, low per Gig price, and maintenance costs reduction

per Gig. These objectives have been achieved by deploying storage solutions that are

more aligned to services, while at the same time doing well-planned utilization of existing

infrastructure capacity. A very basic step is to first define and measure current costs. We

can only improve if we know existing costs, so it is necessary to measure current costs,

thereby providing a base of the current estate on which improvement needs to be done

and measured against.

Price of disk is falling year by year, roughly 20-30% per year, making it easy for anyone

to believe that they have lower cost of acquisition and are achieving a lower TCO.

However, the fact is that cost of acquisition has never been a deciding factor in TCO.

Looking at past few years, this cost has reduced from an average 55-60% of TCO to

about 20-25 % today. The remaining 75-80% percent of storage TCO apart from

acquisition is what needs to be handled or controlled in a well-structured/planned

manner during tough periods. Operational expenses—the costs of storage

infrastructure—are recurring costs that need to be identified by IT managers and action

needs to be taken to control these costs.

The importance of establishing a TCO baseline for storage infrastructure measurement

is being recognized by today’s CEO’s and IT managers involved in budget decisions.

Cost per GB per year is becoming a base method to identify all of the costs to own GB

storage. Confusion can occur when it is realized that, while the price of disk decreases

every year, TCO is not following the same pace, does not change at all, or in some

situations, is increasing. The reason for this is because other components associated

with TCO—labor, maintenance, power, floor space, migrations—are increasing year by


year. It is crucial to look at total costs rather than focusing on one-time costs to increase

the business efficiencies.

Figure 7 highlights the storage and backup cost categories/components and helps to

identify where the majority of the cost is associated with storage infrastructure. These

categories include:

Figure 7: Cost Categories and Description

There are a number of superior storage and backup architecture options available now—

EMC VMAX®, EMC VNX®, Data Domain®, Hitachi VSP, Hitachi 3PAR, and Netapp

FAS6100 series—that can be brought into the environment incrementally or during data

center migration and technology refresh periods. Initially, these storage and backup

architectures might not appear to be the least expensive option but owning these

architectures is always cheaper. The environment they are suited for varies depending

on the current need of the IT manager. For example, some want to control high-growth

environments, others want to reduce compliance/legal support costs, and others want to

reduce power and space costs. There are many more like them. Some of the key

Category DescriptionHardware Depreciation Yearly costs for hardware depreciation or monthly leases

Software Purchase or Depreciation Monthly or yearly costs for the purchase of the software. Some software can be capitalized with the original hardware acquisition

Hardware Maintenance Recurring maintenance or warranty costs for all storage hardware after the base warranty periodSoftware Maintenance Recurring maintenance or warranty costs for all storage software

Storage Management Labor Management labor costs associated with the various tasks of storage management, such as provisioning, tuning, load balancing, troubleshooting and upgrades

Backup and DR Labor Aside from storage management, additional labor related to backups and restores, as well as disaster recovery planning and testing

Migration, Re-mastering Various costs associated with data migration at the storage system's end of life. In large environments, there is continuous labor effort associated with data migrations

Data mobility Time and effort required to move data to different tiers or archive solutions. Different from re-mastering, data mobility follows the data lifecycle, not the system lifecycle.

Power Consumption and Cooling kVA, BTU costs (converted to kW) of data center power. Power costs should include industrial grade conditioning and battery or diesel backup

Monitoring SNMP, NOC and operations consoles for the storage, SAN and backup infrastructures

DC Floor space Cost per square meter of data center floor space. This often includes uninterruptible power supply (UPS) and raised floor costs

Provisioning Time Business impact for the time waiting from when the request is made until capacity is presented to the host

Cost of waste Two types: usable and not allocated, and allocated and not used

Cost of copies Database management systems and other applications often require copies to be made. In-tier or out-

of-tier copies are possible. Test, development, quality assurance (QA), data mart, data loaders and similar applications all require multiple copies of structured and unstructured data

Cost of Duplicate Data Overhead associated with several copies of the same data. This is very common in unstructured file systems

Cost of Growth Fundamentally, every storage architecture has a cost of growth. In high-growth environments with the wrong architecture, the cost of growth can be acute

Cost of Scheduled Outage Microcode changes, capacity upgrades

Cost of Unscheduled Outage (machine related)

In both the storage system and the connections or data path

Cost of unscheduled outage (people and process related)

Often due to capacity problems, operational control and physical thresholds

Cost of Disaster Risk, Business Resumption Business impact with slow or fast recovery after a catastrophic event (declared disaster)

RTO and RPO Costs Business impact costs resulting from the time it takes to return to a recovery time (or point) after a system failure or backup recovery

Data Loss Business and enterprise costs for lost, corrupted or unrecoverable data

Litigation, Discovery Risk Legal risk and e-discovery time costs associated with lawsuits. This also covers general data location and recovery effort time

Reduction of Hazardous Waste EU cost due to regulations such as RoHS Noncompliant hardware may incur an additional tariff for disposal of the asset

Cost of Performance Impact to the business (good or bad) relative to total storage performance (IOPS, latency, MB/sec)

Backup Infrastructure Fixed cost infrastructure for backup. This includes backup servers, media servers, tape libraries, drives, etc.

Cost of Risk with Backup Windows Business impact of shortened or limited backup windows

CIFS-, NFS-related infrastructure Filers, gateways and the necessary software to provide file servers and shared services in the enterprise

Local and Remote Data Circuits Dark fibre used for SAN extensions, remote replication and the associated software

SAN Dedicated Fibre Channel, iSCSI or NAS connection infrastructures. This includes routers, gateways, host bus adapter switches and directors

Noncompliance risk (archive, data retention) Several legal and legislative requirements (HIPAA, Basel II, Sarbanes-Oxley, carbon emissions), noncompliance with which can incur fines, negative publicity and criminal prosecution

Security, Encryption Costs associated with protecting, securing and encrypting data and the storage infrastructure


elements for storage and backup architectures which are economical too are shown in

Figure 8:

Figure 8: Key Elements of Economical Storage and Backup Architectures

Virtualization storage technology, a key component of storage solutions, has proven its

impact on TCO over the years/decades now. Virtualization lays the foundation that

enables other key elements such as Dynamic Tiered Storage and Thin Provisioning. A

25-30% reduction in storage TCO has been because of the following three elements:

1. Storage Virtualization

2. Automated, policy-driven tiered storage

3. Thin Provisioning

Each has technical as well as cost benefits on its own. However, when we unify all three

in a storage architecture, the impact created by this combination is significantly greater

than what they offer individually. Benefits offered by these three constituents when

unified together in one storage architecture include:

• Storage Reclamation: Combination of one-time reclamation and a significant

reduction in cost with growth over time

• Return on assets (ROA): Better utilization of assets; can be utilized even after

asset has passed its depreciation life

• Minimal Storage Estate: Quality of service delivered remains the same

• Migration: Minimal or no disruption to business with heterogeneous storage

migration


• Backup and Recovery: Disk-based backup devices, VTL’s, and deduplication

have significantly reduced backup and recovery times. Multitier functionality in

storage has reduced the cost of copies. Sharing backup services, performing

replication of backups, and snapshot management has become easier with

centrally managed virtual pools.

• License Costs: Contradictory to an increase in storage capacity has been

associated license cost per GB, which has been reduced.

• Downtime: Reduction in scheduled activities such as provisioning time,

maintenance, and upgrades.

• Management Costs: Reduced labor, time, and effort required for provisioning,

configuration changes and management tasks to manage heterogeneous

storage devices.

• Hosting Environment: If we have to measure per TB, there is significant

reduction in the hosting environment, such as reduction in power requirement,

floor space, and cooling/air conditioning.

Compared to traditional or silo storage architectures, the new generation of storage

architectures provide a real world cost savings. Figure 9 provides an example, showing

significant reduction in TCO with the new generation storage architecture.


Figure 9: Cost Savings of Advanced Storage Architectures

Baseline storage capacity considered for the analysis above is 130 TB (analysis is

TCO/TB/Year). It is clear from the above analysis that decreased TCO is significantly

due to reduction in the costs associated with the following elements:

• Migration Costs • Cost of Waste • Cost of Copies • Storage Management Labor Costs

To summarize, if an IT manager is looking to control costs associated with storage, the

first step would be to identify and measure which types of cost have major impact in the

current environment and are most relevant to control. Keeping these elements in mind,

choice is not left to selecting products only. Storage design plays a vital role in meeting

an IT organization’s objective to reduce costs. As discussed earlier, combining Storage

Virtualization, Dynamic Tiered Storage, and Thin Provisioning in a storage architecture

results in significant savings. Technologies will continue to change. However, the good

news is that the underlying principles are not dependent on time. Following these

BaselineNew Generation Architecture

with 3 key Constituents


principles will always help an IT organization meet their objectives by implementing best

practices associated with them.

Virtualization Virtualization delivers multiple benefits—higher processor utilization, less power

consumption, better management through centralized control, higher availability of

applications, reduced execution timelines by eliminating need for hardware procurement,

improvised disaster recovery capability, and improved outsourcing services.

Virtualization has rapidly become a reality. The technologies that are used for servers,

clients, storage, and networks are being virtualized to create flexible and cost-effective

IT infrastructures. Given today’s concerns on TCO and ROI, server virtualization is

positively impacting data center systems. The reduction in power consumption as a

result of virtualization is a factor in TCO and ROI and helps data centers with the

“greening of IT”.

VMware is a leader in virtualization but Microsoft’s recent focus and product

announcements are giving VMware tough competition. As time passes, the virtualization

leader will need to deliver solutions on all aspects of virtualization (networks, servers,

storage, desktops, and so on) while maintaining TCO and ROI for its customers.

Licensing is already a discussion with respect to TCO and ROI and vendors are

responding. Management of virtualization environments will need “ease of use” and an

inventory management component that dynamically tracks virtualization ensuring that

data center managers will always know the state of their virtual environments.

Virtualization is seen as a benefit for a swift and less painful business continuity process

but only if the total data center environment remains manageable.

Today, virtualization is the primary focus for many companies. Virtualization provides a

number of benefits which impact many aspects of information technology operations. A

few of these benefits are:

• reduced power requirements

• improved CPU utilization

• fewer physical servers needed to support swift failover when a virtual server fails

• more flexible allocation of storage


• faster and easier disaster recovery at the disaster recovery site

• enhanced centralized delivery of work station services

Considering these and other benefits of virtualization, it is no wonder that companies are

actively pursuing and embracing this technology.

Though virtualization provides many benefits, there are new challenges. It is important to

keep in mind that because it is faster to create virtual servers than to specify and install

hardware, there is a tendency to create virtual environments “ad hoc”. Consequently,

virtual environments could quickly sprawl and become uncontrollable. In addition, having

more virtual server instances increases the workload for patching, maintaining, and

security.

The following sections will focus on the eight components associated with virtualization:

1. Data Center Server Hardware

2. Data Center Server Storage

3. Data Center Server Networking

4. Data Center Server Power and Cooling

5. Data Center Server Space

6. Data Center Server Provisioning

7. Data Center Server Administrative Costs

8. Reduced Business Risks around Data Center Server Disaster Recovery and

Data Center Server Unplanned Downtime

Data Center Server Hardware With virtualization, data center server workloads can be consolidated, typically in the

range of 10:1 to 20:1. The resulting benefit is significant in that the consolidated servers

can be reallocated to other applications, and future server sprawl avoided.

To calculate the level of consolidation, virtualization best practice involves workload

assessments—in essence, looking at the number of CPUs in use today, and how many

CPUs can be consolidated. The key variable is the amount of workloads that can be

consolidated onto a single CPU. Based on examining VMware deployments in customer

environments, on average four to five virtual machines are typically consolidated per

CPU.


The following inputs (Figure 10) will be useful for data center server hardware TCO

calculations:

Figure 10: Data Center Server Hardware TCO Inputs

TCO Calculation for Data Center Hardware Data Center Hardware Savings = (Total Servers * Amortized Cost per Server) As-Is

State - (Total Servers * Amortized Cost per Server) To-Be State

Data Center Server Storage Storage virtualization can help companies implement an enterprise virtualization strategy

to reduce IT costs / improve IT productivity even further. A key cost factor while

implementing a storage attached network (SAN) architecture is that almost all servers

need to be connected to the SAN network, resulting in an investment of network

connections, deploying and managing HBAs that will connect the server to the SAN

network, and SAN switches to connect the servers to the “SAN Fabric”.

VMware infrastructure server consolidation projects have dramatically reduced SAN

deployment costs by reducing the number of SAN switches and HBAs needed post-

virtualization. In many deployments where there is no SAN in place today, storage

virtualization is often part of the server consolidation project. In such cases, many

customers will invest in SAN connectivity and SAN storage incrementally as part of the

virtualization project.

The following inputs (Figure 11) will be needed for data center server storage TCO

calculations:


Figure 11: Data Center Server Storage TCO Inputs

TCO Calculation of Data Center Server Storage

Savings on HBAs = [(Number of HBAs * Price per HBA) / Useful Life of Servers] As Is

- [(Number of HBAs * Price per HBA) / Useful Life of Servers] To Be

Savings on SAN Switches = [(Number of SAN Switches * Price per SAN Switch) / Useful

Life of Servers] As Is

- [(Number of SAN Switches * Price per SAN Switch) / Useful Life of Servers] To Be

Storage Savings = [Percentage of Storage DAS * Total Storage Capacity * Cost per GB

DAS] As Is

- [Percentage of Storage DAS * Total Storage Capacity * Cost per GB DAS] To Be

+ [Percentage of Storage SAN * Total Storage Capacity * Cost per GB SAN] As Is

- [Percentage of Storage SAN * Total Storage Capacity * Cost per GB SAN] To Be

Data Center Server Networking Similar to storage, virtual infrastructure has dramatically reduced the number of physical

network components. Fewer Level 1 and Level 2 switches, NICs, and cables are

required to provide server connectivity to the corporate network with fewer physical

servers attached to the network.

Typically, I/O requirements in a virtualized scenario result in an increased number of

NICs per server (3 per server), although the total number of NICs across all servers is


substantially reduced. For the TCO calculation, the reduced NIC requirements are

accounted for in the price of the server hardware, since they often accompany server

purchase.

Inputs needed for data center server network TCO calculations are shown in Figure 12.

Figure 12: Data Center Server Network TCO Inputs

TCO Calculation for Network Annual Network Savings = ROUND UP [(Number of Servers * Number of NICs per

Server * Number of Ports per NIC) / Number of Ports per Network Switch)] As Is

- ROUND UP [(Number of Servers * Number of NICs per Server * Number of Ports per

NIC) / Number of Ports per Network Switch)] To Be

Data Center Server Power and Cooling Data center power consumption can be categorized into three main categories:

• Operating Power for the computing infrastructure (IT loads): Server hardware,

network switches, SAN components, and so forth.

• Network Critical Physical Infrastructure (non-IT loads): Facility infrastructure/

transformers, uninterruptible power supplies (UPS), power wiring, fans, and

lighting.

• Cooling Power for air conditioners, pumps, and humidifiers.

Virtualization lessens the need for physical servers and related networking, storage, and

data center infrastructure, resulting in less power consumption for operations and

cooling. This typically drives substantial reductions in annual power service costs, as

well as important “green” savings in carbon consumption. A complete model would

account for each asset consuming power as listed above, but for simplicity, the

methodology focuses only on the power saved from reduction in server hardware with


regard to direct operating and cooling power omitting potential power and cooling

savings for networking, storage, and other data center infrastructure. As with other TCO

saving calculations, the savings in power is calculated by estimating the differences in

operating power consumption and cooling power of server hardware before (as is) and

after (to be) virtualization.

The operating power consumed by server hardware can be calculated by adding up the

power ratings of each server in the data center. Because this number represents the

maximum power used, it should be de-rated (30-40% of rated power) to achieve steady-

state power consumption. As well as operating power, servers produce heat and require

substantial cooling to keep them running at prescribed temperatures by OEM’s. Data

center design plays an important role in determining the thermal efficiency and the cost

of cooling. Many data centers still employ a front-to-back layout, which positions servers

in the same direction. This means the heat emission from the back of one server feeds

directly into the air intake of the front of another server. A better approach is the hot-

aisle/cold-aisle layout (Figure 13) which mitigates the unacceptable temperature

gradients associated with front-to-back layouts.

Figure 13: Aisle/Cold-Aisle Layout

Data centers often use a seven-tile aisle pitch. This measurement allows two 2 x 2 foot

(0.61 x 0.61 m) floor tiles in the cold aisle, 3 feet (0.9 m) in the hot aisle, and a 42-inch

(1-m) allowance for the depth of the cabinet or rack

In the event of a Computer Room Air Conditioning unit failure, airflow redundancy will

continue to satisfy cooling requirements. Furthermore, many data centers have hot

spots, where heat density is greater than other areas. Focused redundancy satisfies

localized data center cooling requirements.


The analysis below (Figure 14) gives a snapshot of the HVAC scaling with regard to

different cooling techniques applied in the data center.

Figure 14: HVAC Scaling

IT equipment energy costs need to reflect cooling costs that can be as much as twice

those of the actual IT equipment, depending on the PUE (power usage effectiveness) of

the data center.

Beyond annual operating and cooling power fees, many organizations are becoming

more conscious as to the environmental impact of data center power consumption.

Figure 15 provides a holistic view on the green datacenter approach.


Figure 15: Holistic View of Green Data Center

Figure 16 shows inputs needed for data center server power TCO calculations.

Figure 16: Data Center Server Power and Space TCO Inputs

TCO Calculation For each server type, the following equations are used to determine annual operating

power:

Server Operating Power per Server per Year As Is = Server Nameplate Operating Power

* Nameplate to steady state power conversion * Data Center Operating Hours *

Electricity Price per Hour


Server Operating Power per Server per Year To Be = Server Nameplate Operating

Power * VMware Utilization Uplift * Nameplate to steady state power conversion * Data

Center Operating Hours * Electricity Price per Hour

To calculate the total operating power consumption, the above equations are used and

summed for each server type taking the product for Quantity of Servers and the Server

Operating Power per Server per Year.

To calculate the TCO savings, the difference between operating power costs are

compared.

For server cooling power consumption, the following equations are used:

Annual Server Cooling Power per Server per Year = Operating Power per Server per

Year * Cooling Load Factor * Airflow Redundancy / Airflow De-rating

To calculate the total operating power consumption, the above equations are used and

summed for each server type taking the product for Quantity of Servers and the Server

Operating Power per Server per Year.

To calculate the TCO savings, the difference between operating power costs are

compared.

Annual Power and Cooling Savings = Power and Cooling Costs As Is - Power and

Cooling Costs To Be

Data Center Server Space Decreasing the quantity of physical servers can lead to retrieval of current data center

space, reducing the need to consume more space due to server proliferation to handle

growth, and avoiding future data center facilities build-out or colocation requirements

Virtualization technologies such as VMware can reduce a company’s physical server

count, impacting data center footprint today, and preventing future requirement of data

center space (new facility or third party colocation). The TCO calculation accounts for

the total annual data center carrying costs, monthly real-estate rental charges, plus

amortizing the cost of data center facilities, including power and cooling infrastructure.

The annual space cost is calculated as follows:


Annual Data Center Cost per Square Foot = (Cost to Build Data Center Facilities + Cost

for Data Center Power and Cooling Infrastructure) / Years to Amortize Build-out Costs +

Annual Space Lease or Allocated

Annual Real Estate Cost per Square Foot

Inputs needed for data center space TCO calculations are shown in Figure 17.

Figure 17: Data Center Server Space TCO Inputs

Data Center Server Provisioning A VMware infrastructure enables administrators to provision workloads from their

systems without having to acquire, set up, and deploy new hardware to meet increasing

workload demands.

Labor hours are saved by not having to manually provision servers. The savings are

calculated by multiplying the hours saved by an administrator hourly wage.

Provisioning a server in a non-virtualized environment takes approximately 20 hours per

server on average including overhead tasks for server procurement and vendor and

contract management, and server administration time for server unpack, set up,

installation, test, and deployment.

The savings are most commonly realized as a productivity improvement since fewer

administrators are required to accomplish big roll outs and redeployment of

administrators from routine provisioning tasks to more strategic value added activities.

However, the opportunity savings for this are calculated using labor hour and cost

savings.


Inputs needed for data center server provisioning TCO calculations are shown in Figure

18.

Figure 18: Data Center Server Provisioning TCO Inputs

Data Center Server Administrative Costs Virtualization of workloads and reducing the number of physical assets to manage helps

decrease the number of server administrators needed for physical moves and changes,

asset inventory, physical security, disaster recovery and planning, compliance

management/reporting, vendor and contracts management, chargeback, and

financial/budget management.

In a typical virtualized environment, an administrator can manage 30-40% more

workloads as compared to physical infrastructure.

The following inputs are beneficial for calculating TCO of administrative costs:

• Average Servers per IT Administration FTE

• Average Hourly Burdened Labor Rate for IT System Administration and Support

Staff

• Annual increase in server administration costs

Disaster recovery and Business risks When it comes to disaster recovery and business resilience, virtual infrastructure offers

significant savings, including:

• Recovery from a massive failure: Unsuccessful or lengthy recoveries are

commonplace, and VMware infrastructure can speed recovery and enable long-

term survival;


• General Downtime – VMware can dramatically reduce planned downtime

associated with scheduled software upgrades, application maintenance,

hardware reconfiguration, and so forth. In addition, it reduces unplanned

downtime such as unscheduled outages due to hardware failure, application

(software) failure, and so on;

• Reduced cost for DR planning: Covered in server administration savings.

In the event of a massive failure (disaster), VMware infrastructure can dramatically

decrease recovery time by

1. Consolidating servers which reduces the number of physical servers which need

to be restored in case of disaster.

2. Hardware-independent virtual servers which require only single step file

recovery, reducing time to recover and resume.

VMware infrastructure can help reduce both planned and unplanned downtime. During

planned hardware maintenance, a server may have to be powered down which can

result in a temporary disruption of business. VMware’s vMotion technology drastically

reduces this downtime by allowing IT administrators to move running virtual machines

between servers without end user impact.

Unplanned downtime is also reduced using VMware Infrastructure. vMotion enables

administrators to dynamically move virtual machines away from overloaded hosts or

failed servers. This minimizes disruption to normal business activity and can ultimately

lead to preservation of revenue which might have been lost due to downtime.

Because planned downtime usually has minimal impact on a company (performed

during non-business hours), only unplanned downtime impact is considered.

Based on the parameters discussed above, Figure 19 shows TCO savings with current

and to-be state for around 300 servers:


Figure 19: VMware Infrastructure TCO Calculation

Figure 20: VMware Infrastructure Benefits

Figure 21: VMware Infrastructure 3 year Benefits

Cumulative 3 Year TCO ComparisonCurrent (As

Is)With VI

(Projected)Difference ($ and %

savings)VMware Infrastructure BenefitsData Center Server Hardware $3,839,931 $482,538 $3,357,393; 87.4%Data Center Server Storage $231,733 $495,056 $-263,323; -113.6%Data Center Server Networking $220,612 $30,886 $189,726; 86.0%Data Center Server Power and Cooling Consumption $1,068,742 $97,847 $970,895; 90.8%Data Center Server Space $1,005,578 $95,427 $910,151; 90.5%Data Center Server Provisioning $424,527 $31,841 $392,686; 92.5%Data Center Server Administration $2,367,810 $1,815,321 $552,489; 23.3%Disaster Recovery Site Investment $2,796,480 $502,833 $2,293,647; 82.0%Data Center Server Disaster Recovery (Indirect) $864,000 $86,400 $777,600; 90.0%Data Center Server Downtime (Indirect) $2,314,305 $578,577 $1,735,728; 75.0%

Investment RequiredVI Software Licensing and SnS $0 $392,439 $-392,439; 0%Additional Software Licensing Costs (if any) $0 $0 $; 0%VI Design, Plan and Deployment Services $0 $239,013 $-239,013; 0%VI Training $0 $12,930 $-12,930; 0%

TCO - Direct $11,955,413 $4,196,131 $7,759,282; 64.9%TCO - Indirect $3,178,305 $664,977 $2,513,328; 79.1%Total TCO (3 year) $15,133,718 $4,861,108 $10,272,610; 67.9%

Expected Benefits from VI Year 1 Year 2 Year 3 Total

Data Center Server Hardware $1,014,318 $1,115,750 $1,227,325 $3,357,393Data Center Server Storage ($79,554) ($87,509) ($96,260) ($263,323)Data Center Server Networking $57,319 $63,051 $69,356 $189,726Data Center Server Power and Cooling Consumption $293,322 $322,654 $354,919 $970,895Data Center Server Space $274,970 $302,467 $332,714 $910,151Data Center Server Provisioning $113,732 $130,109 $148,845 $392,686Data Center Server Administration $160,015 $183,057 $209,417 $552,489Disaster Recovery Site Investment $764,549 $764,549 $764,549 $2,293,647Data Center Server Disaster Recovery (Indirect) $259,200 $259,200 $259,200 $777,600Data Center Server Downtime (Indirect) $578,576 $578,576 $578,576 $1,735,728Total Benefits $3,436,447 $3,631,904 $3,848,641 $10,916,992


Figure 22: 3 year TCO Comparison for VMware Infrastructure

Numbers used above can vary based on enhancement of features in products. Figure 23

lists the assumptions taken to arrive at the above TCO savings and numbers:

Figure 23: VMware Infrastructure TCO Calculation Assumptions

To summarize, for most IT organizations, infrastructure costs consume too much of the

IT budget. In fact, the average company spends 61% of their budget on day-to-day

Current Data Center Server Hardware ProfileNumber of Data Center Servers AS-IS cost

2 CPU 100 $5,0004 CPU 200 $9,500How many gigabytes (GB) of storage do you have in your current environment (in total)? 30000What is the percentage of current servers attached to SAN? 10%Current (As Is) Data Center Storage ProfileOn average, by what percentage does your server storage increase each year? 10.0%When server is attached to a SAN, what is the number of HBAs per host? 2.0How many ports are there per typical SAN switch? 24What is the cost of each HBA? $1,250What is the cost for SAN switches? $6,000What is the cost for DAS storage (per GB)? $3.00What is the cost for SAN storage (per GB)? $10.00Current (As Is) Data Center Server Networking ProfileWhat are the current number of network interface cards (NICs) per server? 2What are the current number of ports per NIC? 2What are the current number of ports per network switch? 24What is the total cost for a network switch? $4,000On average, by what percentage does your server networking costs increase each year? 10.0%What percentage of the annual server networking savings can be realized? 100.0%Current (As Is) Data Center Server Power and CoolingWhat is the current price of electricity (cost per kWatt hour) for the data center facilities? $0.1000What is the operating power (in Watts) per server?2 CPU 5504 CPU 950Current (As Is) Data Center Server ProvisioningHow many servers are provisioned per year (growth / replacements)? 130

On average, by what percentage does your server provisioning task workload increase each year?10.0%

What percentage of the annual provisioning labor savings can be realized? 100.0%Current (As Is) Data Center Server IT Operations and AdministrationWhat is the average server:administrator ratio? 40.0What percentage of the annual IT operations and administration overhead labor savings can be realized? 50.0%Current (As Is) Data Center Server DowntimeWhich most closely describes the application(s) supported by these server operations?On average, how many downtime hours occur per year for these server operations? 150.0On average, what is the per hour business cost in lost productivity or transactions from these downtime events?

$51,429

Current (As Is) Data Center Server Disaster Recovery Risks and CostsWhat is the likelihood of a disaster occurring in any given year which will require recovery? 16.0%What is the estimated hourly cost of recovery including downtime and labor costs? $450,000What is the expected time (in hours) for full recovery for all servers / data? 40Current Disaster Recovery (DR) Site InvestmentWhat is the current number of servers installed (As Is) for disaster recovery (DR)? 150.00 How many person hours are needed to setup and deploy each replication server? 20.0 What is the total storage infrastructure cost for the DR site? $35,005What is the total network infrastructure cost for the DR site? $33,325What is the total data center space cost for the DR site? $151,900VMware Infrastructure Proposed Configuration and Benefit Assumptions4 CPU $15,200What is the estimated provisioning task time reduction factor with VMware? 13.48What is the estimated number of workloads/vms per IT operations and administration staff FTE with VMware?

75

What is the estimated disaster recovery time reduction factor with VMware? 90.0%What is the estimated downtime reduction factor with VMware? 75.0%

For the VMware solution, the GB to add per workload/vm unit? 20.0 After VMware, what percentage of storage will be SAN? 100.0%What is the number of Network Interface Card (NIC) per server with the VMware solution? 3What is the number of ports per NIC with the VMware solution? 2


operations, and 25% on progressive migrations and upgrades, leaving little of the

budget—less than 14%—for innovation. One way to reduce “keeping the lights on” costs

is through enterprise virtualization—providing a flexible pool of server, QA lab, storage,

and desktop resources which can be allocated based on business demands.

Infrastructure optimization using enterprise virtualization can help to consolidate assets,

improve utilization, and make the business more resilient and agile.

Data Center Facilities and Hosting Even through challenging economic times, the need for physical data center capacity

continues to grow. For some businesses, the driver is expansion into new markets or

geographies. For others, it’s the need to deal with growing amounts of data generated by

applications with high-capacity demands, evolving end-user abilities, or regulatory

bodies that demand ever-increasing quantities of meticulous documentation. If a

customer’s data center is running out of space—or power, an increasingly important

constraint—there are two options. Customers can either build and operate a new facility,

or lease the capacity required from a colocation provider who can solve the problem

immediately.

Colocation, often referred to as “COLO,” differs from traditional hosting, where the

hosting company provides the hardware and some or all of the software required to run

your applications. In a colocation arrangement, customers own all the hardware, and

typically provide the technicians to support it as well. Customers don’t have to worry

about floor space, cooling, power (and its distribution), cabling, fire suppression, and

physical security. This is all managed by the COLO provider.

Predicting and measuring TCO for the physical infrastructure for network rooms and

data centers is required for ROI analysis and other business decision processes.

The “build-or-buy” decision between construction and colocation should be weighed

carefully, as the choice will affect your company and your bottom line quite literally for

decades. This article will review six key factors that affect that choice, some of which

extend beyond basic TCO analysis.

Let’s consider some facts on buy vs. build and then shed some light on ways to reduce

TCO for customers who have already made investments.


Key Benefits of Buying vs. Building a Data Center

Leasing a data center Building a data center

A predictable and operational expenditure

model with costs that are easy to predict

and that increase at a consistent rate over

the life of the data center.

Complete control over operating

environment, from who can access the

facility to the temperature that it runs.

Additional capacity can be brought on

quickly and only as-needed, shielding you

from having to build out extra capacity that

might not be used for many years.

Very low risk of losing your lease and

being forced to leave the facility.

Data center is run by professionals with

more experience and expertise in the

practice of running an efficient and highly

available data center facility.

Ability to leverage and share existing

space, giving IT staff the ability to work in

close proximity to the data center floor for

a low cost.

An ecosystem of partners in the same

facility that can be leveraged with

extremely low latency via a cross-connect.

Figure 24 gives a snapshot of TCO components for a typical rack in a highly available

2N data center.

Figure 24: TCO components for typical rack

1% 5%

18%

6%

18% 20%

15%

2% 15%

System Monitoring

Project Management

Power Equipment

Cooling Equipment

Engineering & Installation

Electricity


According to a Forrester study, most companies find leasing is more cost effective than

building a data center. In this study, it was found that the total cost of building versus

leasing a data center over a time period of 15 years were not significantly different. The

original estimates indicated following the net present value of the cash flows.

Leasing a Data Center – $(29.60)

New Data Center build – $(28.70)

However when risk was factored into the model, the new “Most likely NPV Model”

jumped to $47 million while leasing remained under $35 million.

The major risk identified with building a data center facility was over- or under-

provisioning of the data center facility which may have huge costs in the longer run with

high probability of impacting business case.

Clearly substantiating the above risks, Figure 25 shows the results of the installed

versus utilized power of a study conducted by APC on data center facilities that are built

by customers.

Figure 25: Power Utilization Percentage

0%

20%

40%

60%

80%

100%

120%

0 5 10

Util

izat

ion

Perc

enta

tge

Years from Commissioning

Installed Power capacity

Expected power Requirement

Actual Power requirment


Opportunities to control TCO for COLO providers and customers having their own data centers A variety of strategies to control lifetime TCO are apparent. These include efficiency

improvement, improved planning, rightsizing the system, negotiating costs, self-service,

and so forth. Per rack TCO savings for a typical 2N data center or network room

resulting from a variety of scenarios are summarized below.

Scenario TCO $ saved per rack

% of TCO saved

Purchasing power equipment with 2% higher electrical efficiency

$1,472.00 1.1%

Reducing the electric rate by 1 cent per KW-Hr $3,100.00 2.4%

Eliminating the raised floor $4,200.00 3.3%

Increasing the cooling performance coefficient by 100%

$5,500.00 4.3%

Obtaining space at no cost $12,000.00 9.4%

Obtaining all capital equipment at 50% discount from standard

$15,700.00 12.3%

Rightsizing the system to the actual requirement over time

$76,400.00 60.1%

There are many contributors to the total cost of a data center that are difficult to scale

with time and are typically incurred up-front, such as facility space improvements, facility

switch gear, and engineering costs. When the modular, scalable technology is used to

the extent which is currently practical, saving up to 30-40% have been recorded in some

cases.


The oversizing of infrastructure is a major contributor to this cost, and on average 30%

cost savings can be obtained by implementing practical design techniques using

modular scalable data center infrastructure.

Figure 26 shows a matrix of the opportunities vs. their impact on TCO.

Figure 26: Opportunities vs. their impact on TCO

Some of the initiatives on a facility level with savings estimated in different customer

scenarios are shown below:

Initiative Savings Approach Limitations

Rack

Optimization

10-15% Use of proper tool to allocate space

and power in each rack

Need re-

allocation of

systems

amounting to

some

downtime

Power

Management

Up to

50% of

server

power

usage

By turning off servers when idle and

successfully powering-up when

needed again

Complementary to virtualization

initiative


Efficient air

conditioning

architecture

7-15% Row-oriented cooling is efficient for

higher density

Shorter air paths require less fan

power

For new

designs

only

Benefits are

limited to high

density

designs

Economizer

modes of air

conditioners

4-15% This can offer substantial energy

savings, depending on geographic

location

Some data centers have air

conditioners with economizer modes,

but economizer operation is

disabled

For new

designs

only

Difficult to

retrofit

Server

Virtualization

10-40% Involves consolidation of applications

onto fewer servers, typically blade

servers

Also frees up space for power and

cooling capacity for expansion

Requires

major IT

process

changes

To achieve

savings in

an existing

facility,

some power

and

cooling

devices may

need to be

turned off


Efficient Floor

Layout

5-12% Floor layout has a large effect on the

efficiency of the air conditioning

system

Involves hot-aisle / cold-aisle

arrangement with suitable air

conditioner locations

For new

designs and

expansions

Difficult to

retrofit

Efficient Power

Equipment

4-10% New best-in-class UPS systems have

70% less losses than legacy UPS at

typical loads

For new

designs or

retrofits only

Coordinate air

conditioners

0-10% Many data centers have multiple air

conditioners that actually conflict,

resulting in gross waste

May require a professional

assessment to diagnose

For data

center

with multiple

air

conditioners

Correct

Placement of

Vented Floor

Tiles

1-6% Reduces hot spots

A professional assessment can

ensure an optimal result

Only for data

centers

using raised

floor

Requires

expert

guidance to

achieve best

result


Energy Efficient

Lighting

1-3% Turn off some or all lights based on

time of day or motion

Use more efficient lighting software

technology

Benefit is

greater on low

density or

partly filled

data centers

Install Blanking

Panels

1-2% Decrease server inlet temperature

Saves energy by increasing the

CRAC return air temperature

Cheap and easy with new snap-in

blanking panels, such as those by

APC

Cloud It is now common knowledge that, while traditional, customized solutions can meet

business requirements, they result in higher license costs, inefficient utilization, and

increased TCO. It’s becoming clear that increasing business requirements will push IT

organizations toward data center transformation. This includes finding ways to reduce

existing IT infrastructure costs such as through virtualization and consolidation that

decrease the number of physical servers needed and reducing energy consumption. IT

organizations can quickly address and respond to business needs by introducing a self-

management layer that enable services to be provisioned automatically, allowing

everyone to use service by themselves.

Nearly all IT organizations (almost 90%) are looking for a way to move toward business

agility as they face the daily challenges arising from costly and rigid IT infrastructure.

There are many reasons for this. Almost 70% of an IT organization’s budget is

consumed by existing environment maintenance itself; 30% is for new projects.

Management, power, and cooling costs associated with operations of systems

distributed across geographies are increasing and will continue to increase. Utilization

rates of these distributed servers are very low, averaging around 7-8%, putting

maximum capacity in waste only. Provisioning time for new servers takes a very long


time, sometimes months. This creates an opportunity to address these business issues

and provide new solutions with an innovative approach. As a result, many companies

have taken the initiative to move out of their data center and move to public cloud

providers such as Azure or Amazon with an aim to lower costs, increase response time,

and other benefits. Seeing this move, there is a need for a dynamic IT infrastructure that

gives reason or justification why a customer should stay with a data center.

In this article, we will analyze the TCO for a dynamic IT infrastructure built around private

cloud services, while at the same time comparing it with public cloud alternatives and

traditional distributed server models as well.

Virtualization and Server Consolidation—Starting Point for Cloud Virtualizing an existing environment enables IT organizations to move toward an on-

demand platform where IT resources can be easily available from a centralized virtual

pool. Close analysis of a 4500 distributed server environment show that operational

costs associated with each server amounts to more than $35,000, with almost 91% due

to software maintenance and systems administration. Virtualization reduces the number

of physical servers leading to more capable virtual machines which ultimately will greatly

reduce maintenance costs. A number of significant benefits have been identified by this

approach; consolidation of workloads, meeting SLA’s, scalability, lowest per VM image

cost being a few examples.

One way to answer all the questions and calculate TCO of a private cloud-based IT

environment, while at the same time comparing it with other options, is to:

1. Calculate the estimated consolidation ratio based on environment type (Windows,

Linux, etc).

2. Calculate the cost associated with the operation of the virtualized server environment

over a period of 3 or 5 years.

3. Perform a comparison between traditional and public cloud services solutions.

Service Management The cost savings associated with service management are easily recognized after

implementing a private cloud solution. Fewer servers to manage, reduced software


requirements, less management required, and lower cost are key benefits. Apart from

basic monitoring costs, the following solution components are required for improving

service management efficiency:

• Centralized monitoring of applications, where different components run on

different servers

• Unified view of the business-level services state that has dependency on shared

infrastructure spread out across multiple physical machines

• A database that will store and track changes made to hardware, software, and

networking configurations in a better controlled way

• A service desk that will allow the administrators to handle and resolve service

requests using the automated processes

Provisioning of Requests While the first three points discussed—virtualization, consolidation, and service

management—form the basic startup of an IT infrastructure, there is still a need for a

service portal that enables users to be self-dependent and request IT services as and

when required on demand in minimal time, even in minutes. A central repository, used

for defining and creating services, can be accessed by any user to search for the

required service. Indexes make it easier to perform the search function. Once approved

based on the rules set up initially, the underlying infrastructure fulfills the user request.

As soon as the user stops using the service, the allocated underlying resources become

free for any other user request. Management process must be automated using some

software to enable users to use the services.

By leveraging cloud computing’s multi-tenancy and elasticity, EMC IT has begun to offer

IT solutions on demand, scalable services that provide high availability, self-service

provisioning, metered usage, and chargeback. Via implementation of these

technologies, EMC IT is focusing on cloud-based architecture which will provide

customers with reduced TCO using consolidation, and at the same time offer good ROI,

effectiveness, better service, and last but not least, agility.

Similar to other companies, EMC is faced with increasing application complexity, which

increases the time and cost to provision infrastructure, platforms, and applications. In an

effort to reduce complexity and optimize IT infrastructure wherever possible, EMC has


focused on cloud computing to address current IT challenges and business

transformation, thereby driving maximum benefits. IT-as-a-Service (ITaaS) has been an

encouraging factor for cost savings, energy consumption reduction via shared

resourcing, and enabling rapid and agile deployment of customer environments or

applications. Other benefits of ITaaS are:

• Agility – Enables business users to browse and select required services and IT

personnel to easily provision, configure, and monitor virtual applications,

databases, and platforms in minimal time. This results in around 45-50%

reduction in software platform provisioning time.

• Architect for Future – Seamlessly provision for the future with infrastructure,

platforms, and applications that scale up and out to meet fluctuating demands.

• Cost Savings – Reduce real estate, energy, and maintenance costs.

IT-as-a-Service is a business-focused approach that focuses on results, operational

efficiency, competitiveness, and rapid response. The result is improved services

utilization aligned with business needs.

EMC provide three types of ITaaS services to business units:

Infrastructure-as-a-Service (IaaS): Offers compute, storage, backup and recovery, and

networks, individually or as an integrated service.

Platforms-as-a-Service (PaaS): Provides databases and application platforms such as

development tools, runtime environments, application frameworks, ILM, and enterprise

content management (ECM) as services.

Software-as-a-Service (SaaS): Widely used applications being offered to business units

including BI, ERP, CRM, and master data management. Consolidation and

standardization of infrastructure, streamlining of services to internal departments,

providing a more efficient working model, and decreased provisioning time has been an

observation of EMC IT delivery that delivers enterprise applications to business units

with higher agility.


Figure 27: Cloud Services Framework

Figure 27 shows the concept of IT-as-a-Service. There are the stakeholders, the

providers of the Cloud service. These services can be represented as public, private, or

hybrid Cloud services. There are the brokers, typically the IT department. There are the

consumers, typically company lines of business.

A collection of Cloud services are offered to consumers in a service catalog. These

services have agreed-upon characteristics and benefits to the stakeholders. The source

of the services is transparent to the consumers. Figure 27 shows a VDC within a private

Cloud that supports service offerings within a service catalog. These VDC’s are pooled

and tiered providing different levels and features of service offerings.

Platform-as-a-Service (PaaS) – Two categories have been identified under PaaS: 1. Database platforms including Oracle Database as a Service, SQL Server as a

Service, and Greenplum® as a Service.

2. Application Platforms including application development as a service, enterprise

content management as a service, ILM as a service, security platform as a

service, and integration as a service.


PaaS is a rapidly evolving type of Cloud service. It offers quick time to market,

transparent database connectivity, and new types of Web 2.0 developer environments.

These services are now offering virtual application portability across private and public

Clouds, or integration with SaaS applications.

Figure 28: PaaS Characteristics

In Database as a Service, business units are offered reduced TCO, improved service

levels, more efficient management, easier administration, and much stronger

compliance.

Figure 29: Design Principles for Database as a Service

Figure 29 shows the four design principles taken by EMC IT in setting up Database as a

Service. The table below provides a description of each.


Design Principles Description

Database Consolidation

Disparate databases consolidated into tiered clusters based on business criticality, required availability, and I/O profile

Information Optimization

Reduction of duplicate data to optimize the databases using effective information monitoring tools

Standardization Consistency, easier management, lower costs, and better performance via standard hardware and database footprints

Compliance Common management, administration, and compliance-related policies and procedures

For providing Database as a Service, EMC IT has adopted both a grid-based and a

virtualization approach toward database virtualization and consolidation. EMC has two

principal DB platforms, including Oracle and SQL Database, along with the Greenplum

DB platform. Database as a Service has also significantly reduced internal project

lifecycles, offering businesses the advantage of a faster turnaround. High availability and

same time reduction of data discrepancies support and run costs have made Database

as a Service a best option.

Applications Platform as a Service Tools are a major requirement to design and build applications for a cloud-based

operating environment. EMC IT has effectively provided tools for its cloud-based

solution, using EMC and partner technologies to provide a platform for developing

secure next generation applications. Applications built out of this platform are optimized

for virtual, self-managed operating environments. EMC IT’s objectives were to leverage

the power of this next generation cloud platform for application development, reduce

footprint of physical machines, simplify system architectures needed to run and manage

business critical applications, and reduce application development time and time to

market by enabling development teams to use rapid and flexible development

methodologies.


Guiding principles for building this platform are shown in the table below.

Guiding Principles Description

Lightweight Framework

Interfaces and frameworks that have lightweight, reusable, agile, and aspect-oriented programming.

Agile Development Optimized with testing and production platforms that scale up or down and shifts loads physically and geographically.

Service Based Self-managed and on demand provided applications.

Efficiency Efficient programming methodologies to increase efficiencies of system management.

Many other platforms are provided to users for application development, ECM, ILM,

information security, and IT integration. Figure 30 provides a brief description for each.

Service Type Description

Application Development

Application developers leverage application development platforms to easily build and deploy applications into the cloud.

Enterprise Content

Consolidated, scalable platform for hosting unstructured content using tiered storage and centralized management, supports more efficient provisioning and reduces management costs, in future chargeback based on usage and governance frameworks are expected to be incorporated.

Information Lifecycle

Enables end to end information optimization throughout the lifecycle of the data thereby ensuring right level of performance for applications at the lowest cost, efficient and cost effective data storage platform by reducing infrastructure, resources and maintenance costs.

Security Platform

Helps administrators securely administer and monitor public networks while keeping them separate from corporate networks; a Governance, Risk, Compliance (GRC) framework to drive policy adherence, govern network infrastructure, manage information security policies and ensure compliance with legal and regulatory requirements. Comprehensive platforms are being build to allow for common identity management and audit transactions that occur in private cloud environment.


Integration

Integrating multiple sources across business units to leverage this data seamlessly for business purposes. Service oriented architectures/web services, enterprise messaging, and extract, transform and load (ETL) provide integration services.

Figure 30: Service Types

Figure 31 highlights the benefits of application Platform as a Service.

Application Platforms as a Service Benefits

Benefit Type Description

Efficiency Improvement

High quality application infrastructure on demand with minimum time and effort.

Agility Quickly and efficiently adapt to new technologies and best practices.

Simplicity Reduce complexity and redundancy of systems.

Availability Enable high performance and zero application downtime.

Scalability High degree of scalability and effective dynamic application capacity management.

Figure 31: Benefits of Application Platforms as a Service

Software-as-a-Service (SaaS) Services such as BI, ERP, CRM, and master data management are being provided by

EMC IT resulting in the following benefits:

• Unify business definitions and provide a consistent online experience to

geographically dispersed users

• Implement consistent application security policies

• Consolidate process and integration logic outside of individual applications and

interfaces

It helps to streamline IT services to various internal departments and provide more

efficient services. It also helps to deliver enterprise applications to business units with a

high degree of agility, while reducing provisioning time and costs. EMC IT offers BI,


ERP, and CRM applications services under SaaS. Figure 32 provides a brief description

of each.

SaaS Service Type Description and Benefits

Business Intelligence

Reduction of TCO of business intelligence, reduction in number of source feeds and removal of data and hardware redundancies, eliminates risk of data discrepancies from multiple code bases. Significant performance gains including improvement in batch job performance, and a reduction in storage footprint. Going forward, EMC's Greenplum which is known as highly scalable analytical database is a key design point in offering BI as a service.

ERP and CRM

ERP as a Service will reduce the overall investment and time required to provision ERP modules, and increase ROI for investments on ERP made by customers. This will lay down a path for smooth and problem free integration of organizations and will help in working more effectively with suppliers, vendors, and partners.

Figure 32: SaaS Service benefits

Anything As a Service (XaaS) Recently, we have heard the term “Anything as a Service” (XaaS). With new technology,

market demands, and experience enterprises are embracing a new infrastructure model

to deliver IT-as–a-Service through hybrid Cloud computing. The rigid boundaries among

types of services or private and public Clouds are becoming transparent with distributed,

integrated, and portable Cloud applications. Figure 33 shows the XaaS services.

Figure 33: Anything as a Service (XaaS)


In summary, a cloud-based solution will provide customers with on-demand, scalable

service applications as a service, higher efficiency, high availability, better service, self-

service provisioning, chargeback, and metered usage. Automation, policy, and

governance add more to the cloud option. If customers opt for a cloud solution, it will

offer the best balance of these benefits:

• Lower TCO

• Higher ROI

• Enhanced Efficiency

• Better Service

• Increased Enterprise Agility

Conclusion Technologies will come. Technologies may vanish. The enduring questions from

business will remain, “How much investment, how much payback, how much ROI, how

much TCO” is your solution going to provide? Getting money out of the CEO’s pocket is

becoming increasingly difficult until and unless you have something new to bring a smile

to the CEO’s face. There is a need for new initiatives, innovations, and strategies to

reduce IT operating cost.

Over the past many years, there have been issues with underutilization and

oversubscribed capacity and IT organizations recognize these problems now. Now, with

a limited budget to invest, many IT organizations are rising to the challenge to do more

with less investment and to take decisions for this little investment in hand. Demands are

more, investment is less. Hence, it becomes crucial to identify the underlying basic

principles associated with any solution that will help reduce TCO and achieve higher

ROI.


Appendix: Bibliography

1. Reference Source: Wikipedia http://en.wikipedia.org/wiki/Total_cost_of_ownership

2. http://www.hp.com/sbso/productivity/howto/it_bladesystem/index.html

3. http://www.cisco.com/en/US/solutions/collateral/ns1015/white_paper_c11-687149.pdf, Cisco Economics of Networking, P.No. 3-5

4. David R. Merrill, Storage Economics, Four Principles for Reducing Total Cost of Ownership, May2009, P.No. 8, 9 and 12

5. http://www.conectividad.org/archivo/estudios/tco/vmware.pdf, VMware TCO/ROI Methodology, P.No. 8, 9, 11, 14, 16.

6. Build or Buy? The Economics of datacenter facilities – Rachel A. Dines, July 29 2011 Determining TCO for Datacenter and Network room Infrastructure – APC, Revision 3, White Paper#6

7. http://www.emc.com/collateral/software/white-papers/h8134-it-journey-applications-cloud-wp.pdf, EMC IT’s Journey to the Private Cloud, December 2010, 5-8.

8. EMC Virtual Data Center and Cloud Infrastructure, Cloud Services, 2010, 2011, P.No. 10, 13 and 18.

EMC believes the information in this publication is accurate as of its publication date. The information is subject to change without notice.

THE INFORMATION IN THIS PUBLICATION IS PROVIDED “AS IS.” EMC CORPORATION MAKES NO RESPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE INFORMATION IN THIS PUBLICATION, AND SPECIFICALLY DISCLAIMS IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Use, copying, and distribution of any EMC software described in this publication requires

an applicable software license.

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