The Total Economic Impact Of NetApp s Storage Solutions For Server Virtualization

Transcription

1 Prepared fr NetApp, Inc. May 12, 2009 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Multicmpany Analysis Prject Directr: Bb Crmier, Frrester Cnsulting

2 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin TABLE OF CONTENTS Executive Summary...4 Purpse...4 Methdlgy...4 Apprach...5 Key Findings...5 Disclsures...6 Abut NetApp s Strage Slutins Fr Server Virtualizatin And VMware...7 Custmer Interview Highlights...7 Sample Organizatin Descriptin...8 TEI Framewrk...11 Csts...12 Benefits And Savings: Quantified...12 Benefits: Unquantified...15 Risk...15 Flexibility...17 TEI Framewrk: Summary...17 Key Findings...18 Study Cnclusins...18 Appendix A: Sample Organizatin Descriptin...20 Appendix B: Ttal Ecnmic Impact Overview...23 Benefits...23 Csts...23 Risk

3 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Flexibility...23 Appendix C: Glssary...24 Appendix D: Abut The Prject Manager , Frrester Research, Inc. All rights reserved. Unauthrized reprductin is strictly prhibited. Infrmatin is based n best available resurces. Opinins reflect judgment at the time and are subject t change. Frrester, Techngraphics, Frrester Wave, RleView, TechRadar, and Ttal Ecnmic Impact are trademarks f Frrester Research, Inc. All ther trademarks are the prperty f their respective cmpanies. Fr additinal infrmatin, g t

4 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Executive Summary In early 2009, Frrester Research started wrk n a research prject cmmissined by NetApp that fcused n examining the ptential return n investment (ROI) enterprises may realize by adpting NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware's ESX server and virtualizatin platfrm. This study highlights the benefits and csts f deplying NetApp s strage slutins fr server virtualizatin acrss the enterprise f a sample Organizatin (see Appendix A fr a descriptin f the sample Organizatin). The findings in this study are in large part based n in-depth interviews cnducted by Frrester with seven rganizatins currently using NetApp s strage slutins fr server virtualizatin. The study examines the estimated ROI fr the sample Organizatin and presents the aggregate findings derived frm the interview and analysis prcess as well as ur independent research. The study fund that fr ur sample Organizatin, the NetApp strage slutins fr server virtualizatin prvided quantifiable benefits and savings in the fllwing areas: Reductin in strage hardware and sftware csts using data deduplicatin, thin prvisining, and FlexClne technlgies. Imprvements in backup and recvery prcesses. Savings in media, hardware and sftware assciated with centralized backup. Labr savings fr strage administratin. In additin, mst interviewed rganizatins indicated that their riginal investment in NetApp s strage slutins fr server virtualizatin culd prvide them with the flexibility and agility t take advantage f future savings that NetApp disaster recvery replicatin technlgy culd bring t their rganizatins. Purpse The purpse f this study is t prvide readers with a framewrk t evaluate the ptential financial impact n their rganizatins f NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. Frrester s aim is t shw all calculatins and assumptins used in the analysis. Readers shuld use this study t better understand and cmmunicate a business case fr investing in NetApp s strage slutins fr server virtualizatin. Methdlgy NetApp selected Frrester fr this prject because f ur industry expertise in server cnslidatin and virtualizatin, strage technlgies, and Frrester s Ttal Ecnmic Impact (TEI) methdlgy. TEI nt nly measures csts and cst reductin (areas that are typically accunted fr within IT) but als weighs the enabling value f a technlgy in increasing the effectiveness f verall business prcesses. Fr this study, Frrester emplyed fur fundamental elements f its TEI methdlgy in mdeling NetApp s strage slutin fr server virtualizatin: - 4 -

5 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin 1. Csts and cst reductin. 2. Benefits t the entire rganizatin. 3. Flexibility. 4. Risk. Given the increasing sphisticatin that enterprises have regarding cst analyses related t IT investments, Frrester s TEI methdlgy serves an extremely useful purpse by prviding a cmplete picture f the ttal ecnmic impact f purchase decisins. Please see Appendix B fr additinal infrmatin n the TEI methdlgy. Apprach Frrester used a five-step apprach fr this study: 1. Frrester gathered data frm existing Frrester research relative t NetApp s strage slutins fr server virtualizatin. 2. Frrester interviewed NetApp s marketing, prduct management, and sales persnnel t fully understand the ptential (r intended) value prpsitin f its slutins. 3. Using knwledge f the NetApp slutin, as well as input frm existing Frrester research, a Frrester representative cnducted in-depth discussins with seven f NetApp s custmers regarding their experiences with NetApp s strage slutins fr server virtualizatin. 4. Frrester cnstructed a financial mdel representative f data cllected in the interviews. 5. Frrester created this study, which represents and examines the estimated value f the findings derived frm the custmer interview and analysis prcess and frm Frrester s independent research. Key Findings Table 1 represents a summary f the ROI the Organizatin expects t realize ver a three-year perid by deplying NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm

6 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Table 1: Three-Year Summary Financial Results The Organizatin Summary financial results Unadjusted (best-case) Risk-adjusted ROI 52% 37% Payback perid Within 15 mnths Within 18 mnths Ttal csts (PV) ($437,818) ($437,818) Ttal cst savings and benefits (PV) ($665,710) ($599,139) Ttal (NPV) $227,892 $161,321 Surce: Frrester Research, Inc. The three-year risk-adjusted ttal NPV (net present value) f $161,321 represents the net cst savings and benefits attributed t using the NetApp slutin when cmpared with the csts f the Organizatin s strage envirnment befre cnslidatin and virtualizatin (see details belw in the Csts, Benefits, Flexibility, and Risks sectins). In additin, the risk-adjusted ROI was a very favrable 37%. Table 1 illustrates the risk-adjusted cash flw fr the sample Organizatin, based n data and characteristics btained during the custmer interview prcess. Frrester risk-adjusts these values t take int accunt the ptential uncertainty that exists in estimating the csts and benefits f a technlgy investment. The risk-adjusted value is meant t prvide a cnservative estimate, incrprating any ptential risk factrs that may later affect the riginal cst and benefit estimates. Fr this study, Frrester applied a 10% risk adjustment i.e., a reductin f 10% t all benefits t reflect the risks. Fr a mre in-depth explanatin f risk and the risk adjustments used in this study, please see the Risk sectin. The bjective f this study is nt t illustrate savings that ther enterprises can btain by deplying the NetApp slutin but rather t identify savings that the interviewed custmers experienced. These results can be used as a guide t allw ther enterprises t determine the apprpriate benefits fr their particular envirnment. Disclsures The reader shuld be aware f the fllwing: The study was cmmissined by NetApp and delivered by the Frrester Cnsulting grup. NetApp reviewed and prvided feedback t Frrester, but Frrester maintained editrial cntrl ver the study and its findings and did nt accept changes t the study that cntradicted Frrester s findings r bscured the meaning f the study. NetApp prvided the custmer names fr the interviews. Frrester makes n assumptins as t the ptential return n investment that ther rganizatins will receive. Frrester strngly advises that readers shuld use their wn estimates within the framewrk prvided in the study t determine the apprpriateness f an investment in NetApp s strage slutins fr server virtualizatin

7 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Frrester des nt endrse NetApp r its strage slutins. The study is nt a direct r implied market r cmpetitive cmparisn. Abut NetApp s Strage Slutins Fr Server Virtualizatin And VMware NetApp Strage Slutins Fr Server Virtualizatin Accrding t NetApp, its strage slutins fr server virtualizatin cmplement the benefits prvided t servers by VMware, enabling rganizatins t: Save up t 50% n strage pwer, cling, and space and lwer verall data center csts using thin prvisining and snapsht cpies. Bring prducts, services, and prjects t market faster with instant strage prvisining. Frequently and efficiently back up data with many recvery pints using many spaceefficient snapsht cpies, each representing a ptential rllback pint. Prvide self-service tls fr virtual server administratrs t schedule snapsht frequency and perfrm data restres in the event f system r user crruptin r deletin Organizatins may als experience a smth transitin t their strage infrastructure with NetApp s specialized virtualizatin services including assessment, implementatin, and management delivered by experienced, certified prfessinals, using prven methdlgies and best practices. VMware ESX Server Accrding t NetApp, VMware and its Virtual Infrastructure Suite (VI3) is cmprised f prducts that help rganizatins deply and manage highly available and dynamic data centers. The fundatin f VI3 is ESX Server, the hypervisr r virtualizatin layer that allws a traditinal physical server t be prvisined int multiple virtual machines. A key value f a virtual machine is that it acts just like a traditinal server, thus requiring n r nly minimal change t an applicatin in rder fr it t perate within the virtual infrastructure. The hypervisr layer addresses ne f the main gals f the legacy data center maintain applicatin islatin by running each applicatin n its wn server yet ESX allws rganizatins t aggregate multiple virtual servers nt a single physical hsting platfrm. Custmer Interview Highlights Frrester derived its cnclusins in large part frm infrmatin received in a series f in-depth interviews with executives and persnnel at seven rganizatins currently using NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. The fllwing is a brief descriptin f each f the interviewed rganizatins, all f which were prmised annymity: 1. An institute f science fr ne f the leading universities in the US whse server and strage needs have grwn dramatically frm 16 physical servers and 4 TB f disk t 100 physical servers, 30 virtual servers, and mre than 200 TB f NetApp strage in the past - 7 -

8 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin 2.5 years. It has been using NetApp strage slutins fr server virtualizatin in cnjunctin with VMware ESX Server fr mre than tw years. 2. A leader in remte nline data backup and managed data prtectin slutins including nline data backup, disk-based recvery, high-availability, archiving, and data lifecycle slutins. It has been using NetApp s strage fr eight mnths and has cnslidated 40 physical servers nt three VMware ESX servers with 20 TBs f NetApp strage. 3. A 25-year-ld leading medical device cmpany develping and manufacturing less-invasive devices. It has been using NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware fr mre than tw years t eliminate 125 physical servers and replace them with 18 VMware ESX hsts with 180 TBs f NetApp strage. 4. A wrld leader in csmetics, skin care, fragrance, and persnal care prducts. It has been using NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware fr mre than a year t eliminate 300 physical servers and replace them with 36 VMware ESX hsts with 35 TBs f NetApp strage. 5. A nt-fr-prfit prvider f gvernment infrmatin technlgy and telecmmunicatin slutins t a majr US city and the surrunding cunty. It has been using NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware fr mre than fur years. It has mre than 300 virtual servers running n 22 VMware ESX hsts accessing 275 TBs f NetApp strage acrss three data centers. 6. The central IT grup f a large US city in the Nrtheast cnsisting f 40 emplyees wh supprt the city and bard f educatin s IT needs. It has been using NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware fr mre than nine mnths t eliminate 20 physical servers and replace them with fur VMware ESX hsts using 13.2 TBs f NetApp strage. 7. The cmmunity cllege system f an East Cast state in the US supprting 23 clleges and mre than 240,000 students. It has been using NetApp s strage slutins fr 18 mnths t establish an autmated disaster recvery site that tday uses 100 TBs f NetApp strage. Sample Organizatin Descriptin The Organizatin is a $2 billin-plus multinatinal manufacturer and service prvider headquartered in Nrth America with peratins in Eurpe and Asia. Prir t implementing NetApp s strage slutins fr server virtualizatin, it had 400 Intel X86 physical servers being used t run missincritical applicatins such as ecmmerce, , and financials. The server ppulatin was a mix f Windws NT and Windws 2003 perating systems. The Organizatin recently made the strategic decisin t implement server virtualizatin fr 300 servers in the fllwing categries: file, print, active directry, small database, Dmain Name System (DNS), and Web servers. It has chsen t keep its large database and Micrsft Exchange infrastructure n physical servers. In additin, it wanted t virtualize its disaster recvery infrastructure smetime in the next tw years. Prir t implementing NetApp s strage slutins fr server virtualizatin, the Organizatin: Was using a Fibre Channel SAN. Backed up files t tape using a legacy tape-t-tape system

9 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Recvered files frm tape. In the event f a disaster, wuld have tapes shipped in frm remte strage facility. As with the rganizatins that Frrester interviewed, the sample Organizatin s reasns fr pursuing a server virtualizatin strategy were as fllws: 1. Cnslidatin. Reduce the number f servers, reduce its strage ftprint, use fewer netwrk prts and cnslidate t ne strage vendr. 2. Green IT. Its data center was reaching its space, pwer, and cling capacity, and the virtual server strategy is seen as a way t reduce pwer spending and avid data center expansin csts. 3. Higher availability. The Organizatin wanted t fcus n higher availability fr its critical business applicatins thrugh the use f VMware failver technlgies. 4. Disaster recvery. T replace their tape-based backup and recvery systems with replicatin in abut tw years. 5. Faster applicatin deplyment. It wanted a mre efficient way t deply applicatins and patches. 6. Reduce labr csts. The strage slutin needed t be easier t manage with fewer resurces needed. The Sample Organizatin Chses NetApp s Strage Slutins Fr Server Virtualizatin Frrester assumes that the sample Organizatin had already purchased VMWare ESX sftware prir t investing in NetApp s strage slutins fr server virtualizatin, therefre the cst fr VMware is nt included in this case study ROI analysis; hwever, we are listing the cnfiguratin belw. VMware ESX sftware (investment already made by Organizatin): vcenter. VMtin. High Availability. Dynamic Resurce Scheduler. Virtual Cnslidated Backup. Site Recvery Manager. The Organizatin cntacted NetApp, its primary strage vendr, t purchase the fllwing hardware, sftware, services, features, and functinalities (prices in bld): - 9 -

10 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin FAS3140A with 24 TB f raw capacity fr primary strage ($310,992) (assumes initial use f 12 TB after deduplicatin and 25% annual grwth thereafter, reaching 24 TB * at end f Year 3). Included in the price is: iscsi prtcl. SMVI (Snap Manager fr Virtual Infrastructure). SnapMirrr sftware. SnapRestre sftware. Deduplicatin sftware. FlexClne sftware. Three-year SupprtEdge Premium 4-hur nsite supprt. FAS2050 with 20 TB f raw capacity as replicatin and backup target ($103,326) (assumes initial use f 10 TB after deduplicatin and 25% annual grwth thereafter, reaching 20 TB * at end f Year 3). Included in the price is: iscsi prtcl. SnapMirrr sftware. SnapRestre sftware. Deduplicatin sftware. Three-year SupprtEdge Premium - 4-hur nsite supprt. NetApp University training units (60) system administratin curses ($4,500). * Nte: Withut deduplicatin the Organizatin wuld need t buy an additinal 44 TB f raw strage capacity (disk shelves and drives) fr primary and backup strage at an incremental cst (r savings fr this analysis) f $218,000. Assumptins: Prir t implementing NetApp s strage fr virtualizatin slutins, the Organizatin had 400 X86 ne- and tw-scket servers and had plans t virtualize 300 f thse running file, print, active directry, small database, Dmain Name System (DNS), and Web servers. The Organizatin s strage needs are expected t grw by 25% annually fr the three years f this analysis, which Frrester sees as a reasnably cnservative data grwth rate. During the next 18 mnths, the Organizatin will replace 300 physical servers with 10 ESX hst (virtual) servers (quad cre servers with 512 MB f memry such as HP DL380 r IBM 3650 and quad prt Ethernet HBAs) with a prjected rati f 30 virtual servers per physical server

11 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin The new future backup and disaster recvery plans will incrprate NetApp strage fr virtualizatin slutins. Backup: Befre: primary strage backed up t tape with legacy tape-t-tape system. After: backup using NetApp FAS2050 as replicatin and backup target. Disaster recvery: Befre: recvered frm tape. Wuld have tapes shipped back in the event f a disaster. Future (tw years): immediate failver t disaster recvery site using NetApp FAS see Flexibility sectin belw). TEI Framewrk Intrductin Frm the infrmatin gathered in the in-depth custmer interviews, Frrester has cnstructed a TEI framewrk fr thse rganizatins cnsidering implementatin f NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. The bjective f the framewrk is t identify the cst, benefit, flexibility, and risk factrs that affect the investment decisin. Sample Organizatin Based n the interviews with the seven existing custmers that NetApp prvided, Frrester cnstructed a TEI framewrk, a sample Organizatin, and an assciated ROI analysis that illustrates the areas affected financially. The sample Organizatin that Frrester synthesized frm these results is described abve and in Appendix A. Framewrk Assumptins Table 2 lists the discunt rate used in the present value (PV) and net present value (NPV) calculatins, the time hrizn used fr the financial mdeling, and ther csts. Table 2: General Assumptins General assumptins Value Discunt rate used t cmpute NPV 10% Length f analysis Annual fully laded cst f a strage administratr Three years $110,000 Surce: Frrester Research, Inc

12 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Csts Csts are an imprtant part f the TEI mdel. Csts, r IT impact, are calculated as a change in csts primarily fr IT as a result f the intrductin f the technlgy t the Organizatin. Therefre, the intrductin f NetApp s slutin affects IT budgets negatively with the purchase f the slutin; it als affects the Organizatin psitively, in terms f the ptential cst savings and efficiencies created (see the Benefits And Savings sectin belw). The impact f cst is accrued in tw different areas described belw: NetApp slutin csts (see pages 9 and 10 fr details and pricing) and the Organizatin s internal preparatin, planning, and migratin csts, which all tgether amunt t $437,818. Csts Fr The NetApp Slutin: $418,818 See cnfiguratin details and pricing starting n page 9. NetApp pricing is based n nrmal and average discunts ff NetApp s list price as f April Cst Fr Internal Preparatin And Planning Labr: $4,000 A readiness assessment that lks at csts, benefits, and risks alng with detailed planning is essential fr a successful strage cnslidatin initiative fr server virtualizatin. Based n interviews with current NetApp custmers, ur Organizatin required ne full-time equivalent (FTE) strage administratr t spend apprximately tw weeks f his time befre and during implementatin planning and testing methds (e.g., VMtin) f migrating data frm legacy strage t the virtual strage envirnment. Cst Fr Internal Labr Fr Data Migratin: $15,000 Internal labr assciated with the actual data migratin frm the previus strage system t the NetApp array. Frrester estimates the time and effrt t be equal t eight weeks f effrt, r $15,000. Benefits And Savings: Quantified In additin t the csts assciated with the NetApp slutin, there were psitive IT cst savings and benefits with NetApp s strage slutins fr server virtualizatin. Interviewed rganizatins, hwever, were challenged with segregating the benefits frm server virtualizatin with the benefits frm NetApp s strage slutins. With Frrester s assistance, a majrity f the rganizatins agreed that the NetApp quantified benefits fcused arund: reduced strage hardware and sftware csts thrugh data deduplicatin, FlexClne, and thin prvisining technlgies, imprvements in the backup and recvery prcesses, savings in media and sftware assciated with centralized backup, and strage administratin labr savings. Based n an analysis f the interviews with the participating custmers, we culd quantify the fllwing benefits as a result f implementing NetApp s strage slutins fr server virtualizatin. Cst Savings Reductin In Strage Hardware And Sftware Csts: $254,000 The interviewed rganizatins reprted using cmbinatins f the three NetApp technlgies, listed belw, that reduced their strage csts. Fr ur sample Organizatin, we assumed that during a six-mnth perid, ur strage administratrs became aware f and fully prficient at all three technlgies. The interviewed custmers using these technlgies reprted significant strage cst savings averaging 60% t 70% in their prductin VMware envirnments

13 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Data deduplicatin. NetApp prvides the benefit f sharing identical data amng multiple virtual machines that reside n disk strage thrugh its data deduplicatin technlgy, resulting in the cntents f virtual machines being reduced t a single cpy per data stre. Several custmers reprted using NetApp s deduplicatin acrss all strage prtcls (NFS, FC, and iscsi) supprted by VMWare and saving 50% in future strage csts. Our Organizatin was able t avid purchasing 44 TB f primary and back-up strage (disk shelves and drives) at an initial cst avidance f $218,000. The interviewed custmers reprted savings f anther 15% in future primary strage hardware using the cmbinatin f NetApp thin prvisining and FlexClne features, althugh it was difficult fr these custmers t segregate the savings between the tw. Our Organizatin was able t avid purchasing anther 7.2 TB f strage hardware (disk shelves and drives) ver three years at an average cst f $5,000 per terabyte r $36,000 ($12,000 savings annually). These features are described belw. Thin prvisining. The seven interviewed custmers each described a traditinal (previrtualizatin) envirnment where server administratrs wuld verprvisin strage t avid running ut and t avid the dwntime related t expanding the prvisined strage. NetApp s thin prvisining feature prvides strage n demand by treating strage as a shared resurce that is cnsumed nly when individual virtual machines require it. This sharing increases the ttal utilizatin rate f strage by eliminating the unused but prvisined areas f strage that are assciated with traditinal strage. Thin prvisining and data deduplicatin are mutually inclusive features designed t reduce the need fr mre strage by increasing the utilizatin rates f existing strage. Thin prvisining allws ne t nly cnsume n demand, with deduplicatin remving any redundancy subsequently added t the array. Bth deduplicatin and thin prvisining can be enabled r disabled n a data bject basis. FlexClne. With NetApp s FlexClne feature, any strage bject (file, LUN, r vlume) can be clned and made available fr access. With FlexClne, cmmn strage blcks between the clne and the riginal data set cnsume n additinal physical strage space. Clnes can increase in size as unique data is added t them. Shuld any f this clned data becme redundant, data deduplicatin technlgy will remve the redundancies, returning the previusly used strage back t the pl fr reuse later. Cst Savings Imprvements In Backup And Recvery Prcesses: $528,000 Several interviewed custmers reprted imprvements in their backup and recvery prcesses. Our sample Organizatin riginally cnsidered using its legacy tape-t-tape system t back up its VMware data. Hwever, it sn realized that as strage requirements cntinued t grw at 25% annually, it wuld nt be able t cmplete the tape-t-tape backup prcess within an apprpriate backup windw. The Organizatin chse t purchase a NetApp FAS2050 device as its replicatin and backup target and t use NetApp Snapsht technlgy t perfrm lcal backups. Snapsht will create pint-in-time cpies f file systems fr use as backup in significantly less time than the previus tape-t-tape system, reducing the future need fr media and sftware assciated with tape backup prcesses. There were tw specific savings categries identified with ur Organizatins imprvement in its backup and recvery prcesses: 1. Media And Sftware Assciated With Centralized Backup: $198,000 After the strage needs f the eliminated servers (file, print, active directry, small database, DNS, and Web) are cnslidated nt NetApp strage systems and backed-up

14 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin t the FAS2050 device using Snapsht, there will n lnger be a need fr the legacy tapet-tape systems including equipment, sftware, and media csts. Instead f having a backup slutin fr each f the riginal 300 (nw virtualized) servers, ur Organizatin nw has nly ne strage system (FAS3140A) frm which t perfrm data backups. In additin, the Organizatin did nt have t grw its legacy tape-t-tape system and ffsite facilities aviding incremental hardware, sftware, media and strage csts. The sample Organizatin was able t save $66,000 annually in media (tape), backup tape drives, sftware csts, and ffsite tape strage. The ttal three-year cst savings assciated with centralized backup is $198, Labr savings fr backup and recvery administratin: $330,000 Several interviewed rganizatins highlighted savings in the time it takes fr administratrs t restre data frm backups when using the NetApp slutin. Prir t deplying NetApp s strage slutins fr server cnslidatin, several rganizatins fund that the time t restre frm backup tapes was significant, bth in terms f inefficient use f IT resurces and end user dwntime. Based n input frm the interviewed custmers, we estimate that the IT administrative savings resulting frm imprving the labr efficiencies f backup and restre fr ur Organizatin will be ne FTE r $110,000 annually, based n a fully burdened strage administratr s salary f $110,000 annually. The ttal three-year cst savings assciated with simplificatin f backup and recvery tasks is $330,000. Table 3: Ttal Benefits And Cst Savings The Organizatin (Nn-Risk-Adjusted) Ttal benefits and cst savings Year 1 Year 2 Year 3 Ttal NPV Reductin in strage hardware and sftware csts using data deduplicatin $218,000 $0 $0 $218,000 $198,182 Reductin in strage hardware and sftware csts using thin prvisining and FlexClne $12,000 $12,000 $12,000 $36,000 $29,842 Media and sftware assciated with centralized backup $66,000 $66,000 $66,000 $198,000 $164,132 Labr savings fr backup and recvery strage administratin $110,000 $110,000 $110,000 $330,000 $273,554 Ttal benefits and cst savings $406,000 $188,000 $188,000 $782,000 $665,710 Surce: Frrester Research, Inc

15 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Benefits: Unquantified The interviewed custmers identified the fllwing additinal benefits f using NetApp s strage slutins fr server virtualizatin, but they were nt able t quantify the benefits at the present time: Mst f the interviewed custmers acknwledged savings in pwer and cling csts as a result f server virtualizatin and strage cnslidatin nt NetApp hardware. Hwever, savings dllars culd nt be specifically apprtined t the NetApp strage because f legacy server use f direct-attached strage. Each f the interviewed custmers reprted that they were able t deply and prvisin new applicatins up t fur weeks faster with VMware ESX servers and NetApp s strage slutins fr server virtualizatin. Risk Risk-adjusted and nn-risk-adjusted ROI are bth discussed in this study. The Organizatin s individual csts and benefits are quted in nn-risk-adjusted (best-case) terms and befre risk adjustments are made. The assessment f risk prvides a range f pssible utcmes based n the risks assciated with IT prjects in general and specific risks relative t NetApp s strage slutins fr server virtualizatin prjects. In ur research, we discvered that implementing the NetApp slutins was a relatively lw-risk endeavr if rganizatins tk the time t thrughly plan the server virtualizatin and strage transitin prcess. TEI uses risk factrs t widen the pssible utcmes f the csts and benefits (and resulting savings) assciated with a prject. As the future cannt be accurately predicted, there is risk inherent in any prject. TEI captures risk in the frm f risks-t-benefits and risks-t-csts. Measurement f risk is a way f incrprating the levels f cnfidence and uncertainty regarding the cst and benefit estimates f a given investment. Higher cnfidence that the cst and benefit estimates will be met implies that the level f risk is lwer, and the variatin between the riskadjusted and nn-risk-adjusted utcmes is minimized. Frrester cnsidered the fllwing general risks in this study: A lack f rganizatinal discipline in creating prcesses and prcedures t best take advantage f the benefits. A lack f apprpriate training fr the strage administratrs wh will be respnsible fr ptimizing the full benefit ptential f strage cnslidatin and taking advantage f the future simplificatin f backup and recvery tasks. Failures t reduce, transfer, r redeply IT supprt headcunt made redundant by deplying strage slutins fr server virtualizatin. The pssibility that the benefits will nt be measured and quantified in the future; as a result, n TEI benefit wuld be captured and acknwledged. Internal inertia, cnflicting pririties, and turnver, reducing an rganizatin s ability t achieve the benefits. Once cnslidated, having fewer pints f failure in strage envirnment will put significantly mre data at risk

16 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin The fllwing risk assciated with NetApp strage slutins fr server virtualizatin was cnsidered in this study: The inability f the Organizatin t find, train, and retain administratrs fluent in technlgies such as VMware and NetApp s Data ONTAP 7G perating system, t take full advantage f the benefits utlined in this study. Fr this study, Frrester applied a 10% risk adjustment i.e., a reductin f 10% t all benefits t reflect the risks listed abve. We have nt risk-adjusted csts, as these were primarily fixed qutes frm NetApp. Table 3 represents the ttal csts, benefits, and cst savings (risk-adjusted by 10%) f implementing NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. Table 4: Ttal Benefits And Cst Savings The Organizatin (Risk-Adjusted) Ttal benefits and cst savings Year 1 Year 2 Year 3 Ttal NPV Reductin in strage hardware and sftware csts using data deduplicatin $196,200 $0 $0 $196,200 $178,364 Reductin in strage hardware and sftware csts using thin prvisining and FlexClne $10,800 $10,800 $10,800 $32,400 $26,858 Media and sftware assciated with centralized backup $59,400 $59,400 $59,400 $178,200 $147,719 Labr savings fr backup and recvery strage administratin $99,000 $99,000 $99,000 $297,000 $246,198 Ttal benefits and cst savings $365,400 $169,200 $169,200 $703,800 $599,139 Surce: Frrester Research, Inc. If a risk-adjusted ROI still demnstrates a cmpelling business case, it raises cnfidence that the investment is likely t succeed as the risks that threaten the prject have been taken int cnsideratin and quantified. The risk-adjusted numbers shuld be taken as realistic expectatins, as they represent the expected value cnsidering risk. Assuming nrmal success at mitigating risk, the risk-adjusted numbers shuld mre clsely reflect the expected utcme f the investment

17 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Flexibility Flexibility, as defined by TEI, represents investing in additinal capacity r agility that can be turned int benefit fr sme future additinal investment. We believe rganizatins that invest in NetApp s strage slutins fr server virtualizatin lay the grundwrk t take advantage f migrating t a virtualized disaster recvery envirnment. Fr ur Organizatin, virtualizatin is the future fundatin t enhance and simplify disaster recvery and high availability. Over the next 18 mnths, ur Organizatin will be putting missin-critical applicatins n virtual machines and with this; disaster recvery becmes a mre imprtant issue. The limitatins f tape will cause difficulty in a disaster recvery situatin because f tape device data transfer speeds, and the physical distance between a primary data center and the Organizatin s disaster recvery site. Interviewed custmers expressed an interest r the intent t take advantage f the ptin t use NetApp SnapMirrr replicatin technlgy alng with VMware s Site Recvery Manager (SRM) t reduce the impact f a site disaster n the business. With SnapMirrr technlgy, a virtual infrastructure can be replicated ver the WAN t a remte data center. The future recvery f virtual machines affected by a site disaster can be cmpleted in minutes instead f hurs r days. In additin, SRM can leverage NetApp s FlexClne technlgy t make immediate zer-cst clnes f the DR data, allwing strage administratrs t test their disaster recvery plicies at any time withut interrupting the prductin envirnment r disaster recvery replicatin. Our Organizatin als plans t leverage NetApp s data deduplicatin technlgy in their disaster recvery plans. Mst f the seven rganizatins indicated that their riginal investment in NetApp s strage slutins fr server virtualizatin prvided them with the flexibility and agility t take advantage f this disaster recvery ptin and the ptential savings that a virtualized disaster recvery envirnment can bring t their rganizatins. At present, nly three f the custmers Frrester interviewed were currently taking advantage f VMware s Site Recvery Manager and SnapMirrr technlgies; therefre, this study will nt attempt t quantify its benefits. Hwever, we encurage the reader t learn mre abut these technlgies t determine the ptential quantifiable benefits within their rganizatins. The value f flexibility is clearly unique t each rganizatin, and the willingness t measure its value varies frm rganizatin t rganizatin. Fr the purpse f this analysis, we have assumed that the Organizatin sees the future value in being able t reduce future backup strage acquisitin csts r achieve lnger intervals between strage capacity upgrades using deduplicatin. The value f the ptin (when calculated) is based n the Black-Schles Optin Pricing frmula. (Fr additinal infrmatin regarding the flexibility calculatin, please see Appendix B.) TEI Framewrk: Summary Cnsidering the financial framewrk cnstructed abve, the results f the Csts, Benefits, Risk, and Flexibility sectins using the representative numbers can be used t determine a return n investment, net present value, and payback perid. Table 5 belw shws the summarized risk-adjusted values, applying the risk-adjustment methd indicated in the Risk sectin, which was t apply a 10% risk adjustment i.e., a reductin f 10% t all benefits t reflect the risks listed abve. N risk adjustments were made t the csts, as these represented fixed qutes frm NetApp r internal planning csts. It is imprtant t nte that the values used thrughut the TEI framewrk are based n in-depth interviews with seven rganizatins and the resulting sample Organizatin built by Frrester. Frrester makes n assumptins as t the ptential return that ther rganizatins will receive within their wn envirnment. Frrester strngly advises that readers use their wn estimates within

18 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin the framewrk prvided in this study t determine the expected financial impact f implementing NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. Key Findings Table 5 represents a summary f the risk-adjusted csts, benefits, and ROI that the Organizatin expects t realize ver a three-year perid by deplying NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm. Table 5: Sample Organizatin Csts, Benefits, And ROI, (Risk-Adjusted) Initial cst Year 1 Year 2 Year 3 Ttal NPV Ttal csts ($437,818) ($0) ($0) ($0) ($437,818) ($437,818) Ttal benefits $0 $365,400 $169,200 $169,200 $703,800 $599,139 Ttal ($437,818) $365,400 $169,200 $169,200 $265,982 $161,321 Return n investment 37% Payback perid 18 mnths Surce: Frrester Research, Inc. The three-year, risk-adjusted ttal NPV (net present value) f $161,321 represents the net cst savings and benefits attributed t using the NetApp strage slutin fr server virtualizatin when cmpared with the csts f the Organizatin s legacy server envirnment (see details abve in the Csts, Benefits, Flexibility, and Risks sectin). In additin, the risk-adjusted ROI was a very favrable 37%. Study Cnclusins As the data in this study indicates, NetApp s strage slutins fr server virtualizatin have the ptential t prvide a gd return n investment. In additin, the risk-adjusted ROI f 37%, alng with an 18 mnth payback perid (breakeven pint), raises cnfidence that the investment is likely t succeed, as the risks that may threaten the prject have already been taken int cnsideratin and quantified. In this study, risks have been mdeled cnservatively in the hpes f shwing wrst-case expectatins. A successful, well-planned implementatin will allw benefits and cst savings t accrue t the Organizatin in the fllwing areas: Reductin In strage hardware and sftware csts using data deduplicatin, thin prvisining, and FlexClne technlgies. Imprvements in backup and recvery prcesses. Savings in media and sftware assciated with centralized backup

19 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Labr savings fr strage administratin. In additin, mst interviewed rganizatins indicated that their riginal investment in NetApp s strage slutins fr server virtualizatin culd prvide them with the flexibility and agility t take advantage f the future savings that NetApp disaster recvery replicatin technlgy culd bring t their rganizatins. Organizatins that are likely t achieve a similar ROI have the fllwing characteristics: Midsize t large rganizatins with a pre- r pst-virtualizatin envirnment f multiple servers that are prving difficult t manage and maintain. Organizatins where the csts f pre-virtualizatin server infrastructure (servers, strage, netwrks) cntinue t increase, sacrificing new investment pprtunities. Organizatins that are large enugh t have distinctly delineated IT administratin rles, i.e., system, strage, netwrk. Interest in adptin f a disk-t-disk backup strategy envirnment either befre r after implementing NetApp s primary strage slutins. An IT staff with the requisite skills t manage virtual server and strage envirnments, including knwledge f VMware's ESX server and virtualizatin platfrm, as well as NetApp s Data ONTAP 7G perating system. Fr ur Organizatin, NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm carried a lw level f risk, a psitive 37% riskadjusted ROI, and an 18 mnth hrizn t recup the investment. We make n assumptins regarding the effects f NetApp s strage slutins fr server virtualizatin in cnjunctin with VMware s ESX server and virtualizatin platfrm at ther rganizatins. This study examines the ptential impact attributable t the seven rganizatins that participated in ur examinatin and applies the cmmn csts and benefits t a representative sample Organizatin. The underlying bjective f this dcument is t prvide guidance t technlgy decisin-makers seeking t identify areas where value can ptentially be created based n using NetApp s strage slutins fr server virtualizatin

20 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Appendix A: Sample Organizatin Descriptin The Organizatin is a $2 billin-plus multinatinal manufacturer and service prvider headquartered in Nrth America with peratins in Eurpe and Asia. Prir t implementing NetApp s strage slutins fr server virtualizatin, it had 400 Intel X86 physical servers being used t run missincritical applicatins such as ecmmerce, , and financials. The server ppulatin was a mix f Windws NT and Windws 2003 perating systems. The Organizatin recently made the strategic decisin t implement server virtualizatin fr 300 servers in the fllwing categries: file, print, active directry, small database, Dmain Name System (DNS), and Web servers. It has chsen t keep its large database and Micrsft Exchange infrastructure n physical servers. In additin it wanted t virtualize its disaster recvery infrastructure smetime in the next tw years. Prir t implementing NetApp s strage slutins fr server virtualizatin the Organizatin: Was using a Fibre Channel SAN. Backed up files t tape using a legacy tape-t-tape system. Recvered files frm tape. In the event f a disaster, wuld have tapes shipped in frm remte strage facility. As with the NetApp custmers interviewed by Frrester, the sample Organizatin s high-level business bjectives fr pursuing a NetApp strage fr server virtualizatin strategy were as fllws: 1. Cst reductin. It wanted t reduce the time and mney spent n managing its servers and assciated strage. 2. Supprt business needs. It needed t have a mre flexible and agile strage infrastructure t respnd t the business needs faster. 3. Disaster recvery. It had insufficient disaster recvery plans and minimal cverage in the event f a disaster. The sample Organizatin s tactical gals and bjectives fr pursuing a NetApp strage fr server virtualizatin strategy were as fllws: 1. Cnslidatin. Reduce the number f servers, reduce its strage ftprint, and cnslidate t ne strage vendr. 2. Green IT. Its data center was reaching its space, pwer, and cling capacity. 3. Higher availability. The Organizatin wanted t fcus n higher availability fr its critical business applicatins. 4. Disaster recvery. T replace its tape-based backup and recvery systems with replicatin in abut tw years. 5. Faster applicatin deplyment. It wanted a mre efficient way t deply applicatins and patches

21 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin 6. Reduce labr csts. The strage slutin needed t be easier t manage with fewer resurces needed. Frrester assumes that the sample Organizatin had already purchased VMWare ESX sftware prir t investing in NetApp s strage slutins fr server virtualizatin, therefre the cst fr VMware is nt included in this case study ROI analysis; hwever, we are listing the cnfiguratin belw. VMware ESX sftware with: vcenter. VMtin. High Availability. Dynamic Resurce Scheduler. Virtual Cnslidated Backup. Site Recvery Manager. The Organizatin cntacted NetApp, its primary strage vendr, t purchase the fllwing hardware, sftware, services, features, and functinalities: FAS3140A with 24 TB f raw capacity fr primary strage (assumes initial use f 12 TB after deduplicatin and 25% annual grwth thereafter, reaching 24 TB at end f Year 3). Cnfiguratin includes: iscsi prtcl. SMVI (Snap Manager fr Virtual Infrastructure). SnapMirrr sftware. SnapRestre sftware. Deduplicatin sftware. FlexClne sftware. Three-year SupprtEdge Premium 4-hur nsite supprt. FAS2050 with 20 TB f raw capacity as replicatin and backup target (assumes initial use f 10 TB after deduplicatin and 25% annual grwth thereafter, reaching 20 TB at end f Year 3). Cnfiguratin includes: iscsi prtcl. SnapMirrr sftware

22 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin SnapRestre sftware. Deduplicatin sftware. Three-year SupprtEdge Premium 4-hur nsite supprt. NetApp University training units (60) system administratin curses. Assumptins: Prir t implementing NetApp s strage fr virtualizatin slutins, the Organizatin had 400 X86 ne- and tw-scket servers and had plans t virtualize 300 f thse running file, print, active directry, small database, Dmain Name System (DNS), and Web servers. The Organizatin s strage needs are expected t grw by 25% annually fr the three years f this analysis, which Frrester sees as a reasnably cnservative data grwth rate fr such a firm. During the next 18 mnths, it will replace 300 physical servers with 10 ESX hst (virtual) servers (quad cre servers with 512 MB f memry such as HP DL380 r IBM 3650 and quad prt Ethernet HBAs) with a prjected rati f 30 virtual servers per physical server. The new future backup and disaster recvery plans will incrprate NetApp strage fr virtualizatin slutins. Backup Befre: primary strage backed up t tape with legacy tape-t-tape system. After: backup using NetApp FAS2050 as replicatin and backup target. Disaster recvery Befre: recvered frm tape. Wuld have tapes shipped back in the event f a disaster. Future (tw years): immediate failver t disaster recvery site using NetApp FAS2050. See Flexibility sectin abve fr mre details

23 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Appendix B: Ttal Ecnmic Impact Overview Ttal Ecnmic Impact is a methdlgy develped by Frrester Research that enhances an rganizatin s technlgy decisin-making prcesses and assists vendrs in cmmunicating the value prpsitin f their prducts and services t clients. The TEI methdlgy helps rganizatins demnstrate, justify, and realize the tangible value f IT initiatives t bth senir management and ther key business stakehlders. The TEI methdlgy cnsists f fur cmpnents t evaluate investment value: benefits, csts, risks, and flexibility. Fr the purpse f this analysis, the impact f flexibility was nt quantified. Benefits Benefits represent the value delivered t the user rganizatin IT and/r business units by the prpsed prduct r prject. Often prduct r prject justificatin exercises fcus just n IT cst and cst reductin, leaving little rm t analyze the effect f the technlgy n the entire rganizatin. The TEI methdlgy and the resulting financial mdel place equal weight n the measure f benefits and the measure f csts, allwing fr a full examinatin f the effect f the technlgy n the entire rganizatin. Calculatin f benefit estimates invlves a clear dialgue with the user rganizatin t understand the specific value that is created. In additin, Frrester als requires that there be a clear line f accuntability established between the measurement and justificatin f benefit estimates after the prject has been cmpleted. This ensures that benefit estimates tie back directly t the bttm line. Csts Csts represent the investment necessary t capture the value, r benefits, f the prpsed prject. IT r the business units may incur csts in the frms f fully burdened labr, subcntractrs, r materials. Csts cnsider all the investments and expenses necessary t deliver the prpsed value. In additin, the cst categry within TEI captures any incremental csts ver the existing envirnment fr nging csts assciated with the slutin. All csts must be tied t the benefits that are created. Risk Risk measures the uncertainty f benefit and cst estimates cntained within the investment. Uncertainty is measured in tw ways: the likelihd that the cst and benefit estimates will meet the riginal prjectins and the likelihd that the estimates will be measured and tracked ver time. TEI applies a prbability density functin knwn as triangular distributin t the values entered. At a minimum, three values are calculated t estimate the underlying range arund each cst and benefit. Flexibility Within the TEI methdlgy, direct benefits represent ne part f the investment value. While direct benefits can typically be the primary way t justify a prject, Frrester believes that rganizatins shuld be able t measure the strategic value f an investment. Flexibility represents the value that can be btained fr sme future additinal investment building n tp f the initial investment already made. Fr instance, an investment in an enterprisewide upgrade f an ffice prductivity suite can ptentially increase standardizatin (t increase efficiency) and reduce licensing csts. Hwever, an embedded cllabratin feature may translate t greater wrker prductivity if activated. The cllabratin can nly be used with additinal investment in training at sme future pint in time. Hwever, having the ability t capture that benefit has a present value that can be estimated. The flexibility cmpnent f TEI captures that value

24 The Ttal Ecnmic Impact Of NetApp s Strage Slutins Fr Server Virtualizatin Appendix C: Glssary Discunt rate: The interest rate used in cash flw analysis t take int accunt the time value f mney. Althugh the Federal Reserve Bank sets a discunt rate, rganizatins ften set a discunt rate based n their business and investment envirnment. Frrester assumes a yearly discunt rate f 12% fr this analysis. Organizatins typically use discunt rates between 8% and 15% based n their current envirnment. Readers are urged t cnsult their rganizatin t determine the mst apprpriate discunt rate t use in their wn envirnment. Net present value (NPV): The present r current value f (discunted) future net cash flws given an interest rate (the discunt rate). A psitive prject NPV nrmally indicates that the investment shuld be made, unless ther prjects have higher NPVs. Present value (PV): The present r current value f (discunted) cst and benefit estimates given at an interest rate (the discunt rate). The PV f csts and benefits feed int the ttal net present value f cash flws. Payback perid: The breakeven pint fr an investment, r the pint in time at which net benefits (benefits minus csts) equal initial investment r cst. Return n investment (ROI): A measure f a prject s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits minus csts) by csts. A Nte On Cash Flw Tables The fllwing is a nte n the cash flw tables used in this study (see the Example Table belw). The initial investment clumn cntains csts incurred at time 0 r at the beginning f Year 1. Thse csts are nt discunted. All ther cash flws in Years 1 thrugh 3 are discunted using the discunt rate shwn in Table 2 at the end f the year. Present value (PV) calculatins are calculated fr each ttal cst and benefit estimate. Net present value (NPV) calculatins are nt calculated until the summary tables and are the sum f the initial investment and the discunted cash inflws and utflws in each year. Example Table Categry Initial cst Year 1 Year 2 Year 3 Ttal Surce: Frrester Research, Inc