Branch IT Consolidation
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- Jonathan Bridges
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1 Branch IT Consolidation Ricky Fun Solution Sales Manager Data Center, Asia 1 Agenda Importance of Branch Offices in any Economy Branch IT Challenges & Cost Implications Economics of Branch IT Consolidation Cisco Solution Overview Case Studies 2 1
2 Importance of Branch Offices in any Economy 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential BDM 11/29/08 3 Business Priorities Customer Intimacy Number of Branches Growing 11% per year Costs Reduction Average number branch devices decreased from 7 to 5 Collaboration, Web 2.0 Branch Bandwidth Growth 50% per year Competition 62% of Enterprises adding new branches Virtual Workers 91% of employees work away from HQ Visual Networking Video & Collaboration Tools Top Bandwidth Drivers 4 2
3 Importance of Branch Office As market competition heats up and organizations fight for every customer $, the battle focuses on Branch Office Branch Office is the only contact customers has with Organization Imperative to ensure impeccable customer experience & satisfaction to achieve loyalty Organizations must continue to invest in IT resources at the Branch to ensure it responds to business needs Challenge for Mgmt to balance Customer Service with Branch IT costs 5 World Wide Perspective Branch IT Challenges 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential BDM 11/29/08 6 3
4 Typical DC & Branch Setup The branch office has becomes mini Data Center support File & Print Services, localized application & data Small branches may require file & print servers while medium & large branches require application & storage services IT skills at the branches required to support Application Windows Server, Storage etc Large Branch Office Medium Branch Office Data Center WAN Small Branch Office 7 Branch IT Requirements & Challenges Branch Operation Cost Application Performance File & Print Staff Applications Backup Storage Networking Data Protection & Compliance The need to ensure application performance has created branch equipment sprawl Cost Microsoft, Cisco and Nemertes Research show that branch IT consumes 33% of all IT budget Basel II HIPAA SOX Compliance 8 PCI Internal Compliance 4
5 Rising Costs of Branch Offices Companies spend 6 billion dollars per year on branch servers, storage, backup and management -Source: IDC, Gartner, Cisco Analysis Branches consume 70-90% of business resources -Source: NetworkWorld 80% of enterprise workers work outside headquarters -Source: Nemertes Research Most enterprises have many servers running at 15% or less utilization, but still requiring 100% administration -Source: Gartner The average branch has 4-6 servers -Source: Nemertes Research 9 IT Branch Cost Initial acquisition & setup costs File & Windows DNS & Print servers Application Servers Direct attach storage (DAS) and/or NAS Security systems Backup systems backup sw, tape auto-loader, tapes Server room, racks & cabling Annual maintenance cost Hardware (5-10% of acquisition costs) Software (18-20% of acquisition costs) 3 rd party system App/file/print Servers Security Backup Local Storage Router 10 5
6 IT Branch Cost IT staff Loaded costs includes salary cost, staff benefits, computer, cubicle Typically loaded costs is 2-3 x salary costs Annual cost per branch can be in range of US$30-50K (incl initial setup and operating) Assume 100 branches, annual costs to support branches is US$3-5M Consider growth of branches over 3-5 years to grow customer base & revenue App/file/print Servers Security Backup Local Storage Router 11 Data Backup & Recovery and Compliance Rising Incidents of Branch Data Leakage A top financial firm lost a file server with 930,000 customers information -Source: CNN, March 2006 A bank lost 3.9 million customers credit information on unencrypted tapes -Source: Wall Street Journal, June 2005 February 2005, Bank lost unencrypted computer backup tapes containing information from 1.2 million federally issued credit cards Regulations Are Responding HIPAA - Health information of patients Basel II International Banking Regulations SOX - Business Financial and Accounting Information Internal Compliance Companies Process & Procedures PCI - Credit Card Information Compliance Complexity of managing backup & recovery process Backup & recovery operation is a major component of IT operations. expect their data to be backed up and in the event of data loss expect 100% recovery. 12 6
7 Economics of Branch IT Consolidation 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential BDM 11/29/08 13 Branch IT Consolidation ROI Scenario Bank planning to deploy 100 branches, each branch has 1 x File Server 1 x Application Server 1 x Backup Server & Tape Drive Servers Data growth rate is 50% Cost considerations Branch Office Backup Storage Router HW & SW purchase costs Security Voice Switch One time Installation costs Annual maintenance (HW = 10%, SW = 20%) Operation costs (Hourly rate is $25) Bandwidth costs Cisco solution costs 14 7
8 Branch IT Consolidation ROI Scenario Metric Assumption Average Data Growth rate 50% % savings on backup tapes when centralized Ratio of Centralized Servers cost to Decentralized 20% 20% Ratio of Centralized Server/Storage Admin to Decentralized 25% Hourly rate for Server/Storage Admin ($) 25 NPV discounted at WACC (Weighted Avg Cost Capital) 12% 15 ROI Results (Savings per Branch) Total CAPEX (Capital Expense) Savings per Branch HW / SW Costs Non-Consolidated Branch IT Consolidated Branch IT - Additional Cost in CAPEX Savings DC Year 1 $17,700 $3,960 $13,740 Year 2 $1,050 $840 $210 Year 3 $1,575 $1,260 $315 Total $20,325 $6,060 $14,265 The CAPEX savings derived from not buying IT equipment for 100 branches is $1.43M Costs incurred at DC to upgrade IT equipment such as File Servers, Application Servers, Networks & Storage 16 8
9 ROI Results (Savings per Branch) Total OPEX (Operating Expense) Savings per Branch Operation Costs Non-Consolidated Branch IT Consolidated Branch Operation IT - Additional Cost in Savings DC Year 1 $14,850 $3,713 $11,138 Year 2 $14,550 $3,638 $10,913 Year 3 $14,550 $3,638 $10,913 Total $43,950 $10,988 $32,963 The OPEX savings derived from reducing the IT equipment for 100 branches is $3.3M The OPEX savings exceeds the CAPEx savings by 2.3 X OPEX consists of HW/SW annual maintenance, branch support opertions & IT staff costs 17 ROI Results (Savings per Branch) Total Bandwidth Savings per Branch Operation Costs Non-Consolidated Branch IT Consolidated Branch IT - Additional Cost in Operation Savings DC Year 1 $340 $0 $340 Year 2 $340 $0 $340 Year 3 $340 $0 $340 Total $1,020 $0 $1,020 The bandwidth cost savings derived from not requiring to upgrade the WAN to support 100 branches is $102K With WAN optimization capability, bandwidth requirement reduces or maintains 18 9
10 ROI Results (100 Branches, 3 Years) Total Project Costs (procuring & implementing Cisco ) to implement Branch IT consolidation project = $1.13M Total Savings (NPV@12%) = $2.9M 3 Year ROI = 258% Breakeven = 6 months 19 Cisco Solution 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential BDM 11/29/
11 WAN Limitations is Root Cause Applications and video work well on LAN: High bandwidth Low latency Reliability Round Trip Time ~ 0mS Client LAN Switch Server But not on WAN: Low bandwidth Application chattiness High latency Frequent packet loss Client Round Trip Time ~ hundreds of milliseconds LAN Switch Routed Network LAN Switch Server WAN limitations cause poor application and video performance, and keep servers and storage in branch offices 21 The Solution: Make WAN Perform Like LAN Branch Mobile Cisco WAN in LAN Speed Cisco Data Center TCP Optimization Data Redundancy Elimination App-Specific Acceleration Video delivery optimization Accelerates TCP performance over the WAN Redundant data does not need to transit the WAN reduces overall bandwidth usage Optimizes application protocols, such as MAPI, CIFS, NFS, HTTP, Print eliminates protocol inefficiencies Streamlined video delivery ensures one copy of live streaming transits the WAN 22 11
12 Application Acceleration is Pre-requisite for Branch Consolidation Category Applications 2X 5X 10X 25X 50X 100X+ File Sharing Web and Collaboration Software Distribution Enterprise Applications Backup Applications Data Replication CIFS NFS Microsoft Exchange Lotus Notes Internet Mail HTTP WebDAV FTP Microsoft Sharepoint Microsoft SMS Altiris HP Radia Microsoft SQL Oracle, SAP Lotus Notes Microsoft NTBackup Legato Networker Veritas Netbackup CommVault Galaxy EMC SRDF/A EMC IP Replicator NetApp SnapMirror Data Domain Double-Take Veritas Vol Replicator 2-20X Avg >100X Peak 2-5X Avg 20X Peak 2-10X Avg 100X Peak 2-20X Avg >100X Peak 2-5X Avg 20X Peak 2-10X Avg 50X Peak 2-10X Avg 50X Peak 23 Branch Consolidation with Cisco 1 st Step: Server and Storage Consolidation: Accelerating centralized applications & file/print services reduces branch server and storage sprawl 2 nd Step: Branch Equipment Consolidation: Integrating WAN optimization with branch router (ISR) reduces equipment complexity and total cost of ownership Branch offices without Backup Storage Servers Branch offices with Cisco Security Voice Switch Router Integrated Services Router (ISR) 24 12
13 Hybrid Approach for Large Branches - Localised What You Must Large Branch Backup Local Storage Centralize what you can with Cisco Locally host Window services on same device Data Center Servers Cisco WAN Cisco Router Business and Communication Apps Integrated and Windows Server: Providing Best Mix of Distributed and Centralized IT Services Storage Backup 25 Cisco Solution Elements Branch Mobile Branch Router WAN In LAN Speed Router DC Data Center Applications Capability: WAN optimization for branch users Integrated video delivery Windows Server on (WoW) Data replication acceleration Mobile Software: WAN optimization for mobile users Hardware: Integrated Services Router Modules (ISR) Wide Area Application Engine (WAE) Wide Area Virtual Engine (WAVE) 26 13
14 Total Cost of Ownership Minimized Overlay Appliances 3G Modem Router Switch Wireless LAN WAN/App Optimization Security Appliance Voice Appliance vs. Integrated Services Router (ISR) Cisco ISR 2800/3800 With Voice, Wireless, Video, WAN Optimization, Switch Network Modules for the ISR Running full version Dedicated hardware Integrated QoS & WAN Optimization Bandwidth prioritization Unified QoS Integrated Performance Routing Best routes for specific applications Higher security Lower latency 27 Cisco : Network & Security Service Preservation A Full Preservation of IP and TCP Header Information B QoS NBAR NetFlow ACL NAT Security Filter VPN QoS NetFlow Visibility Cisco Client Workstation LAN Switch WAN Router Firewall IP Network Firewall WAN Router LAN Switch NAS Edge WAE Core WAE Robust Application Adapters to Offload WAN and Data Center Local Services Transport and Flow Optimizations Data Redundancy Elimination Accelerates ALL TCP Traffic Data Center Scalability 28 14
15 Cisco : Transparency Ensures Security Policy Cisco Tunnel Solutions Stateful Protection of Each Accelerated Stream No Stateful Protection of Each Accelerated Stream Accelerated Web Accelerated Files Accelerated Web Accelerated Files Accelerated Accelerated Accelerated CRM Accelerated CRM Cisco is the most transparent and easiest solution to implement and integrate as it does not require us to overhaul our security infrastructure. Mark Drake, Network Engineer, Health Management Associates, Inc 29 Cisco : Encrypting Data At Rest The Costs of Data Leakage: The average cost of a data breach per record compromised grew 30%, averaging $4.8 million/breach. 12 Cisco Strong Encryption: 256-bit Advanced Encryption Standard evaluated by Common Criteria No keys left on disks Centralized key management with backup, restoration and high availability Cisco Central Manager WAN Remote Office Disk Fetch Disk Encryption Key and Store in RAM Disk Disk Data Center 1. Source: Ponemon Institute, 2006 Annual Study: Cost of a Data Breach, October 2006, 768 IT Managers Survey 2. Source: Forrester Research: The Cost of a Security Breach 30 15
16 Cisco : PCI Compliance Before A $14.7 billion financial services company Retail banking and loan applications in branch offices Up to 1 hour printing application documents using Citrix After After Application Acceleration WAN Bandwidth Optimization Secure WAN Acceleration 80% faster Citrix remote printing 70% bandwidth usage cut Strong disk encryption Stateful protection PCI 1.1 compliance "The latest version of Cisco s product line includes security features of special interest to us, including disk encryption and support for stateful firewall protection." Barth Bailey, VP network infrastructure and security, Fulton Financial Providing both acceleration and protection are critical WAN optimization requirements for our loan and retail application data. 31 Branch Consolidation Case Studies 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential BDM 11/29/
17 Minimize Branch IT Costs Branch IT Consolidation Case Study Challenges: Large oil & gas drilling/services company 20 branches with file/print/mail servers. High cost and servers end of 3-year life Facing a $30k/site CapEx for server refresh Solution: WAN optimization embedded in router Centralized file/print/mail Results: Decommissioned branch servers & storage Maintained user LAN-like experience CapEx savings/site: $28,000 OpEx savings/site: $7,200 per year $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 With, the overall costs per site were reduced from: $35k to $7k one time; $700/month to $100/month $0 - Kirk Reid: IT Director, Precision Drilling Standalone Server CapEx OpEx Standalone Server 33 Minimize Branch IT Costs WAN Bandwidth Savings Case Study Michael Baker INC. uses Bentley Projectwise software to collaborate Challenges: Significant bandwidth expenses Sending multi-terabytes / day Slow ProjectWise keeps servers in remote offices Strategy: Centralize server and storage Optimize the WAN ProjectWise WAFS SQL Printing Directory-Services Content-Management -and-Messaging Systems-Management Results and ROI: $4K-$7K BW savings/month $1 million productivity gains 269% ROI in 18 months File-System Version-Management 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Bandwidth Reduction % 34 17
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