The Value of Scaling Up to HP-UX and Business-Critical Servers

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1 Sponsored by: HP and Intel Authors: Al Gillen Randy Perry Matthew Marden June 2014 Business Value Highlights Upgrading existing HP Integrity servers and the HP-UX operating system delivers a 325% ROI and pays for itself in nine months through the following benefits: Lowering server footprint costs: 28% Lowering power costs: 23% Reducing impactful unplanned downtime per user from more than one hour to four minutes per year Increasing non-it employees productivity through better application performance and instilling confidence in IT systems and services The Value of Scaling Up to HP-UX and Business-Critical Servers EXECUTIVE SUMMARY An IDC analysis shows that HP customers upgrading their HP Integrity servers and the HP-UX operating system (OS) are benefiting from cost savings from creating more consolidated datacenter environments and increased employee productivity as a result of better application performance. On average, these customers are recording a five-year return on investment (ROI) of 325% by upgrading HP Integrity servers and HP-UX. IDC s analysis demonstrates that HP s customers are benefiting by:» Improving the stability of critical business applications and programs» Reducing outages and downtime for customer-facing workloads» Consolidating their server footprints and cutting costs associated with servers and power» Driving higher non-it employee productivity by enabling time savings and more productive use of business applications and programs Situation Overview Today, a company s datacenter and day-to-day business operations are tightly integrated. Companies are increasingly looking to their IT as a means to gain a competitive advantage in the market rather than simply as a means of supporting business functions. IT applications and services have become a critical element in how companies interact with their customers, deliver new products and services, and improve the productivity of their own workforce. Document # IDC. Page 1

2 Yet even though IT organizations are charged with delivering an expanding base of workloads and seemingly higher degrees of service-level agreements (SLAs), they are also challenged with constrained budgets and overburdened staff. In response, IT organizations must seek efficiencies in their operations and shift to a more agile infrastructure that is flexible enough to adapt to future changes in the business. Over the past 15 years, IDC has seen the industry move more toward distributed environments as lower-cost x86 systems increased their share of workloads. While this shift enabled customers to control capital expenditure with lower-cost servers and made it possible to inexpensively add incremental capacity, the increased operational costs of managing the proliferating x86 installed base are taxing IT budgets, making it difficult to fund and staff new initiatives. The reality is that lightly provisioned x86 servers have created sprawl sprawl that has been muted by x86 virtualization and the industry still has significantly more capacity than workloads. Every server and every operating system instance needs to be provisioned, life cycled, and operationally managed, backed up, and covered with a disaster recovery plan. This white paper examines how six organizations spanning the pharmaceutical, healthcare, banking, and manufacturing industries were able to upgrade and expand their operations using the HP Integrity server product line and the HP-UX operating system and, in the process, reduced their datacenter operating costs, increased the reliability and availability of critical applications and programs, and improved business productivity. The integrated nature of the HP Integrity platform delivers efficiencies in systems management, monitoring, and provisioning. The integrated nature of the HP Integrity platform delivers efficiencies in systems management, monitoring, and provisioning. HP Integrity servers utilize HP Insight Management software and HP s Integrated Lifecycle Automation to automate key management processes, including a system s physical deployment, configuration, and problem management. Companies upgrading their HP Integrity servers were able to optimize their IT staff resources and free up IT staff time for more innovative and valuable initiatives. Up-to-date HP Integrity servers enabled these companies to consolidate physical servers and components while still maintaining the same workload capacity and performance. The study also demonstrated that renewing the HP Integrity environment improved IT availability. Relative to traditional server environments, customers with HP-UX on HP Integrity servers reduced downtime having a negative impact on end users from more than one hour per end user per year to four minutes per end user per year. IDC believes that HP Integrity customers can leverage upgrades to the latest generations of HP Integrity servers (i4) with HP-UX to experience improved return on infrastructure investment, creating a flexible IT environment that provides for both easier IT management Document # IDC. Page 2

3 and easier adaptation to the changing needs of the business. IDC estimates that over a fiveyear period, the companies in the study saw their refresh of HP Integrity servers generate $230,096 in benefits per 100 users within the HP Integrity and HP-UX environment and recorded a return on investment of 325% for the upgrade. As a result, cumulative savings from the implementation of this refreshed technology paid back the full investment within a period of nine months after the completion of the installation and consolidation efforts. What s Changing the Game? IT Complexity Results in Business Inefficiency Today s enterprise datacenters are complex environments that typically handle a wide variety of applications running on distinct types of platforms. In this heterogeneous datacenter environment, there is an increasing requirement to drive efficiencies by streamlining costs and changing how staff spend their time specifically working to shift the bulk of labor from maintenance of existing infrastructure to work on new initiatives. Successful implementation of this reallocation of IT labor investments can lead to tangible and positive business returns. In the face of these requirements, IT managers are challenged by constrained budgets, even though they still must continue to deliver on increasingly stringent SLAs, build new applications, and maintain high levels of application availability. The issues of IT efficiency and agility are even more critical as more business units rely on tight integration with IT. The datacenter has become a cornerstone of the business; workforce operations and client relationships are increasingly driven by IT applications and services. Many enterprise datacenters have consolidated and virtualized server platforms in an effort to eliminate redundancy, reduce cost, and increase IT flexibility. Many enterprise datacenters have consolidated and virtualized server platforms in an effort to eliminate redundancy, reduce cost, and increase IT flexibility. IDC sees this trend continuing, with a shift toward using more network and storage virtualization, along with management tools to create agile, software-defined compute environments via virtual resource pools. With a consolidated, converged infrastructure, IT organizations can deliver the flexibility and scalability to turn IT into a more service-oriented corporate function. Challenges with Distributed Industry-Standard Server Environments Enterprise datacenters continue to increase in scale and complexity every year. IDC research shows that companies have predominantly transitioned their IT environments to distributed industry-standard architectures. These scale-out deployments were driven by the ability to Document # IDC. Page 3

4 expand IT services to a greater number of business users. The lower price point for industrystandard systems over the traditional scale-up business systems enabled IT departments to control their capital expenditures. However, this migration to a distributed environment created a more complex infrastructure that resulted in higher operational costs, higher unplanned downtime, and less efficient use of compute resources. The management and administration cost associated with server environments has grown to eclipse costs in other categories. Many customers report that the personnel cost to maintain their server installed base consumes the majority of their IT budgets. In addition, server power and cooling remains a top-of-mind issue. IDC s data indicates that the annual energy expense associated with servers can reach up to 60% of the cost of the capital expense. Customers have been relaying to IDC that their IT staff are overburdened with operating their IT environments because of the complexity in the datacenter. As shown in Figure 1, IDC s research indicates that generally, as servers and virtual machines expand in the datacenter, server administration costs increase and take much larger percentages of the IT datacenter budget. FIGURE 1 Workload Growth and Consequent Customer Spending on Servers, Server Administration, and Power and Cooling, Customer Spending ($B) $400 $350 Workloads (M of OS Instances) 2.0 $ $250 $ $150 $100 $50 $0 67% 44% 34% 24% 19% Power and Cooling Server Administration Server Spending Workloads Notes: We expect server capex spending as a percentage of total spending on server infrastructure will drop from over 65% in 1997 to just under 20% by Workloads, as measured by the number of OS instances, will have increased 24 times between 1997 and Source: IDC, 2014 Document # IDC. Page 4

5 Future Requirements for a More Efficient IT Environment Complex IT environments and overburdened IT staff are driving higher costs in the datacenter and negatively impacting the delivery of IT services. IT managers need to implement solutions that can considerably reduce costs by:» Increasing IT hardware utilization. The typical practice of overprovisioning server capacity results in wasted rack space as well as increased power, cooling, bandwidth, and operational costs. Consolidating server footprints via standard, consolidated platforms can produce significant capital and operating cost reductions. While x86 virtualization has helped greatly, customers tell IDC that they still run their servers at suboptimal utilization rates. Servers that can successfully support higher rates of virtualization without singlepoint-of-failure concerns are attractive.» Simplifying management and increasing flexibility. As currently deployed, most server configurations are static, hardwired, and difficult to change, even if the server configuration can be live migrated from physical server to physical server. Existing management processes and tools align with individual technology silos, and the promise of a software-defined datacenter has yet to really arrive in a practical, consumable sense. The complex workflows and approval cycles between groups impact IT project delivery time and solution cost.» Improving server energy efficiency. IDC finds that the primary drivers behind efforts to improve energy efficiency are to ensure the availability of IT to the business by averting risks posed by power and cooling challenges and, in parallel, to reduce operational costs. To avoid costly new datacenter buildouts, IT must deploy more systems within the constraints of the current power and cooling resources. Each passing year, it appears that the competitive environment requires businesses to both deliver applications faster and improve productivity. Each passing year, it appears that the competitive environment requires businesses to both deliver applications faster and improve productivity. These requirements become challenging because of the complexity of server environments and the fact that they are inflexible, difficult to change, and costly to manage. The costs associated with provisioning, monitoring, and managing servers have escalated, challenging IT organizations to seek systems and tools to help them lower the overall cost of IT operations. For those with existing HP Integrity environments, the most advanced HP Integrity servers directly address these problems, as demonstrated in the research results presented in the sections that follow. Document # IDC. Page 5

6 Latest-Generation HP Integrity Servers Drive Efficiency and Simplicity in the IT Environment Study Demographics In March and April 2014, IDC interviewed six midsize and enterprise-level companies from the pharmaceutical, healthcare, banking, and manufacturing industries that use HP Integrity servers with the HP-UX operating system. IDC designed the interviews to collect quantifiable information as well as qualitative responses regarding the organizations HP Integrity environments and to understand the benefits these organizations are seeing when upgrading their HP Integrity servers. With this information, IDC analyzed the impact on these organizations of HP Integrity servers using the HP-UX operating system. Table 1 provides an aggregated profile of the organizations surveyed for this white paper. TABLE 1 Sample Demographics Average number of employees 2,800 Average number of HP Integrity and HP-UX users 1,750 Average number of HP Integrity servers deployed 5 Average number of CPUs on HP Integrity servers 70 Average terabytes of storage provisioned for 43 HP Integrity servers Average number of workloads on HP Integrity servers 18 Industries represented Regions represented Source: IDC, 2014 Pharmaceutical, healthcare, banking, and manufacturing United States, Middle East, Australia, and worldwide Document # IDC. Page 6

7 Financial Benefits Analysis The organizations interviewed in this study expanded and/or upgraded their HP Integrity servers to support specific workloads that are often business critical in nature. The most significant benefits these organizations experienced from these upgrades included:» Ultrahigh stability for mission-critical or very important business systems and applications» Higher availability (reduced downtime) impacting these systems and applications» Datacenter cost efficiencies realized by reducing or minimizing server sprawl» Strong relationship with and support from HP» Improved end-user productivity enabled by the power of HP Integrity servers by improving application performance or reducing time required for certain processes and programs IDC s interviews with the organizations sought to measure the financial impacts resulting from their upgrades of HP Integrity servers running on the HP-UX operating system. IDC aggregated and normalized the results of these interviews and projects that these organizations will realize a discounted average benefit of $13.8 million, or $230,096 per 100 users of workloads and programs run on these HP Integrity servers using HP-UX, over five years. The organizations are achieving these financial benefits in the following four areas (see Figure 2):» Business productivity gains: HP customers end users are experiencing improved application performance and reduced downtime, which saves time and improves productivity. In addition, reduced downtime translates into higher revenue for a number of these customers. On average, these organizations are realizing five-year annual business productivity benefits of $28,652 per 100 users, or $1.72 million per organization.» IT infrastructure cost reduction: Customers upgrading their HP Integrity servers are reducing costs by limiting datacenter sprawl, cutting power costs, and minimizing database and application licensing costs with their HP Integrity server environments. On average, these organizations are cutting IT infrastructure costs by $24,321 per 100 users per year, or $1.46 million per organization, over five years. Document # IDC. Page 7

8 » IT staff productivity gains: Customers upgrading their HP Integrity servers are achieving IT staff efficiencies with their HP Integrity servers running on HP-UX both in terms of administering these servers because of their reduced footprint and numbers and in terms of productivity in application development and other areas because of greater application performance. This results in a five-year average annual benefit of $7,915 per 100 users, or $473,771 per organization.» Risk mitigation benefits: HP customers are leveraging their updated HP Integrity and HP-UX server environments to further reduce the occurrence, duration, and impact of downtime on their operations. As a result, they are benefiting from increased employee productivity, with a five-year average annual benefit worth $3,386 per 100 users, or $202,697 per organization. FIGURE 2 Average Annual Benefits Resulting from HP Integrity Server Upgrades $28,652 $24,321 Total: $64,274 per 100 users $7,915 $3,386 Business productivity gains IT infrastructure cost reduction IT staff productivity gains Risk mitigation benefits Source: IDC, 2014 Driving the Business with the IT Environment HP customers report that they are leveraging the stability and strong performance of their updated HP Integrity and HP-UX server environments to realize user productivity gains and capture additional revenue. On average, the organizations surveyed are realizing $28,652 per 100 users in annual business productivity benefits over five years. Document # IDC. Page 8

9 An HP Integrity customer that recently upgraded from Superdome servers to new Superdome 2 servers noted that it can now complete a batch process impacting hundreds of business users significantly faster. As the customer explained, Everyone has experienced a performance increase as a result. One of the finance guys asked, Did you guys do something? They noticed. Like businesses everywhere, HP s customers are increasingly dependent on critical applications and workloads to drive their business. The organizations surveyed for this white paper reported that they are most frequently running workloads that support their business decision making and core business applications on their HP Integrity server environments. Several customers noted that their end users have noticed the impact of running these critical workloads on the updated HP Integrity environment. Much reduced downtime on HP Integrity and HP-UX servers means that non-it employees are spending less time dealing with IT problems and have greater confidence in IT supporting their efforts to drive business. According to one customer, We use HP Integrity servers for our most critical system, and they keep my business running. In addition, the significantly enhanced computing power of the latest HP Integrity server environment has spurred end-user productivity gains by improving the performance of the applications used to drive business. As a result, employees are able to spend more of their time driving their organization s business and benefiting their organization s bottom line. Reducing the Cost of Infrastructure Across the IT Environment HP customers are leveraging their use of HP Integrity servers and the HP-UX operating system to reduce their datacenter-related costs. With the latest, more capable HP Integrity servers, they can maintain more consolidated server environments. Thus, even if they could procure alternative servers at a lower cost on a per-server basis, their overall server-related datacenter costs, including server footprint, power, and licensing costs, are still lower by going with an updated HP Integrity and HP-UX environment. In total, IDC calculates that these organizations are realizing average annual cost savings of $24,321 per 100 users over five years (see Figure 3). Document # IDC. Page 9

10 An HP Integrity customer that recently upgraded to HP Integrity i4 servers has seen costs related to the size of its server environment fall dramatically since the upgrade. As the customer explained, We went from a 32 CPU unit in the RX chassis to 2 CPUs with 4 cores each with Integrity. One waisthigh machine to one blade. Since upgrading, we ve reduced power consumption by 90% on these servers. FIGURE 3 Average Annual IT Infrastructure Cost Reduction Resulting from HP Integrity Server Upgrades ($ per 100 users) $25,000 $20,000 $15,000 $10,000 $5,000 $0 Source: IDC, 2014 Total: $24,321 $233 $4,000 $8,359 $11,729 Other costs reduced Power costs reduced Licensing costs reduced Server footprint costs reduced One HP customer explained that it saw significant value in its updated HP Integrity and HP-UX environment: We ve reduced our power consumption significantly and [we] get four times more compute capacity. On average, surveyed companies have 23.1% lower power costs and 27.6% lower costs associated with their server footprints by maintaining a more consolidated high-end server environment with HP Integrity and the HP-UX operating system (see Figure 4). FIGURE 4 IT Savings with Upgraded HP Integrity Servers 46.3% 23.1% 27.6% 31.0% Power costs Server footprint costs Licensing costs Server administration staff costs Source: IDC, 2014 Document # IDC. Page 10

11 A long-time HP Integrity customer explained why it prefers the HP Integrity and HP-UX environment to a more distributed environment: If you go with a more distributed platform, the mapping would be one to four instead of one to one. So to replace each HP Integrity box, I would need to put multiple systems in, which increases the magnitude of support, and our management costs would be four times as much. Making IT Staff More Productive Organizations upgrading and expanding their HP Integrity server environments reported achieving several types of IT staff efficiencies. IT staff time savings and productivity increases attributable to upgrading organizations HP Integrity and HP-UX environments totaled an average of $7,915 per 100 users per year over five years (see Figure 5). As a baseline matter, HP Integrity server environments require less IT staff time to manage on an ongoing basis. For IT departments, managing fewer, more reliable servers requires less time and fewer staff resources. On average, the organizations surveyed also reported that their HP Integrity server environments were 46% more efficient to manage than an alternative server environment. Beyond time savings on ongoing server management, organizations also reported that the upgrades are achieving other IT staff productivity gains, including:» Improved application performance achieved with reliable and robust HP Integrity servers running on HP-UX makes application development teams more productive.» Greater server stability with HP Integrity means that surveyed organizations saved time in areas such as incident and problem management.» The ease of deploying newer HP Integrity servers means that surveyed organizations were able to achieve time savings during initial deployments. FIGURE 5 Average Annual IT Staff Productivity and Cost-Savings Benefits Resulting from HP Integrity Server Upgrades ($ per 100 users) $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Source: IDC, 2014 Total: $7,915 $49 $527 $2,096 $5,243 Initial deployment Ongoing server administration Other IT staff FTE savings Application development time savings Document # IDC. Page 11

12 An HP Integrity customer explained why it is vital for it to continue to reduce downtime: The real issues when there is downtime begin at the end of an hour of downtime. For an hour, most of our lines will still run because we ve downloaded enough information to keep going. At the end of an hour, though, we have no more information to continue to manufacture. Minimizing Unplanned Downtime, Benefiting from Planned Downtime Customers using HP Integrity servers and the HP-UX operating system praised their impact on the stability and availability of the workloads run on these servers. Surveyed organizations already had low downtime environments, but they have even less downtime on their updated HP Integrity and HP-UX servers (see Table 2). For HP Integrity customers, stability and reliability are at the core of the value proposition of HP Integrity servers and the HP-UX OS. As one customer explained, Absolutely, HP-UX helps us better achieve our business strategy. This is clearly translated in the number of downtime instances. There is absolutely zero downtime with HP servers. Several customers explained that they avoid downtime with HP Integrity servers because of the clustered HP Serviceguard server environment. With HP Serviceguard, the organizations are able to partition servers and keep problems in one area of a server from becoming a bigger problem that can knock a server offline. TABLE 2 Downtime KPIs Updated Advantage with HP Integrity Updated HP and HP-UX Integrity and HP-UX Average Pre-Upgrade Environment Change Environment (%) Unplanned downtime Number of unplanned downtime incidents per year Unplanned downtime hours per incident Annual unplanned downtime hours of impact per user Planned downtime Number of planned downtime incidents per year Planned downtime hours per incident Annual planned downtime hours of impact per user Source: IDC, 2014 Document # IDC. Page 12

13 Organizations also praised the impact of their HP Integrity and HP-UX environments with regard to their ability to take planned downtime. One customer explained the benefit of being able to take planned downtime as follows: Because of the stability of the HP Integrity environment, we can have more planned downtime. That s a good thing because, with more planned downtime, we can get needed changes done and we can be more proactive in identifying and resolving problems. In addition to this productivity increase, these organizations are also realizing less quantifiable benefits by making their servers and systems more robust by being able to take more planned downtime. In addition to reduced downtime benefits, the surveyed organizations reported that they maintain exceptional data integrity within their HP Integrity and HP-UX environments. As one customer explained, I ve never had a data integrity issue on the HP Integrity platform because of the internal redundancy. I don t know how to correlate that to a world without the redundancy built into it, but anytime you have hardware failures that are automatically shutting things off, you have some risk to your data integrity. Given that HP s customers are running business-critical workloads on their HP Integrity and HP-UX servers, avoiding even the possibility of data integrity problems is a significant benefit. Increased Consolidation Delivers Improved ROI IDC assessed the cost, benefits, and value of upgrading HP Integrity servers running on the HP-UX operating system over a five-year period to the interviewed organizations. These companies are making an average initial investment of $30,928 per 100 users and spending an average of $6,543 per 100 users each year over five years to upgrade the HP Integrity and HP-UX servers. These investments will result in average annual benefits of $64,978 per 100 users over five years. Over five years, these companies will realize a cumulative net benefit of $261,246 per 100 users (see Figure 6). Document # IDC. Page 13

14 FIGURE 6 Investments in and Benefits Resulting from HP Integrity Server Upgrades ($ per 100 users) $300,000 $250,000 $200,000 $150,000 Investments Benefits Cumulative net benefit $261,246 $100,000 $50,000 $47,371 $68,008 $68,912 $69,832 $70,768 $0 -$50,000 -$30,928 -$4,738 -$6,809 -$6,931 -$7,056 -$7,183 Initial Year 1 Year 2 Year 3 Year 4 Year 5 Source: IDC, 2014 Table 3 presents IDC s ROI analysis for the refresh of the organizations HP Integrity and HP-UX servers. This ROI analysis is a five-year view of the financial impact on these companies. The five-year ROI analysis shows that on average, the organizations in this white paper will spend $54,079 per 100 users of workloads or applications run on HP Integrity servers or the HP-UX OS environment ($3.24 million per organization) and achieve $230,096 in benefits per 100 users ($13.77 million per organization). This results in a net present value (NPV) of $176,017 per 100 users ($10.53 million per organization) for their use of HP Integrity and HP- UX servers. Based on these results, the organizations saw an average payback period of nine months after deploying HP Integrity and HP-UX servers and are seeing an ROI of 325%. Document # IDC. Page 14

15 TABLE 3 Five-Year ROI Analysis of HP Integrity Server Upgrades Average per Organization Average per 100 Users Benefit (discounted) $13.77 million $230,096 Investment (discounted) $3.24 million $54,079 Net present value (NPV) $10.53 million $176,017 Return on investment (ROI) 325% 325% Payback period 9 months 9 months Discount rate 12% 12% Source: IDC, 2014 How HP Customers Achieved These Returns HP Integrity Servers and HP-UX Solutions The HP Integrity platform and the HP-UX operating environment have a long history of scale-up, business-critical computing. The platform itself is available in blade and rack configurations of varying sizes to meet customers needs, from a single small server with just one processor to an HP Integrity Superdome 2 configuration with up to 32 processors. To build a reputation in business-critical deployments, a platform needs to establish credibility in a number of areas including long supported life cycles, have maximum scalability that exceeds most customer requirements, have the ability to deliver high levels of uptime, and deliver a minimum of unscheduled downtime. A solid portfolio of applications is required, and that must in turn be backed up by deployment software including middleware and database software. The solution must be manageable by common systems management tools that customers often have in their existing environments. In short, customers expect the system to be a tier 1 solution supported by both the compute solution vendor and the third-party ecosystem that surrounds that solution. HP s goals for HP Integrity include the following:» Always-on availability. Although HP Integrity servers may not be guaranteed to deliver true uninterrupted computing, they offer inherently higher levels of availability than competitive x86 servers. Further, HP has reduced the duration of any planned downtime with HP-UX 11i v3 s dramatically faster reboots. Document # IDC. Page 15

16 » Cloud-ready Unix. The Unix operating system historically was the backbone of the Internet and has been the inspiration of much of today s compute infrastructure. The Linux operating system was designed from the beginning to function as a Unix clone. Today, commercial Unix products such as HP-UX continue to be relevant and benefit directly from the investments made by vendors into the Linux ecosystem since Unix and Linux remain so closely aligned. HP offers a private cloud solution for HP-UX, the CloudSystem Matrix with HP-UX.» Integrated software stack. Like most large system solutions, the HP Integrity platform has a robust set of out-of-the-box software solutions that begin with HP-UX 11i v3. The HP-UX solution includes both hard and soft partitioning capabilities and management tools. IDC notes that customers tend to select HP Integrity server and HP-UX 11i for the most scalable, critical workloads that they are supporting. For instance, one large-scale pharmaceutical company uses an HP Integrity server for its enterprisewide ERP system. Challenges/Opportunities HP competes with other providers of scalable server systems for customer opportunities that fit this high-end market segment. Not surprisingly, the competition for servers in this class tends to be IBM and Oracle, both of which provide scalable Unix server systems that compete directly for opportunities in this market segment. IBM has been growing its market share in the contracting Unix server market in recent years, attaining the number 1 ranking in terms of unit volume and server revenue. IBM has been growing its market share in the contracting Unix server market in recent years, attaining the number 1 ranking in terms of unit volume and server revenue. Competitors in the Unix server market segment show no signs of slowing down, with all three major vendors making major announcements in the first half of IDC expects this market segment will see a continuation of aggressive competition between the major vendors. The decision to deploy new enterprise servers is often characterized by a sales cycle that is longer than that of volume servers that are added to racks and blade server chassis because investments in large systems are always associated with a very specific workload that has broad application for a customer. Therefore, should the original plan be changed, the system is usually not able to be repurposed to another workload like an x86 server could be. One challenge HP faces is that it needs to make clear to the marketplace that HP Integrity servers are available as building blocks for the datacenter and that the price range for the HP Integrity server product line which is best known for its midrange and high-end models extends into the volume space for servers priced at less than $20,000. Opportunities for Document # IDC. Page 16

17 HP Integrity servers are broad, including longtime uses to support transaction processing, scalable databases, enterprise applications, , and Web-enabled applications, including Java and many Linux applications. The ability of Unix to support modern runtime frameworks (Java, PHP, Perl, Python, Node.js, Spring, and similar solutions) means that the HP-UX 11i v3 is able to be used as the foundation for a platform-as-a-service (PaaS) deployment. In addition, it is practical for ISVs that are currently deploying on HP-UX to use the HP Integrity platform as the basis for a software-as-a-service (SaaS) offering, thanks to the strong virtualization capabilities of the HP Integrity solution. Regarding vertical market segments, Unix has long been a favorite in important sectors including financial services, telecommunications, and government. It is perhaps less known that HP Integrity servers also support Unix deployments in the healthcare, retail, logistics/distribution, and manufacturing segments. HP Integrity servers support customers traditional Unix systems deployments. In addition, customers in Asia/Pacific, Central Europe, Latin America, and Africa are using scalable HP Integrity servers to build new enterprise infrastructure to support rapidly increasing computing demands. The flexible computing demands seen in cloud computing can be addressed by HP Integrity servers as cloud computing moves increasingly to provide enterprise-level business services. The flexible computing demands seen in cloud computing can be addressed by HP Integrity servers as cloud computing moves increasingly to provide enterprise-level business services. To that end, HP can potentially sell HP Integrity servers to cloud service providers for public clouds delivering PaaS or SaaS or to IT customers for private clouds for infrastructure as a service (IaaS), PaaS, or SaaS. Conclusion Today s business organizations need more computing power than ever before but are keeping expenses under close management to make sure they do not spiral out of control. One technique to control operational costs over time is to consolidate workloads onto fewer physical server footprints. It has proved to be a very useful IT approach during the economic downturn, leveraging shared-resource virtualization and flexible IT management. When HP Integrity servers are deployed, expanded, and upgraded, they can be platforms for workload consolidation from Unix servers. This is true for consolidating workloads not only from Unix servers but also from x86 servers, particularly from x86 servers that are running Linux distributions. Often, these Linux applications running on x86 servers are also already available (or easily ported) to run on HP Integrity servers. IDC s study of this group of companies around the world that upgraded and expanded their HP Integrity servers shows that dramatic savings are possible. Consolidating on refreshed HP Document # IDC. Page 17

18 Integrity servers not only reduced the costs associated with supporting existing workloads but also led to better business responsiveness, productivity gains for end users, maintenance cost reductions, IT staff and management cost reductions, and fewer power/cooling and footprint demands. The scalability of the new generation of HP Integrity servers allowed these enterprises to avoid the costs of buying and deploying more servers as their application workloads inexorably increased demonstrating the business value of consolidating onto scalable server platforms. Appendix IDC utilized its standard ROI methodology for this project. This methodology is based on gathering data from current users of the technology as the foundation for the model. Based on these interviews, IDC performs a three-step process to calculate the ROI and payback period:» Measure the savings from reduced IT costs (staff, hardware, software, maintenance, and IT support), increased user productivity, and improved revenue over the term of the deployment.» Ascertain the investment made in deploying the solution and the associated training and support costs.» Project the costs and savings over a five-year period and calculate the ROI and payback for the deployed solution. IDC bases the payback period and ROI calculations on a number of assumptions, which are summarized as follows:» Time values are multiplied by burdened salary (salary + 28% for benefits and overhead) to quantify efficiency and manager productivity savings.» Downtime values are a product of the number of hours of downtime multiplied by the number of users affected.» The impact of unplanned downtime is quantified in terms of impaired end-user productivity and lost revenue.» Lost productivity is a product of downtime multiplied by burdened salary.» Lost revenue is a product of downtime multiplied by the average revenue generated per hour. Document # IDC. Page 18

19 » The net present value of the five-year savings is calculated by subtracting the amount that would have been realized by investing the original sum in an instrument yielding a 12% return to allow for the missed opportunity cost. This accounts for both the assumed cost of money and the assumed rate of return. Because every hour of downtime does not equate to a lost hour of productivity or revenue generation, IDC attributes only a fraction of the result to savings. As part of our assessment, we asked each company what fraction of downtime hours to use in calculating productivity savings and the reduction in lost revenue. IDC then taxes the revenue at that rate. Further, because IT solutions require a deployment period, the full benefits of the solution are not available during deployment. To capture this reality, IDC prorates the benefits on a monthly basis and then subtracts the deployment time from the first-year savings. About IDC IDC Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world s leading technology media, research, and events company. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2014 IDC. Reproduction without written permission is completely forbidden. Document # IDC. Page 19