Building the Business Case for. Data Center Modernization

Transcription

1 White Paper Intel Xeon Processor Data Center Modernization Building the Business Case for Data Center Modernization A financial and technical ROI-based approach Introduction IT departments are under more pressure than ever to deliver increasing value back to the business. In addition to responding to day-to-day operational challenges, IT is being asked to define an efficient path to new deployment paradigms, including server virtualization, cloud computing, and ultimately, a software-defined infrastructure. For IT decision-makers, the question becomes: How do you help lead your business forward? While there is no silver bullet for all the challenges IT faces today, spearheading IT modernization initiatives and replacing outdated data center technologies with the latest, cost-effective innovations, IT decision-makers can better meet business needs for greater performance, security, networking, storage, and software efficiency advantages all while lowering operating expenses. Optimizing the data center can also help IT be viewed as an enabling internal partner, moving the enterprise toward a highly efficient, software-defined infrastructure that enables the business to better use the latest technologies to take advantage of future opportunities. Many organizations consider the benefits of IT modernization through the lens of infrastructure modernization technology benefits, including better performance, efficiency, and security. This is a common and valid way to think about modernization. However, another way to look at modernization is to examine the financial aspects of a modernization effort and to seek answers to key questions, such as: Does it cost more to get these new capabilities? Can the business afford the incremental cost in a tight budgetary environment? What is the short term / long term financial impact and ROI related to these efforts? Sajid Khan Global Enterprise Segment Marketing Manager John Kuzma Senior Data Center Architect Isaac Priestley Data Center Finance Manager These perspectives are of keen interest to key stakeholders in general management, operations and finance and this paper examines the key financial considerations necessary to understanding the financial metrics and ROI of a modernization effort. Further, this paper provides the building blocks necessary to developing a clear and compelling financial business case that resonates with key stakeholders who ultimately ratify data center modernization projects.

2 Table of Contents Building the business case...2 Building a Business Case A Best Practices Framework...3 Terms and Definitions...4 Building the business case Who are the Key Stakeholders Strong financial business cases focus on key metrics and information of interest to not only the chief information officer (CIO) but also the chief financial officer (CFO). In fact, a May 2013 Gartner FEI CFO Technology Study, showed that a significant percentage of CFOs have direct responsibility for IT and are increasingly becoming key IT decision makers and influencers. Developing your Financials...4 Storage...6 Utility Expenses...7 Green IT Benefits...8 Accounting: Depreciation Expenses and Tax Implications...9 Putting It All Together...10 Annual Operating Expenses Impact...10 Capital Expenses Impact...11 Tax Implications...12 Summarizing the Financials...12 Additional Benefits of Data Center Modernization...13 Get Started Today...14 Appendix...15 Figure 1. Where Does IT Report? Source: Gartner (May 2013, Survey Analysis: CFOs Top Imperatives From the 2013 Gartner FEI CFO Technology Study) This change is primarily due to the CFOs control of the budget and her critical insights over how business value can best be achieved. IT leaders can benefit from this shift in organizational control by educating CFOs about the value of IT and focusing the conversation on topics that have greater meaning to a CFO such as; total cost of ownership (TCO), return on investment (ROI), net present value (NPV), and payback periods rather than focusing solely on general performance, server utilization, and power efficiency. Consolidating all of these topics is a developing best practice for positioning your modernization project for success. The conversation with the CFO is a key step towards showcasing the overall business value of keeping IT environments current. However, IT leaders also need to have cross-functional conversations to uncover line-of-business (LOB) needs to better support IT infrastructure improvements. Understanding the perspectives and insights of colleagues across the enterprise is essential to developing strategic and insightful data center optimization plans precisely what IT needs to expand its value within the business. 2 Figure 2. What interests stakeholders?

3 Building a Business Case A Best Practices Framework Leading Cancer Care Provider s OPEX Savings Drives New IT Investment Refreshing our infrastructure allowed us to support more users without having to lease more data center space, says Antoine Agassi, Senior VP and Chief Information Officer of 21st Century Oncology. At the same time, we were able to cut power costs by as much as 20 percent. Those cost savings enable the company to adopt new technologies and introduce new services that improve patient care. Read the full case study The remainder of this paper is a focused discussion on considerations used to develop an effective financial business case for a data center modernization program. We use a common enterprise scenario based on a five-year-old server environment and related aging infrastructure. While the company scenario for ACME Company is fictitious and simplified for brevity, the actual cost savings and tax implications are based on established formulas and calculations. For help building your own custom scenario using the concepts described in this paper, use the online Intel Xeon Processor-Based Server Refresh Savings Estimator described in the sidebar below. The IT infrastructure environment for ACME Company is aging. As was the case at many other enterprises, the recession forced ACME Company s IT organization to postpone capital expenditures and limit IT infrastructure spending to essential operations and maintenance only. The company s director of IT oversees an environment with 100 servers and has stretched his budget and the useful life of the five-year-old environment (servers, storage, network infrastructure, and the software stack) to its limit. The primary concerns he s now facing include: Spiraling cost of reactive maintenance Supporting Line of Business (LOB) manager projects Supporting Big Data and Private/Hybrid/Public Cloud initiatives While his maintenance efforts provided short-term relief in a very tough economic environment, his environment has now fallen behind in performance and costefficiency compared to the leading-edge hardware and software available today. The IT director now needs to develop a financial business case to justify modernizing his IT infrastructure. Estimate savings with online tool The Intel Xeon Processor- Based Server Refresh Savings Estimator tool helps you evaluate the benefits of replacing your existing data center infrastructure with the latest generation of servers, networking products, and storage solutions. The Estimator enables you to model your existing IT environment and see the benefits of an infrastructure refresh. As an IT infrastructure ages, a business can expect the percentage of its total IT expenditures to increase to support operations and maintenance. The TCO for any data center is based on a variety of factors and assumptions related to its environment. While every company has a different way of looking at TCO this paper focuses on the most important TCO factors server maintenance, software expenses, storage expenses, and utility expenses. These factors most often form the majority of annual cost savings available to enterprises. CAPITAL EXPENSES Server hardware Network hardware Storage hardware ANNUAL OPERATING EXPENSES Installation and other costs/rebates Network and server maintenance Power (Utility expenses) Labor Software expense ACCOUNTING Depreciation expenses and tax implications Figure 3. Common IT Infrastructure TCO Factors 3

4 Terms and Definitions Aging Infrastructure = Increased OPEX A large, aging, complex, and difficult-to-manage infrastructure consumes more of your time and money than new, innovative technologies. Nearly three-quarters of a business s total IT expenses are devoted to operations and maintenance. As the IT infrastructure grows and ages, these costs continue to increase, reducing the resources available to support other business growth and innovation. Business innovation throttled to 26% 26 % CAPEX 74 % OPEX 74% captive in operations and maintenance Source: Gartner, IT Metrics: Align IT Investment Levels with Strategy Using Run, Grow, Transform and Beyond (March 2012) Let s first briefly define the key category expenses related to our scenario: Server Capital is the cost of acquiring new servers and does not include installation costs, which are primarily based on the actual installation and migration costs of hardware, and their respective disposal costs. Rack costs are also not included because a refreshed environment results in a consolidation of the number of servers needed to deliver the same level of performance as well as a decreased facility footprint. Network costs are based on the number of Ethernet ports (adapters) on a per server basis. Storage costs are based on type of storage device that will be used or migrated. In this example, the key factors are HDD form factor sizes, HDD storage interface, HDD RPM which impacts the performance and amount of power consumed, HDD storage capacity and total number needed, as well as the percentage utilization of the storage devices and the type of configuration used. Server Maintenance is expressed simply as a cost of maintenance on a per server basis and the financial impact of expired parts and service warranties. Utility expenses. Utility expenses for this discussion are calculated on estimates of server power usage, utility rates, utility growth rate, data center operating hours, data center cooling efficiency factors (PUE), and data center capacity costs. The server power usage is based on an estimated server power in kilowatts both when the server is busy and idle. The utility rate is a cost per kilowatt hour for utility power. Utility growth rate is a factor to estimate future utility rate increases year over year in the form of kilowatt per hour. Data center cooling and PUE (Power Usage Effectiveness) is a factor to estimate infrastructure cooling efficiency and cost requirements. The default value for this discussion is set to a PUE of 2. A PUE of 2 means that your non-it power (e.g. cooling, HVAC, lighting, etc.) is equal to your IT power (e.g. server, storage, networking). Therefore total power consumption is estimated at 2 times the IT power consumption. Data center capacity costs (in $/kw) is for data center infrastructure capacity additions. This is used for calculating the cost avoidance savings of not having to build new server infrastructure to accommodate incremental growth if old servers were not refreshed. Software Expenses are a sum of licensing, support, and validation. Licensing is the cost per server to purchase new licenses needed for the environment or for any incremental demand needed. Software support is the software maintenance fee per server. Software validation is the cost per server for validating software configurations on newly installed servers. Developing your Financials Now let s examine the financials in more detail. Start with determining maintenance costs of keeping your network and servers up and running (including the impact of expired parts and service warranties), and then compare those costs to the costs of maintaining a refreshed environment. The calculation is straightforward, and the information becomes an essential input to calculating your overall project TCO and ROI. 4

5 Server Maintenance Savings Formula School District Gets More IT Per Dollar Spent One school district with an operational budget reduced to a bare minimum, wanted to get the most for its money. Migrating to x86 reduced not only the district s capital investments, but also licensing and management costs. Read the full case study The inputs shown above for ACME Company can easily be tailored to the number of servers and maintenance costs in your environment. EXISTING NETWORK AND SERVER ENVIRONMENT SCENARIO Number of Servers 100 Average Maintenance Cost Per Server $2,399 Total Existing Network and Server Maintenance Costs $239,900 NEW INTEL XEON PROCESSOR-BASED ENVIRONMENTnvironment Number of Servers 21 Average Maintenance Cost Per Server $2,399 Total New Network and Server Maintenance Costs $50,379 Total Server Maintenance Savings $189,521 Table 1. Annual Server Maintenance Comparison The Annual Server Maintenance Savings clearly illuminate the high cost of maintaining an aging infrastructure. While this scenario looks at the annualized savings from a server maintenance perspective, you can also expand the financial review to include additional annual savings and benefit opportunities derived from network and other related maintenance. Additionally, ACME Company reduced its server inventory from 100 to 21. This impacts the number of required resources and space necessary to support the business, resulting in additional labor savings to maintain, replace or manage the infrastructure. This information can be calculated in a similar way to the server maintenance calculations above. The savings achieved with this change contributes to your project ROI and to a lower TCO. The TCO savings of a server refresh are compounded when you also consider the impact annual software maintenance fees have on your total expenses. The calculation needed for this input takes into account the proposed project life in addition to the number of servers and the software maintenance fees. The following is a basic formula for calculating software maintenance savings: Software Maintenance Savings Formula Total Software Maintenance Savings = Project Life (Number of Servers X Annual Software Maintenance Fees) 5

6 Rising Costs of Aging Infrastructure Enterprises often pay a heavy toll for aging infrastructure in the form of rising operational costs. Consider, for example, a typical scenario where 32 percent of the servers in a small group or data center are over four years old. Those aging servers contribute only 4 percent of the total performance capabilities in the data center and yet they consume 65 percent of overall energy. Age distribution of servers >4 years old 32 % Performance Capability of servers >4 years old 4 % EXISTING SOFTWARE OPERATING SYSTEM SCENARIO Number of Servers 100 Annual Software Maintenance Fee per Server $15,455 Total Software Maintenance Fees $1,545,500 NEW INTEL XEON PROCESSOR-BASED ENVIRONMENTnvironment Number of Servers 21 Annual Software Maintenance Fee per Server $50,595 Total Software Maintenance Fees $1,062,495 Cumulative Annual Software Maintenance Savings $483,005 Table 2. Annual Software Maintenance Comparison It is important to note that the above scenario only reviews the impact of maintenance fees on the software operating system. Your environment is likely different and you may have an opportunity to add additional software upgrades that warrant a deeper analysis. Other software refreshes may include capital costs and annual maintenance expenses for database software, application servers, system management software, or other types of software. The calculations are similar once the costs are obtained. More complex software environment modeling and scenarios, such as; databases, systems management software, application software or virtualization software, can be developed using the Software Configuration Wizard contained within the Intel Xeon Processor-Based Server Refresh Savings Estimator. Storage The next component of our TCO calculation is storage. Advances in storage technology offer financial benefits that are easy to determine. Using the Server Refresh Savings Estimator for our scenario, we re able to determine that the 100 HDDs in the existing environment can be replaced by GB SSD solution. Using those assumptions, it is relatively simple to calculate the estimated storage savings attributed to ACME Company s proposed refreshed IT infrastructure: Server energy consumption >4 years old 65 % Storage Expense Savings Formula Total Storage Expense Savings = Total Existing Storage Expenses - Total New Storage Expenses EXISTING STORAGE ENVIRONMENT SCENARIO Number of HDDs 100 HDD Expense per Hard Disk Drives (HDD) $ Source: Gartner, IT Metrics: Align IT Investment Levels with Strategy Using Run, Grow, Transform and Beyond. (March 2012) Total Storage Expenses $65,142 6

7 NEW STORAGE ENVIRONMENTnvironment Number of Solid-State Drives (SSD) 21 HDD/SSD Expenses per HDD $1,952 Total Storage Expenses $8,281 Cumulative Annual Savings $56,861 Table 3. Storage Capital Expense Comparison Utility Expenses Infrastructure refreshes can also significantly lower data center utility expenses. Utility expenses are examined because the information and results impact budgets controlled by the CFO. The choices IT make directly impact power consumption and a refreshed environment can lower overall utility expenses. Intel IT Saves USD $184 million with New Refresh Strategy 1 Intel IT which operates 64 data centers and 55,000 servers to support the computing needs of over Intel 100,000 employees used to focus on maximizing the useful life of each server, keeping most of them in service well beyond their four-year warranty. As compute requirements outgrew existing data center space or power and cooling capacity, the organization paid a high price to add or expand data center facilities. To address rising costs and performance issues, Intel IT began a data center optimization program that included revising the server refresh strategy. Since 2010, the strategy has created new business value in excess of USD 184 million, in part by moving to a proactive server refresh schedule, in which existing servers are regularly upgraded to the latest generations of Intel Xeon processors. This has resulted in: Virtualization ratios of up to 35:1 43 percent fewer servers in the Design group 10 percent reduction in energy consumption in Design 6x increase in performance from 2005 to 2012 Additional changes have included: Deploying more than 13,000 Intel Solid-State Drives as fast swap drives, which generated a 27 percent increase in server capacity. Adopting new storage capabilities, accelerating storage refresh, and focusing in increasing utilization, which generated USD 33 million in cost avoidance. Deploying more than 18, gigabit-per-second network ports, generating more than USD 20 million in cost avoidance. Integrating the server and network infrastructure for a 39 percent reduction in hardware across the enterprise. 1 IT@Intel White Paper, Intel IT s Data Center Strategy for Business Transformation, Jan

8 The comparison table below, as discussed previously above, are calculated on estimates of server power usage, utility rates, utility growth rate, data center operating hours, data center cooling efficiency factors (PUE), and data center capacity costs. Your company s situation and approach for calculating total utility expenses and power consumption may be different. EXISTING INFRASTRUCTURE UTILITIES EXPENSE SCENARIO Number of existing servers 100 Hours of Operations 24 X 7 (24 X 365 X Number of servers) 876,000 Utility Rate (per Kilowatt-Hour) $0.10 Utility Growth Rate (per year) 3% PUE 2 Total Utility Expenses $100,417 NEW INFRASTRUCTURE ENVIRONMENT Number of new servers 21 Hours of Operations 24 X 7 (24 X 365 X Number of servers) 131,400 Utility Rate (per Kilowatt-Hour) $0.10 Utility Growth Rate (per year) 3% PUE 2 Total Utility Expenses $21,088 Cloud Service Provider Refreshes Infrastructure for Greater Performance The costs of our server operations went down by 67 percent thanks to the lower power consumption of the Intel technology-powered servers, while the addition of the virtualization software has cut server management costs by 54 percent, says Petr Suchanek, CIO of Gigant Group. Read the full case study Annual Savings Comparison $79,330 Table 4. Annual Utilities Expense Comparison For additional information on data center power consumption and utility expenses, review this article on Power Metrics for Data Centers and other information at Intel.com. Driven by the server refresh power efficiency gains alone, ACME Company s annual utility expenses would drop substantially. The cumulative annual savings represent approximately USD$80,000 and help make the case for the financial benefits of the proposed data center modernization project. Green IT Benefits Another significant benefit is the Green IT benefit resulting from implementing a new environment. A more energy efficient infrastructure benefits the environment through reduced CO 2 emissions. Acme co. saw 254,000 LBs of CO 2 reduction. This is equivalent to planting 634 trees or removing 19 cars from the highways. 8

9 Chart 1. Green IT benefits of new IT infrastructure. Source: Intel Xeon Processor-Based Server Refresh Savings Estimator Accounting: Depreciation Expenses and Tax Implications To this point, we ve examined the potential savings of an infrastructure refresh from a cost savings perspective. Our scenario includes an infrastructure that is five years old and past the depreciable life of the asset (four years). Another important consideration and area of interest to you and the CFO is the impact of asset depreciation expenses on tax payments resulting from a refreshed infrastructure environment. For the last four years, ACME Company has been able to take advantage of a depreciation expense associated with the original server and storage purchases. During the fifth year, however, the assets are fully depreciated and the enterprise is no longer able to take advantage of the depreciation expense. This impacts the overall savings opportunity available to the organization and provides additional support for an infrastructure refresh. Let s take a look at the impact an infrastructure refresh has on depreciation expenses and subsequently the company s tax situation. The enterprise scenario we are using applies a common Straight-Line Method of Depreciation to our new set of assets. Simply defined, the Straight-Line Method accounts for uniform depreciation over the intended life of an asset. The following table can be used to determine the depreciable amount: DEPRECIATION EXPENSE SCENARIO Number of New Servers 21 Server Capital Costs $251,328 Network Capital Costs $8,400 Storage Capital Costs $6,328 Total Annual Depreciation Expense $66,514 Table 5. Annual Depreciation Expense 9 Refreshing the enterprise environment contributes financial savings back to ACME Company in the form of an annual depreciation expense of $66,514. This same expense can be applied forward in the same increment for the following three years for a combined depreciated expense of $266,056.

10 This figure doesn t directly impact the TCO however it does help lower the company s overall tax burden. It s an area of opportunity for the company to explore with respect to the overall financial impact of the proposed project. Putting It All Together Summarizing all the financial information in one table creates a compelling financial story that contrasts the costs and benefits of an existing aging infrastructure to a refreshed environment. In our example, ACME Company has a strong business justification for a new infrastructure project. CATEGORY EXISTING ENVIRONMENT* NEW ENVIRONMENT SAVINGS SAVINGS IMPROVEMENT Server Capital $679,200 $251,328 $427,872 (63%) Network $7,008 $9,872 ($2,864) 41% Storage $65,142 $8,281 $56,861 (87%) Network and Server Maintenance Utility Expenses Annual Software Expenses Tax Implications $239,900 $50,379 $189,521 (79%) $100,417 $21,088 $79,330 (79%) $1,545,500 $1,062,495 $483,005 (31%) ($923,533) ($491,646) ($431,887) (47%) Total $1,715,134 $913,057 $802,078 (47%) *See appendix for full set of assumptions Table 6. Annual Infrastructure Expense Comparison Annual Operating Expenses Impact This summary is based on expenses for a one year period of time. The most significant refresh savings occur within the annual operating expense category and include network and server maintenance, software, and utility expenses. 10

11 Chart 2. Acme Co. Annual IT Operating Expenses Comparison Capital Expenses Impact Reductions in capital expenses between the existing environment and the new environment are also substantial. Capital expense reductions are primarily driven by new environment hardware efficiencies and impacts gained with the refresh and indicative of the high cost of an aging infrastructure. The single largest TCO category, software, also decreases and results in an annual savings improvement of 31%. Chart 3. Acme Co. Annual Capital Expenses Comparison 11

12 Tax Implication Chart 4. Acme Co. Tax Implications Comparison Chart 5. Acme Co. Consolidated Annual Savings Comparison Summarizing the Financials While the earlier TCO comparison above is an annual view of expenses, the following financial overview summarizes the financial benefits over the course of the life of the modernization project. Figure 4 provides an example of the financial benefits overview and the project ROI/Breakeven point. INITIAL INVESTMENT $293,106 NET BENEFITS $1,76m RETURN ON INVESTMENT (ROI) 599% NET PRESENT VALUE (NPV) $1.33m PAYBACK PERIOD (MONTHS) 7 INTERNAL RATE OF RETURN (IRR) 175% Figure 4. ACME Co. Proposed Infrastructure Initiative Financial Benefits Overview 12

13 Figure 5. ACME Co. Proposed Infrastructure Return on Investment The financial benefits overview information becomes the heart of the financial business case for discussions with your CFO and CIO. While the scenario depicted in this paper has been simplified to provide the potential financial savings of an IT modernization initiative via an infrastructure refresh, the information can be used to help your IT build a data-driven financial discussion. You are now ready to build your own business case. Here s a recommended outline of information to help guide the discussion with your key decision-makers and project stakeholders. Download a sample presentation using the Intel Xeon Processor-Based Server Refresh Savings Estimator at Title Slide Executive Summary Title Slide Return on Investment (ROI) Investment required Name of your initiative. Example: The Business Value of a Technology Refresh This section provides the financial benefits overview such as Initial Investment, Net Benefits, Return on Investment, Internal Rate of Return, Payback Period This section may contain a visual chart indicating the ROI and investment breakeven point. This section may contain a table summarizing the technology scenario you are proposing along with the costs for hardware, software, installation, and disposal fees related to implementing the new environment. Financial Benefits Over Time Financial Benefits by Category Other Next Steps / Request This section focuses on the annual cash flow details over the course of the proposed project life. This section focuses on the savings improvements (by category of TCO) gained by a refreshed infrastructure and the cumulative net financial benefit. This section can include other relevant factors including benefits for Facilities, Green IT, other business benefits (power and performance) This section specifies the next steps and/or actions you are seeking to achieve as a result of the discussion. 13 Download a sample presentation after using the Intel Xeon Processor-Based Server Refresh Savings Estimator.

14 Additional Benefits of Data Center Modernization Lower operating expenses have led the discussion for this paper. Other business benefits that include more capable, higher performance, energy efficient servers enable your business to do more with less, boosting competitiveness, business productivity, operating efficiencies, and enhancing services. Beyond the performance benefits and cost savings, there is also a much larger story behind the need for data center optimization. As is now widely discussed within IT, the role of IT is changing rapidly. Shadow IT is emerging as lines of business become increasingly tech-savvy and take IT decision-making upon themselves. In fact, recent research by Vanson Bourne found that 35 percent of IT spending is already occurring outside the IT department, and that number is expected to grow to 44 percent by For IT to remain relevant and trusted, its role needs to change from simply being a provider of IT services to being a service broker or consultant to the organization a strategic expert that collaborates with stakeholders across the business to achieve near- and long-term goals. Further, IT needs to introduce innovative ideas that guide the business forward by reducing costs, enabling new revenue opportunities, and improving support for new applications and other business initiatives. Data center modernization initiatives can help IT move into this new role. When IT decision-makers build a solid financial case for revising the existing hardware refresh cycle showing how doing so can lower costs significantly while enabling better performance and availability it shows not only technology expertise but also strategic acumen that is essential to the new and expanding role of IT in enterprises today. Get Started Today Use the discussion presented in this paper to begin building your business case for an infrastructure modernization project. Get started today by conducting a cost/benefit analysis online with the Intel Xeon Processor-Based Server Refresh Savings Estimator. Find other resources, strategies, and information at Additional Resources Server Refresh Planning Guide Network Structure ROI Calculator 14

15 Appendix The following assumptions and data from the Intel Xeon Processor-Based Server Refresh Savings Estimator were used to generate the financial tables for the ACME Company scenarios listed in this paper. The data is presented for both the existing environment and the new environment: Existing Environment 15 Costs to Implement new environment Server Server Age 2P Intel Processor-based servers 5 years Server Count 100 Estimated Server Price Per Server Installation Migration Costs Per Server $6,792 Storage Storage HDD, 73 GB, 10K rpm HDD with SATA HDD Storage Interface. 10% HDD capacity consumed. RAID 0 Configuration Software Software Support Costs $15,455 software support costs per server per year Power Hardware Maintenance Costs Hardware Depreciation Cycle Software validation Costs Operating System Annual Operating System Support Fee $50 $1,000 per server Linux Premier Support $1,399 Database SQL Server 2012 Enterprise. $6,736 license fee. Annual Database Support Fee Estimated Server Power Busy (Kilowatts) Estimated Server power Idle (Kilowatts) $1, Utile Rate ($/kwh) 0.10 Utility Growth Rate (per year, in $ 3% Operating Hours 24 X 7 Data Center Cooling Efficiency Factor (PUE) 2.0 DC Capacity Cost ($/kw) $10,000 Server Warranty Period Server Maintenance Costs ($ per server per year) Network Maintenance Costs ($ per server per year) 4 years 3 Years (now expired) $2,399. Costs are per server per year for hardware and maintenance/support of any out-of-warranty maintenance. $15

16 New Environment Costs to Implement new environment Server Server Count Estimated Server Price Per Server Installation Migration Costs Per Server Disposal Costs Per Server Network Implementation Costs Per Profile Storage Implementation Costs Per Profile 2P Intel Xeon Processor E v3 Product Family 21 (number of server needed to deliver the equivalent performance) $11,968 $50 $50 $8,400 $6,328 Storage Storage 200 GB 710 (No OP) Solid-State Drive solution Software Power Hardware Maintenance Costs Software Support Costs Per Server Per Year Software validation Costs Per Server Operating System Annual Operating System Support Fee $50,595 $1,000 Linux Premier Support $1,399 Database SQL Server 2012 Enterprise. $6,736 license fee. Annual Database Support Fee Estimated Server Power Busy (Kilowatts) Estimated Server power Idle (Kilowatts) $1, Utile Rate ($/kwh) 0.10 Utility Growth Rate (per year, in $ 3% Operating Hours 24 X 7 Data Center Cooling Efficiency Factor (PUE) 2.0 DC Capacity Cost ($/kw) $10,000 Server Warranty Period Server Maintenance Costs ($ per server per year) Network Maintenance Costs ($ per server per year) 3 Years (now expired) $2,399. Costs are per server per year for hardware and maintenance/support of any out-of-warranty maintenance. $15 16

17 Examining the High Cost of an Aging Infrastructure Hardware Depreciation Cycle Financial Parameters 4 years Discount Rate 10% Marginal Tax Rate 35% The TCO or other cost reduction scenarios described in this document are intended to enable you to get a better understanding of how the purchase of a given Intel product, combined with a number of situation-specific variables, might affect your future cost and savings. Nothing in this document should be interpreted as either a promise of or contract for a given level of costs. This paper is for informational purposes only. THIS DOCUMENT IS PROVIDED AS-IS WITH NO WARRANTIES WHATSOEVER, INCLUDING ANY WARRANTY OR MERCHANTABILITY, NONINFRINGEMENT, FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY OTHERWISE ARISING OUT OF ANY PROPOSAL SPECIFICATION OR SAMPLE. Intel disclaims all liability, including liability for infringement of any property rights relating to use of this information. No license, express or implied by estoppel or otherwise to any intellectual property rights is granted herein. Copyright 2014 Intel Corporation. All rights reserved. Intel, the Intel logo, Xeon, are trademarks of Intel Corporation in the U.S. and/or other countries. * Other names and brands may be claimed as the property of others. Printed in USA 0714/SK/BPC/PDF Please Recycle US