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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IT modernization initiatives and replacing outdated data center technologies with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.

. . . total cost of ownership (TCO). . . . . . . . . . . net present value (NPV). . . . . . .Building the Business Case for Data Center Modernization Table of Contents Building the business case – Who are the Key Stakeholders Building the business case. . . . 4 Developing your Financials . return on investment (ROI). . . . . . . and payback periods rather than focusing solely on general performance. . . . . . 6 Utility Expenses. . . . . . . . . . . . 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. 15 Figure 1. . . . . . . . . . . . . . . . . . . . . Where Does IT Report? Source: Gartner (May 2013. . . . . . 9 Putting It All Together . 4 Storage. showed that a significant percentage of CFOs have direct responsibility for IT and are increasingly becoming key IT decision makers and influencers. . . . . . . . . . . . . 12 Additional Benefits of Data Center Modernization. However. . server utilization. . . . . . . . 11 Tax Implications. . . . a May 2013 Gartner FEI CFO Technology Study. . . . . . . . . . 13 Get Started Today. . What interests stakeholders? 2 . . IT leaders also need to have cross-functional conversations to uncover line-of-business (LOB) needs to better support IT infrastructure improvements. . . . . . . . . . . and power efficiency. 10 Capital Expenses Impact. 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. . . . . . 12 Summarizing the Financials. . . . . The conversation with the CFO is a key step towards showcasing the overall business value of keeping IT environments current. . . . . . . . Building a Business Case – A Best Practices Framework. . Consolidating all of these topics is a developing best practice for positioning your modernization project for success. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . 8 Accounting: Depreciation Expenses and Tax Implications. 2 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). . 3 Terms and Definitions . . . . . . . . . . . . 10 Annual Operating Expenses Impact. . In fact. . 7 Green IT Benefits. . . 14 Appendix . . Figure 2. .

Building the Business Case for Data Center Modernization 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. use the online Intel® Xeon® Processor-Based Server Refresh Savings Estimator described in the sidebar below. a business can expect the percentage of its total IT expenditures to increase to support operations and maintenance. While the company scenario for ACME Company is fictitious and simplified for brevity. 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. “At the same time. For help building your own custom scenario using the concepts described in this paper. Senior VP and Chief Information Officer of 21st Century Oncology. network infrastructure. the recession forced ACME Company’s IT organization to postpone capital expenditures and limit IT infrastructure spending to essential operations and maintenance only. These factors most often form the majority of annual cost savings available to enterprises. The Estimator enables you to model your existing IT environment and see the benefits of an infrastructure refresh. storage expenses.” 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. Estimate savings with online tool The Intel® Xeon® ProcessorBased Server Refresh Savings Estimator tool helps you evaluate the benefits of replacing your existing data center infrastructure with the latest generation of servers. and utility expenses. Those cost savings enable the company to adopt new technologies and introduce new services that improve patient care. we were able to cut power costs by as much as 20 percent. 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. Common IT Infrastructure TCO Factors 3 . The IT infrastructure environment for ACME Company is aging. While every company has a different way of looking at TCO this paper focuses on the most important TCO factors—server maintenance. 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. CAPITAL EXPENSES • Server hardware • Network hardware • Storage hardware ANNUAL OPERATING EXPENSES ACCOUNTING • Installation and other costs/rebates • Depreciation expenses and tax implications • Network and server maintenance • Power (Utility expenses) • Labor • Software expense Figure 3. The TCO for any data center is based on a variety of factors and assumptions related to its environment. software expenses. As an IT infrastructure ages. networking products. and the software stack) to its limit. As was the case at many other enterprises. and storage solutions.” says Antoine Agassi. the actual cost savings and tax implications are based on established formulas and calculations. We use a common enterprise scenario based on a five-year-old server environment and related aging infrastructure. storage.

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. HVAC. as well as the percentage utilization of the storage devices and the type of configuration used. and validation. networking). etc. IT Metrics: Align IT Investment Levels with Strategy Using Run. server. storage. Data center cooling and PUE (Power Usage Effectiveness) is a factor to estimate infrastructure cooling efficiency and cost requirements. Nearly three-quarters of a business’s total IT expenses are devoted to operations and maintenance. The server power usage is based on an estimated server power in kilowatts both when the server is busy and idle. and their respective disposal costs. A PUE of 2 means that your non-IT power (e. Storage costs are based on type of storage device that will be used or migrated. Therefore total power consumption is estimated at 2 times the IT power consumption. lighting. utility growth rate. support.g. The utility rate is a cost per kilowatt hour for utility power. HDD storage capacity and total number needed. and data center capacity costs. aging. Software Expenses are a sum of licensing. Business innovation throttled to 26% 26% CAPEX 74% OPEX 74% captive in operations and maintenance Source: Gartner. The default value for this discussion is set to a PUE of 2. data center cooling efficiency factors (PUE). 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. Software support is the software maintenance fee per server. HDD storage interface. Grow. Utility expenses for this discussion are calculated on estimates of server power usage. reducing the resources available to support other business growth and innovation. data center operating hours. As the IT infrastructure grows and ages. In this example. these costs continue to increase. Network costs are based on the number of Ethernet ports (adapters) on a per server basis. which are primarily based on the actual installation and migration costs of hardware. and the information becomes an essential input to calculating your overall project TCO and ROI. innovative technologies.) is equal to your IT power (e. and then compare those costs to the costs of maintaining a refreshed environment. The calculation is straightforward. Licensing is the cost per server to purchase new licenses needed for the environment or for any incremental demand needed. Start with determining maintenance costs of keeping your network and servers up and running (including the impact of expired parts and service warranties). Developing your Financials Now let’s examine the financials in more detail. HDD RPM which impacts the performance and amount of power consumed.g. and difficult-to-manage infrastructure consumes more of your time and money than new. complex. 4 . Utility growth rate is a factor to estimate future utility rate increases year over year in the form of kilowatt per hour. Software validation is the cost per server for validating software configurations on newly installed servers. cooling. Utility expenses. the key factors are HDD form factor sizes.Building the Business Case for Data Center Modernization Terms and Definitions Aging Infrastructure = Increased OPEX A large. utility rates. 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. 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.

EXISTING NETWORK AND SERVER ENVIRONMENT SCENARIO Number of Servers Average Maintenance Cost Per Server Total Existing Network and Server Maintenance Costs 100 $2. Additionally.399 $50.379 $189. you can also expand the financial review to include additional annual savings and benefit opportunities derived from network and other related maintenance. 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.521 Table 1. The savings achieved with this change contributes to your project ROI and to a lower TCO.Building the Business Case for Data Center Modernization Server Maintenance Savings Formula School District Gets More IT Per Dollar Spent One school district with an operational budget reduced to a bare minimum.399 $239. 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 . While this scenario looks at the annualized savings from a server maintenance perspective. 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. Annual Server Maintenance Comparison The Annual Server Maintenance Savings clearly illuminate the high cost of maintaining an aging infrastructure. Migrating to x86 reduced not only the district’s capital investments. but also licensing and management costs. This information can be calculated in a similar way to the server maintenance calculations above. wanted to get the most for its money. replace or manage the infrastructure. This impacts the number of required resources and space necessary to support the business. resulting in additional labor savings to maintain.900 NEW INTEL® XEON® PROCESSOR-BASED ENVIRONMENTnvironment Number of Servers Average Maintenance Cost Per Server Total New Network and Server Maintenance Costs Total Server Maintenance Savings 21 $2. ACME Company reduced its server inventory from 100 to 21. The TCO savings of a server refresh are compounded when you also consider the impact annual software maintenance fees have on your total expenses.

Building the Business Case for Data Center Modernization Rising Costs of Aging Infrastructure Enterprises often pay a heavy toll for aging infrastructure in the form of rising operational costs. IT Metrics: Align IT Investment Levels with Strategy Using Run.42 Total Storage Expenses $65. Using those assumptions. Using the Server Refresh Savings Estimator for our scenario. systems management software.500 NEW INTEL® XEON® PROCESSOR-BASED ENVIRONMENTnvironment Number of Servers Annual Software Maintenance Fee per Server Total Software Maintenance Fees Cumulative Annual Software Maintenance Savings 21 $50.545. Advances in storage technology offer financial benefits that are easy to determine.005 Table 2.062. 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. 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. for example. application software or virtualization software. Age distribution of servers >4 years old 32% Performance Capability of servers >4 years old 4 % EXISTING SOFTWARE OPERATING SYSTEM Number of Servers Annual Software Maintenance Fee per Server Total Software Maintenance Fees SCENARIO 100 $15.Total New Storage Expenses EXISTING STORAGE ENVIRONMENT Number of HDDs Source: Gartner. a typical scenario where 32 percent of the servers in a small group or data center are over four years old. Consider. such as. Storage The next component of our TCO calculation is storage. (March 2012) 6 SCENARIO 100 HDD Expense per Hard Disk Drives (HDD) $651. Other software refreshes may include capital costs and annual maintenance expenses for database software. system management software. can be developed using the Software Configuration Wizard contained within the Intel® Xeon® Processor-Based Server Refresh Savings Estimator. we’re able to determine that the 100 HDDs in the existing environment can be replaced by 21 – 200 GB SSD solution. databases.495 $483. application servers. More complex software environment modeling and scenarios. Grow.595 $1. 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 .142 . Transform and Beyond. Your environment is likely different and you may have an opportunity to add additional software upgrades that warrant a deeper analysis. or other types of software.455 $1. The calculations are similar once the costs are obtained.

the strategy has created new business value in excess of USD 184 million. in part by moving to a proactive server refresh schedule. Intel IT began a data center optimization program that included revising the server refresh strategy.Building the Business Case for Data Center Modernization NEW STORAGE ENVIRONMENTnvironment Number of Solid-State Drives (SSD) 21 HDD/SSD Expenses per HDD $1. Storage Capital Expense Comparison Utility Expenses Infrastructure refreshes can also significantly lower data center utility expenses. IT@Intel White Paper. 2014 1 7 . 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. Utility expenses are examined because the information and results impact budgets controlled by the CFO.000 employees—used to focus on maximizing the useful life of each server. in which existing servers are regularly upgraded to the latest generations of Intel® Xeon® processors. • Deploying more than 18. To address rising costs and performance issues.000 servers to support the computing needs of over Intel 100.” Jan.000 10 gigabit-per-second network ports. Intel IT Saves USD $184 million with New Refresh Strategy1 Intel IT—which operates 64 data centers and 55. accelerating storage refresh. which generated USD 33 million in cost avoidance. and focusing in increasing utilization.000 Intel® Solid-State Drives as “fast swap” drives. keeping most of them in service well beyond their four-year warranty. Since 2010. which generated a 27 percent increase in server capacity. The choices IT make directly impact power consumption and a refreshed environment can lower overall utility expenses. 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. • Integrating the server and network infrastructure for a 39 percent reduction in hardware across the enterprise.861 Table 3. “Intel IT’s Data Center Strategy for Business Transformation. • Adopting new storage capabilities.281 Cumulative Annual Savings $56.952 Total Storage Expenses $8. generating more than USD 20 million in cost avoidance.

Read the full case study 8 21 131. are calculated on estimates of server power usage. The cumulative annual savings represent approximately USD$80.088 Annual Savings Comparison $79.000 and help make the case for the financial benefits of the proposed data center modernization project.000 LBs of CO2 reduction. ACME Company’s annual utility expenses would drop substantially.000 $0. .10 3% 2 Total Utility Expenses $21.10 3% 2 $100. EXISTING INFRASTRUCTURE UTILITIES EXPENSE Number of existing servers Hours of Operations 24 X 7 (24 X 365 X Number of servers) Utility Rate (per Kilowatt-Hour) Utility Growth Rate (per year) PUE Total Utility Expenses SCENARIO 100 876. Driven by the server refresh power efficiency gains alone.417 NEW INFRASTRUCTURE ENVIRONMENT Number of new servers Hours of Operations 24 X 7 (24 X 365 X Number of servers) Utility Rate (per Kilowatt-Hour) Utility Growth Rate (per year) PUE 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. CIO of Gigant Group. Your company’s situation and approach for calculating total utility expenses and power consumption may be different. saw 254. 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. data center operating hours.Building the Business Case for Data Center Modernization The comparison table below. Acme co. utility growth rate. This is equivalent to planting 634 trees or removing 19 cars from the highways.com. utility rates.330 Table 4. as discussed previously above.400 $0. while the addition of the virtualization software has cut server management costs by 54 percent. A more energy efficient infrastructure benefits the environment through reduced CO2 emissions. and data center capacity costs. Green IT Benefits Another significant benefit is the Green IT benefit resulting from implementing a new environment.” says Petr Suchanek. data center cooling efficiency factors (PUE).

. Simply defined. 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.Building the Business Case for Data Center Modernization Chart 1.514 Table 5. Green IT benefits of new IT infrastructure. we’ve examined the potential savings of an infrastructure refresh from a cost savings perspective. the assets are fully depreciated and the enterprise is no longer able to take advantage of the depreciation expense. The following table can be used to determine the depreciable amount: DEPRECIATION EXPENSE Number of New Servers Server Capital Costs SCENARIO 21 $251.514. The enterprise scenario we are using applies a common Straight-Line Method of Depreciation to our new set of assets.400 Storage Capital Costs $6. Source: Intel® Xeon® Processor-Based Server Refresh Savings Estimator Accounting: Depreciation Expenses and Tax Implications To this point. the Straight-Line Method accounts for uniform depreciation over the intended life of an asset. ACME Company has been able to take advantage of a depreciation expense associated with the original server and storage purchases. Let’s take a look at the impact an infrastructure refresh has on depreciation expenses and subsequently the company’s tax situation. however.328 Total Annual Depreciation Expense $66.056. 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. This impacts the overall savings opportunity available to the organization and provides additional support for an infrastructure refresh.328 Network Capital Costs $8. For the last four years. This same expense can be applied forward in the same increment for the following three years for a combined depreciated expense of $266. Our scenario includes an infrastructure that is five years old and past the depreciable life of the asset (four years). During the fifth year.

533) ($491.872 (63%) Network $7.521 (79%) Utility Expenses $100.417 $21.861 (87%) Network and Server Maintenance $239.088 $79.200 $251. 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. CATEGORY Server Capital EXISTING ENVIRONMENT* NEW ENVIRONMENT SAVINGS SAVINGS IMPROVEMENT $679.142 $8. It’s an area of opportunity for the company to explore with respect to the overall financial impact of the proposed project.545.281 $56.062.715.008 $9.900 $50. 10 .646) ($431.500 $1.134 $913.328 $427. software. Annual Infrastructure Expense Comparison Annual Operating Expenses Impact This summary is based on expenses for a one year period of time. In our example.379 $189. ACME Company has a strong business justification for a new infrastructure project.864) 41% Storage $65.495 $483.330 (79%) Annual Software Expenses $1.872 ($2.887) (47%) Total $1.078 (47%) *See appendix for full set of assumptions Table 6.057 $802. The most significant refresh savings occur within the annual operating expense category and include network and server maintenance.Building the Business Case for Data Center Modernization This figure doesn’t directly impact the TCO however it does help lower the company’s overall tax burden.005 (31%) Tax Implications ($923. and utility expenses.

Acme Co. Acme Co. software. Chart 3. 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. Annual Capital Expenses Comparison 11 . The single largest TCO category. also decreases and results in an annual savings improvement of 31%.Building the Business Case for Data Center Modernization Chart 2. Annual IT Operating Expenses Comparison Capital Expenses Impact Reductions in capital expenses between the existing environment and the new environment are also substantial.

the following financial overview summarizes the financial benefits over the course of the life of the modernization project.76m 599% $1. Proposed Infrastructure Initiative Financial Benefits Overview 12 $1. Acme Co. Tax Implications Comparison Chart 5. Consolidated Annual Savings Comparison Summarizing the Financials While the earlier TCO comparison above is an annual view of expenses.Building the Business Case for Data Center Modernization Tax Implication Chart 4. Figure 4 provides an example of the financial benefits overview and the project ROI/Breakeven point. INITIAL INVESTMENT $293.106 NET BENEFITS RETURN ON INVESTMENT (ROI) NET PRESENT VALUE (NPV) PAYBACK PERIOD (MONTHS) INTERNAL RATE OF RETURN (IRR) Figure 4. ACME Co.33m 7 175% . Acme Co.

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

boosting competitiveness. strategies. and information at www. business productivity. As is now widely discussed within IT. Find other resources.Building the Business Case for Data Center Modernization Additional Benefits of Data Center Modernization Lower operating expenses have led the discussion for this paper. For IT to remain relevant and trusted.intel. Further. 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. recent research by Vanson Bourne found that 35 percent of IT spending is already occurring outside the IT department. In fact. IT needs to introduce innovative ideas that guide the business forward by reducing costs. Get Started Today Use the discussion presented in this paper to begin building your business case for an infrastructure modernization project. Data center modernization initiatives can help IT move into this new role. and that number is expected to grow to 44 percent by 2016. higher performance. and enhancing services. Shadow IT is emerging as lines of business become increasingly tech-savvy and take IT decision-making upon themselves. enabling new revenue opportunities. energy efficient servers enable your business to do more with less. operating efficiencies. Other business benefits that include more capable. Get started today by conducting a cost/benefit analysis online with the Intel® Xeon® Processor-Based Server Refresh Savings Estimator.com/datacenteroptimization Additional Resources Server Refresh Planning Guide Network Structure ROI Calculator 14 . and improving support for new applications and other business initiatives. the role of IT is changing rapidly.and long-term goals. 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. Beyond the performance benefits and cost savings. there is also a much larger story behind the need for data center optimization.

The data is presented for both the existing environment and the new environment: Existing Environment Server 2P Intel® Processor-based servers Server Age 5 years Server Count 100 Costs to Implement new environment Estimated Server Price Per Server $6.455 software support costs per server per year Software validation Costs $1.736 license fee. Costs are per server per year for hardware and maintenance/support of any “out-of-warranty” maintenance.384 Estimated Server power – Idle (Kilowatts) 0.5” HDD. Annual Database Support Fee $1.757 Estimated Server Power – Busy (Kilowatts) .000 per server Operating System Linux Premier Support Annual Operating System Support Fee $1.0 DC Capacity Cost ($/kW) $10.000 Server Warranty Period 3 Years (now expired) Server Maintenance Costs ($ per server per year) $2. RAID 0 Configuration Software Software Support Costs $15. 73 GB.Building the Business Case for Data Center Modernization 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. in $ 3% Operating Hours 24 X 7 Data Center Cooling Efficiency Factor (PUE) 2.399.110 Utile Rate ($/kWh) 0.399 Database SQL Server 2012 Enterprise. 10K rpm HDD with SATA HDD Storage Interface.792 Installation Migration Costs Per Server $50 Storage Storage 100 2. 10% HDD capacity consumed. Network Maintenance Costs ($ per server per year) $15 Power Hardware Maintenance Costs Hardware Depreciation Cycle 15 4 years . $6.10 Utility Growth Rate (per year.

Network Maintenance Costs ($ per server per year) $15 Costs to Implement new environment Power Hardware Maintenance Costs 16 .0 DC Capacity Cost ($/kW) $10.Building the Business Case for Data Center Modernization New Environment Server 2P Intel® Xeon® Processor E5-2600 v3 Product Family Server Count 21 (number of server needed to deliver the equivalent performance) Estimated Server Price Per Server $11.757 Estimated Server Power – Busy (Kilowatts) .328 Storage Storage 200 GB 710 (No OP) Solid-State Drive solution Software Software Support Costs Per Server Per Year $50.384 Estimated Server power – Idle (Kilowatts) 0.399.110 Utile Rate ($/kWh) 0.10 Utility Growth Rate (per year.736 license fee.400 Storage Implementation Costs Per Profile $6. $6.968 Installation Migration Costs Per Server $50 Disposal Costs Per Server $50 Network Implementation Costs Per Profile $8.399 Database SQL Server 2012 Enterprise.000 Operating System Linux Premier Support Annual Operating System Support Fee $1. in $ 3% Operating Hours 24 X 7 Data Center Cooling Efficiency Factor (PUE) 2.595 Software validation Costs Per Server $1.000 Server Warranty Period 3 Years (now expired) Server Maintenance Costs ($ per server per year) $2. Annual Database Support Fee $1. Costs are per server per year for hardware and maintenance/support of any “out-of-warranty” maintenance.

S. combined with a number of situation-specific variables. Nothing in this document should be interpreted as either a promise of or contract for a given level of costs. Xeon. might affect your future cost and savings. the Intel logo. All rights reserved. INCLUDING ANY WARRANTY OR MERCHANTABILITY. express or implied by estoppel or otherwise to any intellectual property rights is granted herein.Examining the High Cost of an Aging Infrastructure Hardware Depreciation Cycle 4 years Financial Parameters 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. including liability for infringement of any property rights relating to use of this information. and/or other countries. Intel. No license. This paper is for informational purposes only. THIS DOCUMENT IS PROVIDED ‘AS-IS’ WITH NO WARRANTIES WHATSOEVER. FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY OTHERWISE ARISING OUT OF ANY PROPOSAL SPECIFICATION OR SAMPLE. Copyright © 2014 Intel Corporation. Intel disclaims all liability. Printed in USA 0714/SK/BPC/PDF Please Recycle 330982-001US . NONINFRINGEMENT. * Other names and brands may be claimed as the property of others. are trademarks of Intel Corporation in the U.