UNIX Server Optimization With TCO and ROI Analysis

Transcription

1 UNIX Server Optimization With TCO and ROI Analysis Prepared For: John Smith Vice President of Finance ABC Company 123 Main Street Anytown, USA Prepared By: Datatrend Technologies, Inc 121 Cheshire Lane, Suite 700 Minnetonka, MN

2 1. Project Overview This ROI and TCO Analysis was created specifically for ABC Company, with research and analysis completed on November 15, 2011 leveraging the Enterprise ROI Engine from Alinean, Inc. IBM Systems Consolidation Evaluation Tool derives its estimations based on the current (AS-IS) cost of ownership for server operations, as entered by each individual end user, to a proposed (To-Be) IBM server solution. Consolidation estimations help to assess the return on investment (ROI) by switching or migrating to the proposed platform and the total cost of ownership (TCO) of the proposed solution. All estimates are based on individual end user input and publicly available data provided by Alinean, Inc. The results in this report, based on a 3 year outlook were created from assumptions about ABC Company s IT infrastructure profile and opportunity metrics, combined with industry research metrics and financial calculations contained in the Alinean software, an independent financial modeling tool and model developed by worldwide leading and independent analyst firm IDC ( and ROI consultancy Alinean, The IT Value Experts ( 2. Executive Summary For this analysis a TCO comparison and a risk adjusted cost-benefit analysis of the proposed solution's impact was conducted. Comparing the Solution A: Current (As Is) Environment with Solution B: IBM Server Solution results in a $42,050,427 advantage for Solution B. Comparing the proposed costs and benefits of Solution B: IBM Server Solution versus the As Is opportunities, it was projected that implementing the proposed solutions resulted in $44,004,628 of 3 year cumulative benefits. Of these projected benefits, $43,356,506 are direct (hard) benefits and $648,123 are indirect (soft) benefits. Top cumulative benefits for the project include: - Server Hardware Costs - $22,471,569 - Server Software Costs - $16,578,000 - Power and Facilities Costs - $3,734,781 - Systems Management Labor - $572,155 - Unplanned Downtime - Business Costs - $238,731 - Business Agility - Productivity Impact - $205,162 - Planned Downtime - Business Costs - $204,230 These benefits can be grouped regarding business impact as: - $43,356,506 in IT cost reductions - $205,162 in business operating efficiency improvements - $442,961 in business strategic advantage benefits The proposed project is expected to help the company meet the following goals and drive the following benefits: - Reduce IT Infrastructure Costs $42,784,351 - Improve IT Staff Efficiency / Productivity $572,155 - Improve IT System Availability / Service Levels $442,961 - Improve Time to Market for New Offerings $205,162 The proposed project is expected to deliver the following benefits to specified stakeholders: - Information Technology - IT $39,621,724 - Operations $3,734,781 - Sales and Marketing $442,961 - Enterprise-wide Target User Population $205,162 To implement the proposed project will require a 3 year cumulative investment of $7,030,311 including: - $4,866,501 in initial expenses - $6,880,311 in capital expenditures - $150,000 in operating expenditures 2

3 Comparing the costs and benefits of the proposed project using discounted cash flow analysis and factoring in a risk-adjusted discount rate of 12.5%, the proposed business case predicts: - Risk Adjusted Return on Investment (RA ROI) of 427% - Return on Investment (ROI) of 526% - Net Present Value (NPV) savings of $28,150,248 - Internal Rate of Return (IRR) of 261% - Payback period of 8.0 month(s) Note: The project has been risk-adjusted for an overall deployment schedule of 6 months, realized benefits to include 100.0% of direct benefits and 20.0% of indirect benefits and a deployment schedule (adoption curve) of 85.0% for year 1,95.0% for year 2, and 100.0% over each successive year of the analysis. 3. Opportunity Based on our discovery, the company was profiled as follows: Industry: Media / Entertainment Primary Geographic Location: United States Annual Revenue: $4,730.0 Number of server users for this project: 200 Current server replacement: Power based servers Primary business application focus: Multiple Workloads 4. Proposed Solution Based on your unique opportunities, it was determined that the following solution (Solution B: IBM Server Solution) would help address your goals and opportunities: Solution Component Recommendation Quantity Net Price Servers IBM - Power System GHz (48) 3 $1,741,965 Operating system IBM AIX + PowerVM 3 $302,400 Virtualization software IBM PowerVM 3 $0 Virtualization management IBM VMControl 144 $25,200 Database Software IBM DB2 58 $2,818,800 Data Growth None 0 $0 Application server None 0 $0 Systems management IBM Tivoli 24 $3,336 Threat prevention / management None 0 $0 None 0 $0 Other software (specify) None 0 $0 Professional Services 0 $100,000 Training 0 $50,000 Special incentive allowances 0 $0 Total $5,041, TCO Analysis and Benefit Summary Comparing the Solution A: Current (As Is) Environment with Solution B: IBM Server Solution results in a $42,050,427 advantage for Solution B. For this analysis, the cumulative 3 year TCO comparison is as follows: IT Costs TCO Comparison Cumulative 3 Year Solution A: Current (As Is) Environment Solution B: IBM Server Solution Difference (A - B) Difference (A - B)% Server Hardware Costs $22,471,569 $1,741,965 $20,729, % Server Software Costs $16,578,000 $5,138,346 $11,439, % Systems Management Labor $2,248,681 $1,497,866 $750, % 3

4 Power and Facilities Costs $4,941,960 $70,506 $4,871, % Total IT Costs $46,240,210 $8,448,683 $37,791, % Business Operating Costs Business Agility - Productivity Impact $2,757,570 $1,409,423 $1,348, % Total Business Operating Costs $2,757,570 $1,409,423 $1,348, % Business Strategic Costs Unplanned Downtime - Business Costs $2,353,008 $784,276 $1,568, % Planned Downtime - Business Costs $2,684,039 $1,342,019 $1,342, % Total Business Strategic Costs $5,037,047 $2,126,295 $2,910, % Total $54,034,827 $11,984,401 $42,050, % Comparing the As Is current costs and opportunities to the proposed solution yields expected benefits of $44,004,628 over the 3 year analysis period, with $43,356,506 in direct (hard) benefits, and $648,123 in indirect (soft) benefits. Benefits Summary Year 1 Year 2 Year 3 Total Total Benefits (to Solution B from Current (AS IS)) $13,076,153 $15,902,596 $15,025,879 $44,004,628 Top Benefits Server Hardware Costs $7,471,877 $7,933,375 $7,066,318 $22,471,569 Server Software Costs $4,697,100 $6,037,155 $5,843,745 $16,578,000 Power and Facilities Costs $690,123 $1,461,436 $1,583,223 $3,734,781 Systems Management Labor $102,222 $221,040 $248,892 $572,155 Unplanned Downtime - Business Costs (Indirect) Business Agility - Productivity Impact (Indirect) Planned Downtime - Business Costs (Indirect) $42,297 $91,934 $104,499 $238,731 $36,350 $79,007 $89,805 $205,162 $36,185 $78,648 $89,397 $204,230 All other included benefits. $0 $0 $0 $0 Total Top Benefits $13,076,153 $15,902,596 $15,025,879 $44,004,628 Direct Benefits $12,961,322 $15,653,006 $14,742,178 $43,356,506 Indirect Benefits $114,832 $249,590 $283,701 $648,123 4

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6 6. Investment Summary To implement the proposed project will require a 3 year cumulative investment of $7,030,311 including: $4,866,501 in initial expenses $6,880,311 in capital expenditures $150,000 in operating expenditures Investment Summary Initial Year 1 Year 2 Year 3 Total Total Investment $4,866,501 $770,870 $696,470 $696,470 $7,030,311 Capital Investment Software Purchases (IT) $3,124,536 $620,870 $696,470 $696,470 $5,138,346 Server Hardware Purchases (IT) $1,741,965 $0 $0 $0 $1,741,965 Total Capital Investment $4,866,501 $620,870 $696,470 $696,470 $6,880,311 Operating Investment Professional Services (IT) $0 $150,000 $0 $0 $150,000 Total Operating Investment $0 $150,000 $0 $0 $150,000 6

7 7. ROI Analysis Analyzing the opportunity, and applying the proposed solution, the cash flow and key financial metrics were calculated, resulting in a: - Risk Adjusted Return on Investment (RA ROI) of 427% - Return on Investment (ROI) of 526% - Net Present Value (NPV) savings of $28,150,248 - Internal Rate of Return (IRR) of 261% - Payback period of 8.0 month(s) ROI Analysis (Solution B) (Probable Case) Initial Year 1 Year 2 Year 3 Benefits (to Solution B from Current (AS IS)) $0 $13,076,153 $15,902,596 $15,025,879 Cumulative Benefits $13,076,153 $28,978,749 $44,004,628 Investment (Solution B) $4,866,501 $770,870 $696,470 $696,470 Cumulative Investment $4,866,501 $5,637,371 $6,333,841 $7,030,311 Cash Flow ($4,866,501) $12,305,283 $15,206,126 $14,329,409 Cumulative Cash Flow ($4,866,501) $7,438,782 $22,644,908 $36,974,318 ROI 526% Risk Adjusted ROI 427% NPV Savings $28,150,248 IRR 261% Payback period (including deployment period) 8 month(s) 7

8 Risk Adjusted Discount Rate 12.5% 8

9 8. Financing Analysis IBM Global Financing typically can provide credit qualified clients with access to fixed rate capital at competitive rates with flexible terms in supported countries. Financing typically helps to deliver improved ROI and lower TCO as compared to a capital expenditure based purchase, thus helping your company to better match costs with expected IT benefits. The following table shows the sample terms and rates used in this analysis to project the impact that financing may have on the expected returns for this investment. Internal cost of capital 9.5% Cost of debt 5.0% Implementation period (months) 6 Solution Component Purchase Price Term (Months) Monthly Payment Server Hardware $1,741, $44, Server Software $3,124, $92, Professional Services $150, $4, Total $5,016,501 $141, Based on the demonstration financing terms described above this project could yield an 28.1% higher ROI by leveraging IBM Global Finance compared to an upfront capital purchase. Financing could potentially accelerate the payback for this project by 2 months. Investment Analysis Purchase Purchase (NPV) Lease (NPV) Initial Investment $5,041,701 $5,041,701 $4,724,330 Total Three Year Investment $7,030,311 $6,838,102 $6,545,932 Total Three Year Benefits $50,044,870 $43,013,192 $43,013,192 Return on Investment (ROI) 611.8% 529.0% 557.1% Internal Rate of Return 292.6% 292.6% 312.6% Payback Period (months) IBM Global Financing offerings are provided through IBM Credit LLC in the United States and other IBM subsidiaries and divisions worldwide to qualified commercial and government customers. Rates are based on a customer's credit rating, financing terms, offering type, equipment type and options, and other factors, including the regulatory environment, and rates and offerings available may vary by country. Other restrictions may apply. Rates and offerings are subject to change, extension or withdrawal by IBM Global Financing without notice. Minimum transaction sizes are US$ 5,000 on a loan, and US$ 25,000 (or local equivalent) on Fair Market Value or Full Payout Lease (in each case, where available from IBM Global Financing). Monthly payments are estimates based on financing rates for installations of qualified products and services in the United States in the current quarter for "Best" credit customers (as determined by IBM Global Financing) for a thirty-six month term. Your actual rates may vary based on your creditworthiness, configuration details, and other factors etc. and are subject to credit approval by IBM Credit LLC or the relevant local IBM Global Financing company. For some clients, total software and services financing is limited to 75% of hardware financed. Other restrictions and conditions may apply, so please contact your IBM Authorized Business Partner or IBM or IBM Global Financing representative for more information. The rates and offering descriptions provided are for informational purposes only and do not represent a commitment by IBM Global Financing to offer leasing or financing, whether at these rates and terms or any other rates and terms. 9

10 Appendix A: Questionnaire (As Is) IBM System Consolidation Evaluation Tool This TCO / ROI evaluation tool was developed independently by the leading tool developer, Alinean, Inc. The tool is designed to provide customers with a quick initial high level analysis of potential consolidation savings by switching to current IBM platforms. This version quantifies potential benefits based on IBM Power Systems servers. Additional versions are available for IBM System x and IBM System z servers. Demonstrated results are based on projected costs associated with specified growth and replacement plans for future years, should you continue with your current hardware and software environment. This tool is sponsored by the Move Up To IBM at: Contact IBM Company Profile What is the closest industry match to your company / organization? Media / Entertainment n1 Where are the primary locations for your data center operations? United States n2 What is the annual revenue (or budget equivalence) for the organization supported by the specified servers? (in Millions) $4,730.0 n3 How many users access the servers in the scope of this project? 200 n4 Current (As Is) Workload Profile Please indicate the servers to be consolidated by the proposed solution. (If your specific server model is not listed, please choose a proxy that is a close match.) Average Cores Workload Group Workload Types Server Type Server Count per Server On-line Transaction Workload Group 1 Processing (OLTP) Sun Fire E25K (1.2 GHz) (48 ch / 96 co) n5 Workload Group 2 Financial / Trading Sun Fire E20K (1.8 GHz) (24 ch / 48 co) n6 Workload Group 3 IT Infrastructure Sun Fire V480 (1.2 GHz) (4 ch / 4 co) 25 4 n7 Workload Group 4 Application Development Sun Fire 4800 (1.2 GHz) (8 ch / 8 co) 20 4 n8 Workload Group 5 Application Development Sun Fire 6800 (1.2 GHz) (16 ch / 16 co) n9 Workload Group 6 Please Select Please Select 0 4 n10 Total 100 3,300 Cumulative estimated workload factor for current servers (used in estimating capacity of target servers) 10,958.2 n11 Projected costs for the current environment are based on the following growth and replacement values for the current server architecture. Average annual growth in computing requirements Average server replacement period (years) 0.0% n n13 Current (As Is) Software Profile Please update the software packages, license levels and pricing to reflect your unique environment. Workload Group Operating System OS License Fee per Server Database Software Database Licenses per Server Price per Database License Workload Group 1 Sun Solaris $0 Oracle EE 48 $18,000 n14 Workload Group 2 Sun Solaris $0 Oracle EE 24 $18,000 n15 Workload Group 3 Sun Solaris $0 Oracle EE 0 $0 n16 Workload Group 4 Sun Solaris $0 Oracle EE 2 $18,000 n17 Workload Group 5 Sun Solaris $0 None 16 $0 n18 Workload Group 6 None $0 None 0 $0 n19 Additional Enterprise Software Packages Predominant Package Type Total Enterprise Licenses Average Price per License Annual Support per License Data Growth (per core) None 0 $0 $0 n20 Application server (per core) None 0 $0 $0 n21 Systems management (per core) None 0 $0 $0 n22 Server virtualization (per core) None 0 $0 $0 n23 Threat prevention / management (per core) None 0 $0 $0 n24 (per user) None 0 $0 $0 n25 Other software (specify) None 0 $0 $0 n26 Current (As Is) Systems Administration Profile Specify the current systems administration and operations staff full time equivalents (FTEs). Systems Administration and Operations Staff Number of FTEs Average Annual Unburdened Salary Systems administrators 5.56 $67,806 n27 Systems operators 3.33 $55,790 n28 Other (specify) 0.00 $0 Total 8.89 $63,305 10

11 Current (As Is) Availability Profile Specify your current availability (downtime). Current Availability (Downtime) Annual Hours of Downtime Availability Percentage of Users Impacted per Outage Revenue Impact per Hour of Outage Average annual system availability % 20.0% $283,800 n29 Average annual scheduled downtime % $28,380 n30 Copyright Alinean, Inc. All rights reserved Disclaimer v3.2.2 Notes: 1. The type of organization. This, along with the primary location of the organization scales key metrics in the tool, particularly relating to salary and any other industry-related metrics. 2. The primary geographic location where the company or organization operates, and the company data centers. The specification should be made for the in-scope users and data centers as part of this project. This, along with the industry type of the company or organization helps scale key metrics in the tool, particularly relating to salary and any other geographic related metrics. 3. The annual revenue for the scope of the organization for this analysis helps to estimate storage capacity and factors such as the cost of downtime. 4. The user population for the scope of this analysis helps estimate storage requirements and the cost of downtime. 5. The selected server information is used to estimate costs for maintaining and growing the current environment, as well as estimating the appropriate IBM system for consolidation. Workload Types include the following classifications: (Web Infrastructure) - Web servers, proxy servers, http servers, connectors (Application Development) - Developer workbench, dev and test servers, Rational, Eclipse (Database) - All production and test databases (Decision Support) - Data mining, data warehousing, analytics (IT Infrastructure) - ftp servers, file and print servers, monitoring consoles, LDAP, DNS, test (Business Processing) - transaction processing, batch processing, customer relationship management, enterprise planning 6. See above 7. See above 8. See above 9. See above 10. See above 11. The workload factor is based on Alinean research using a combination of published benchmarks to estimate approximate computing capacity for the specified current servers. 12. According to Alinean research most organizations processing capacity grows between 12-23% per year. This factor is used to estimate costs for growing the current environment. 13. Typically organizations replace aging server equipment on a regular basis with newer faster and more reliable servers. This factor is used to estimate costs for replacing aging equipment. 14. The selected server software information is used to estimate costs for maintaining and growing the current environment, as well as estimating the appropriate IBM system for consolidation. All software licensing costs are consolidated at a total per server level. 15. See above 16. See above 17. See above 18. See above 19. See above 20. The data management software is used to estimate annual maintenance costs as well as costs for additional licenses for growth. 11

12 21. The application server type is used to estimate annual maintenance costs as well as costs for additional licenses for growth. 22. The systems management information is used to estimate annual maintenance costs as well as costs for additional licenses for growth. 23. The server virtualization software is used to estimate annual maintenance costs as well as costs for additional licenses for growth. 24. The threat prevention / management software is used to estimate annual maintenance costs as well as costs for additional licenses for growth software costs are included for comparison with proposed configuration. Information is used to estimate annual maintenance costs as well as costs for additional licenses for growth. 26. If you have additional software for consideration, please enter that information here. 27. Default assumes 1 systems administrator FTE for every 18 servers. Average annual unburdened salary is estimated at $79,000 USD base salary and scaled by industry and location. 28. Default assumes 1 systems operator FTE for every 30 servers. Average annual unburdened salary is estimated at $65,000 USD base salary and scaled by industry and location. 29. Average annual downtime and the costs of downtime are based on Alinean research Average annual downtime and the costs of downtime are based on Alinean research

13 Appendix B: Solution Selection (To Be) IBM Solution Recommendations Optimizing workloads and driving towards a Smarter Systems environment are critical paths IT must begin to achieve in 2010 and beyond. The IBM Systems recommendations below are based on a high level assessment of relative workload requirements for the specified systems in the Questionnaire tab and based on published benchmarks. The demonstration systems below represent a sustained level of high utilization and extensive virtualization. The new IBM POWER7 products are capable of sustained utilization rates in excess of 90%. Many factors will influence the final solution needed to consolidate your environment and those final results may be different from the tool recommendations. List pricing for the various systems models represent typical and average configurations including memory, storage, network interface cards, cables, and chassis. Cost for racks and HMC is not included. All prices are in USA $. Prices from resellers may vary. Prices are subject to change without notice. Will software licenses be transferred from retired systems where applicable, or purchased new? Transferred n1 Would you like to include server virtualization in the analysis? Yes n2 Would you like to configure the solution for high availability? Yes n3 Server Component Recommendation Quantity Price Net Price X Servers IBM - Power System GHz (48) 3 $580,655 $1,741,965 n4 X Operating system IBM AIX + PowerVM 3 $100,800 $302,400 n5 X Virtualization software IBM PowerVM 3 $0 $0 n6 X Virtualization management IBM VMControl 144 $175 $25,200 n7 X Database Software IBM DB2 58 $48,600 $2,818,800 n8 Data Growth None 0 $0 $0 n9 Application server None 0 $0 $0 n10 X Systems management IBM Tivoli 24 $139 $3,336 n11 Threat prevention / management None 0 $0 $0 n12 None 0 $0 $0 n13 Other software (specify) None 0 $0 $0 n14 X Professional Services Fees $0 $100,000 n15 Training $0 $50,000 n16 Special incentive allowances $0 $0 n17 Total $4,891,701 $5,041,701 Estimated workload factor for the demonstrated systems are based on sustained high utilization levels and highly virtualized environments. Your actual consolidation results will vary depending on your unique systems/workload optimization needs. Initial hardware purchase discount level Initial software purchase discount level Copyright Alinean, Inc. All rights reserved Notes: 15,138.0 n18 0.0% n19 0.0% n20 1. Often software licenses are transferred free of charge from retired servers to new servers during a consolidation. 2. Virtualization is included by default to Power systems. 3. If high availability is selected the number of recommended servers is doubled. 4. The recommended server type and quantity is based on a comparison with the relative workload of the servers entered in the Questionnaire. This model takes a conservative approach and does not factor in increase utilization which often occurs in a server consolidation. The default recommendations have been compared to several real world cases. The recommendations are generally very appropriate, however, computing workloads and characteristics can vary significantly. Please select the most appropriate target system and quantity, if you believe there is a better solution for your needs. 5. The operating system selection is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. (Pricing for IBM AIX and IBM i includes the PowerVM option.) 6. The cost of IBM PowerVM is included with the OS listed above. Pricing for vsphere is based on $2245 per socket. 7. The threat prevention / management software is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 8. The database selection is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. The price for the IBM DB2i database is included in the IBM i operating system license. 9. The data management software is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 10. The application server selection is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 13

14 11. The systems management selection is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 12. The threat prevention / management software is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 13. The selection is used to estimate the costs for the proposed solution. If licenses of the same type are available to be transferred from the retired systems, the cost for those licenses are not added to the proposed solution. 14. If you have additional software for consideration, please enter that information here. 15. Please use this field to capture any estimated services costs that would be required to install and configure the new servers. Application porting or migration efforts can be included. For granularity of services costs you can click on the Professional Services link to bring up the individual worksheet. Please update the professional services estimates to reflect your anticipated project costs. 16. The tool does not estimate training costs. Please update this information to reflect your expectations for training. 17. Enter special incentives that reduce the Net Price Total of your solutions such as IGF Competitive Buyback, Trade-in values, IBM Rewards, or other special incentives from IBM and our Partners. 18. Workload factor for the demonstrated systems are based on sustained high utilization levels and highly virtualized environments. Your actual consolidation results will vary depending on your unique systems/workload optimization needs. 19. Enter the anticipated discount value to be applied across the hardware costs. To discount components individually, simply input the desired Net Price in the table above. 20. Enter the anticipated discount value to be applied across the software costs. To discount components individually, simply input the desired Net Price in the table above. 14

15 Appendix C: TCO and Benefit Details Server Hardware Costs This worksheet compares the server hardware costs for on-going maintenance and growth expectations for the current environment versus the purchase price and growth expectations for the server hardware for the proposed IBM server solution. Cumulative Benefits (3 - Year): $22,471,569 Organization financial benefit type: Net Fixed Assets (NFA - Cumulative) Values map to benefit class: Direct Benefits Goal: Reduce IT Infrastructure Costs Stakeholder: Information Technology - IT Average annual growth rate in computing requirements 0.0% Average server replacement period (years) 5.0 Average annual decrease in server hardware costs 0.0% n1 Server Hardware Costs Year 1 Year 2 Year 3 Year 4 Year 5 Current (As Is) Environment Server count (beginning of year) Annual growth rate in computing requirements 0.0% 0.0% 0.0% 0.0% 0.0% Annual server purchases for replacement Average price per server $0 $0 $0 $799,131 $799,131 Annual server purchase costs $0 $0 $0 $15,982,624 $15,982,624 Average annual server support costs 11.0% 11.0% 13.0% 15.0% 17.0% Annual server support costs $8,790,443 $8,790,443 $10,388,706 $11,986,968 $13,585,230 Annual server hardware costs $8,790,443 $8,790,443 $10,388,706 $27,969,592 $29,567,854 Server Hardware Costs Year 1 Year 2 Year 3 Year 4 Year 5 IBM Server Solution Server count (beginning of year) Annual growth rate in computing requirements 0.0% 0.0% 0.0% 0.0% 0.0% New server purchases for growth Server upgrades for growth $0 $0 $0 $0 $0 Annual server purchase costs $1,741,965 $0 $0 $0 $0 Average annual server support costs 0.0% 0.0% 0.0% 11.0% 11.0% Annual server support costs $0 $0 $0 $191,616 $191,616 Special incentive allowances $0 $0 $0 $0 $0 Annual server hardware costs $1,741,965 $0 $0 $191,616 $191,616 Annual Benefits Year1 Year 2 Year 3 Year 4 Year 5 Server costs for current (As Is) environment IBM server costs are included in investment $8,790,443 $8,790,443 $10,388,706 $27,969,592 $29,567,854 Server Hardware Costs (Current Environment) Year 1 Year 2 Year 3 Year 4 Year 5 Workload Group 1 - Sun Fire E25K (1.2 GHz) (48 ch / 96 co) Server count (beginning of year) Annual server purchases for replacement Average price per server $2,170,656 $2,170,656 $2,170,656 $2,170,656 $2,170,656 Annual server purchase costs $0 $0 $0 $8,682,624 $8,682,624 Annual server support costs $4,775,443 $4,775,443 $5,643,706 $6,511,968 $7,380,230 Workload Group 2 - Sun Fire E20K (1.8 GHz) (24 ch / 48 co) Server count (beginning of year) Annual server purchases for replacement Average price per server $1,350,000 $1,350,000 $1,350,000 $1,350,000 $1,350,000 Annual server purchase costs $0 $0 $0 $5,400,000 $5,400,000 Annual server support costs $2,970,000 $2,970,000 $3,510,000 $4,050,000 $4,590,000 Workload Group 3 - Sun Fire V480 (1.2 GHz) (4 ch / 4 co) 15

16 Server count (beginning of year) Annual server purchases for replacement Average price per server $36,000 $36,000 $36,000 $36,000 $36,000 Annual server purchase costs $0 $0 $0 $180,000 $180,000 Annual server support costs $99,000 $99,000 $117,000 $135,000 $153,000 Workload Group 4 - Sun Fire 4800 (1.2 GHz) (8 ch / 8 co) Server count (beginning of year) Annual server purchases for replacement Average price per server $55,000 $55,000 $55,000 $55,000 $55,000 Annual server purchase costs $0 $0 $0 $220,000 $220,000 Annual server support costs $121,000 $121,000 $143,000 $165,000 $187,000 Workload Group 5 - Sun Fire 6800 (1.2 GHz) (16 ch / 16 co) Server count (beginning of year) Annual server purchases for replacement Average price per server $500,000 $500,000 $500,000 $500,000 $500,000 Annual server purchase costs $0 $0 $0 $1,500,000 $1,500,000 Annual server support costs $825,000 $825,000 $975,000 $1,125,000 $1,275,000 Workload Group 6 - Please Select Server count (beginning of year) Annual server purchases for replacement Average price per server $0 $0 $0 $0 $0 Annual server purchase costs $0 $0 $0 $0 $0 Annual server support costs $0 $0 $0 $0 $0 Annual server hardware purchase costs $0 $0 $0 $15,982,624 $15,982,624 Annual server hardware support costs $8,790,443 $8,790,443 $10,388,706 $11,986,968 $13,585,230 Total annual server hardware costs $8,790,443 $8,790,443 $10,388,706 $27,969,592 $29,567,854 Notes: 1. Historically server processing speeds have increased significantly, while prices have remained relatively stable. This has resulted in the ability to purchase much more powerful servers for lower prices over time. This value is used to discount the cost of future hardware purchases to account for this factor. Realized Benefits (Probable) Year 1 Year 2 Year 3 Solution A Current (As Is) Environment $8,790,443 $7,032,355 $6,648,772 Solution B IBM Server Solution $1,741,965 $0 $0 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $8,790,443 $7,032,355 $6,648,772 Q1 $0.00 $7,933, $7,066, Q2 $0.00 $0.00 $0.00 Q3 $7,471, $0.00 $0.00 Q4 $0.00 $0.00 $0.00 Realized Total Benefits $7,471,877 $7,933,375 $7,066,318 Server Software Costs This worksheet compares the server software costs for on-going support and growth expectations for the current environment versus the purchase price and growth expectations for the server software for the proposed IBM server solution. Cumulative Benefits (3 - Year): $16,578,000 Organization financial benefit type: Net Fixed Assets (NFA - Cumulative) Values map to benefit class: Direct Benefits Goal: Reduce IT Infrastructure Costs Stakeholder: Information Technology - IT Average annual growth rate in computing requirements 0.0% Server Software Costs Year 1 Year 2 Year 3 Year 4 Year 5 16

17 Current (As Is) Environment Server count (beginning of year) Annual OS & DB license purchases $0 $0 $0 $0 $0 Annual OS & DB support costs $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Annual data growth license purchases $0 $0 $0 $0 $0 Annual data growth support costs $0 $0 $0 $0 $0 Annual application server license purchases $0 $0 $0 $0 $0 Annual application server support costs $0 $0 $0 $0 $0 Annual systems management license purchases $0 $0 $0 $0 $0 Annual systems management support costs $0 $0 $0 $0 $0 Annual server virtualization license purchases $0 $0 $0 $0 $0 Annual server virtualization support costs $0 $0 $0 $0 $0 Annual threat management license purchases $0 $0 $0 $0 $0 Annual threat management support costs $0 $0 $0 $0 $0 Annual license purchases $0 $0 $0 $0 $0 Annual support costs $0 $0 $0 $0 $0 Annual other software license purchases $0 $0 $0 $0 $0 Annual other software support costs $0 $0 $0 $0 $0 Annual software license purchases $0 $0 $0 $0 $0 Annual software support costs $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Total annual software costs $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Server Software Costs Year 1 Year 2 Year 3 Year 4 Year 5 IBM Server Solution Server count (beginning of year) OS (IBM AIX + PowerVM) license purchases $302,400 $0 $0 $0 $0 OS (IBM AIX + PowerVM) support costs $0 $75,600 $75,600 $75,600 $75,600 Virtualization (IBM PowerVM) license purchases $0 $0 $0 $0 $0 Virtualization (IBM PowerVM) support costs $0 $0 $0 $0 $0 DB (IBM DB2) license purchases $2,818,800 $0 $0 $0 $0 DB (IBM DB2) support costs $620,136 $620,136 $620,136 $620,136 $620,136 Data Growth (None) license purchases $0 $0 $0 $0 $0 Data Growth (None) support costs $0 $0 $0 $0 $0 AppSrv (None) license purchases $0 $0 $0 $0 $0 AppSrv (None) support costs $0 $0 $0 $0 $0 Mgnt (IBM Tivoli) license purchases $3,336 $0 $0 $0 $0 Mgnt (IBM Tivoli) support costs $734 $734 $734 $734 $734 Security (None) license purchases $0 $0 $0 $0 $0 Security (None) support costs $0 $0 $0 $0 $0 (None) license purchases $0 $0 $0 $0 $0 (None) support costs $0 $0 $0 $0 $0 Other (None) license purchases $0 $0 $0 $0 $0 Other (None) support costs $0 $0 $0 $0 $0 Annual software license purchases $3,124,536 $0 $0 $0 $0 Annual software support costs $620,870 $696,470 $696,470 $696,470 $696,470 Total annual software costs $3,745,406 $696,470 $696,470 $696,470 $696,470 Annual Benefits Year1 Year 2 Year 3 Year 4 Year 5 Software costs for current (As Is) environment IBM software costs are included in investment $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Current (As Is) Environment Server Group OS Package DB Package Average OS & DB License Fee per Server Average Annual OS & DB Support per Server Workload Group 1 Sun Solaris Oracle EE $864,000 $174,780 Workload Group 2 Sun Solaris Oracle EE $432,000 $88,380 Workload Group 3 Sun Solaris Oracle EE $0 $1,980 Workload Group 4 Sun Solaris Oracle EE $36,000 $9,180 Workload Group 5 Sun Solaris None $0 $1,980 Workload Group 6 None None $0 $0 Current (As Is) Environment Year 1 Year 2 Year 3 Year 4 Year 5 Workload Group 1 - Sun Fire E25K (1.2 GHz) (48 ch / 96 co) Server count (beginning of year) OS & DB license costs per new server $864,000 $864,000 $864,000 $864,000 $864,000 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $3,495,600 $3,495,600 $3,495,600 $3,495,600 $3,495,600 17

18 Workload Group 2 - Sun Fire E20K (1.8 GHz) (24 ch / 48 co) Server count (beginning of year) OS & DB license costs per new server $432,000 $432,000 $432,000 $432,000 $432,000 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $1,767,600 $1,767,600 $1,767,600 $1,767,600 $1,767,600 Workload Group 3 - Sun Fire V480 (1.2 GHz) (4 ch / 4 co) Server count (beginning of year) OS & DB license costs per new server $0 $0 $0 $0 $0 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $49,500 $49,500 $49,500 $49,500 $49,500 Workload Group 4 - Sun Fire 4800 (1.2 GHz) (8 ch / 8 co) Server count (beginning of year) OS & DB license costs per new server $36,000 $36,000 $36,000 $36,000 $36,000 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $183,600 $183,600 $183,600 $183,600 $183,600 Workload Group 5 - Sun Fire 6800 (1.2 GHz) (16 ch / 16 co) Server count (beginning of year) OS & DB license costs per new server $0 $0 $0 $0 $0 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $29,700 $29,700 $29,700 $29,700 $29,700 Workload Group 6 - Please Select Server count (beginning of year) OS & DB license costs per new server $0 $0 $0 $0 $0 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $0 $0 $0 $0 $0 Annual OS & DB license costs $0 $0 $0 $0 $0 Annual OS & DB support costs $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Annual server software costs $5,526,000 $5,526,000 $5,526,000 $5,526,000 $5,526,000 Realized Benefits (Probable) Year 1 Year 2 Year 3 Solution A Current (As Is) Environment $5,526,000 $5,526,000 $5,526,000 Solution B IBM Server Solution $3,745,406 $696,470 $696,470 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $5,526,000 $5,526,000 $5,526,000 Q1 $0.00 $6,037, $5,843, Q2 $0.00 $0.00 $0.00 Q3 $4,697, $0.00 $0.00 Q4 $0.00 $0.00 $0.00 Realized Total Benefits $4,697,100 $6,037,155 $5,843,745 Power and Facilities Costs This worksheet compares the facilities (space and power) costs for the current environment versus the proposed IBM server solution. Cumulative Benefits (3 - Year): $3,734,781 Organization financial benefit type: Operating Expense (Allocated) Values map to benefit class: Direct Benefits Goal: Reduce IT Infrastructure Costs Stakeholder: Operations Measure datacenter space using (square feet or square meters) Square Feet Space Requirements Current (As Is) Environment IBM Server Solution Savings Number of servers Average space required per server (Square Feet) Total datacenter space requirements (Square Feet)

19 Average annual cost per square foot of datacenter space $62.50 $62.50 Total annual costs for datacenter space (year 1) $45,125 $476 $44,649 Power and HVAC Requirements Current (As Is) Environment IBM Server Solution Savings Number of servers (processors for IBM) Average power consumption per server (Watts) 10,479 5,020 1,042,880 Average HVAC consumption per server (Watts) 9,431 4, ,582 Total hourly power and HVAC consumption (Watts) 1,991,000 28,614 1,962,386 Annual operating hours 8,766 8,766 Annual power and HVAC consumption (kwatt hours) 17,453, ,830 Average cost per kwatt hour $ $ n1 Total annual power and HVAC costs (year 1) $1,602,195 $23,026 $1,579,169 Average annual growth in computing resources 0.0% Annual Facilities Costs Year 1 Year 2 Year 3 Year 4 Year 5 Current (As Is) Environment annual facilities costs $1,647,320 $1,647,320 $1,647,320 $1,647,320 $1,647,320 IBM Server Solution annual facilities costs $23,502 $23,502 $23,502 $23,502 $23,502 Annual savings in facilities costs $1,623,818 $1,623,818 $1,623,818 $1,623,818 $1,623,818 Notes: 1. Default is the average cost of electricity in the U.S. according to Energy Information Administration, "Average Retail Price of Electricity to Ultimate Customer by End-Use Sector, by State." Realized Benefits (Probable) Year 1 Year 2 Year 3 Solution A Current (As Is) Environment $1,647,320 $1,647,320 $1,647,320 Solution B IBM Server Solution $23,502 $23,502 $23,502 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $1,623,818 $1,623,818 $1,623,818 Q1 $0.00 $345, $385, Q2 $0.00 $345, $385, Q3 $345, $385, $405, Q4 $345, $385, $405, Realized Total Benefits $690,123 $1,461,436 $1,583,223 Systems Management Labor This worksheet compares the systems management labor costs for the current environment versus the proposed IBM server solution. Cumulative Benefits (3 - Year): $572,155 Organization financial benefit type: Operating Expense (Allocated) Values map to benefit class: Direct Benefits Goal: Improve IT Staff Efficiency / Productivity Stakeholder: Information Technology - IT Average annual burden rate for labor 28.0% n1 Systems Management Labor Current FTEs Expected Savings Proposed FTEs Average Annual Fully Burdened Salary Annual Savings Year 1 Systems administrators % 3.34 $86,792 $192,678 n2 Systems and backup operators % 2.66 $71,411 $47,845 Other (specify) % 0.00 $0 $0 Total % 6.00 $240,523 Average annual growth in systems management staff 0.0% n3 Average annual growth in systems management salaries 4.0% Systems Management Labor Year 1 Year 2 Year 3 Year 4 Year 5 19

20 Current (As Is) Environment - FTEs Current (As Is) Environment - annual labor costs $720,362 $749,176 $779,143 $810,309 $842,721 IBM Server Solution - FTEs IBM Server Solution - annual labor costs $479,839 $499,033 $518,994 $539,754 $561,344 Annual savings - FTEs Annual savings - labor costs $240,523 $250,143 $260,149 $270,555 $281,377 Notes: 1. The annual salary burden factor includes additional costs such as paid time off and benefits that the company incurs beyond the employees base salary. This factor is based on geography, where the average is 26% for the US and 35% for Europe. 2. Server consolidation reduces the number of physical servers and help standardize configurations leading to reduced labor requirements. 3. The growth in staff is estimated at 2/3rds the growth rate in servers. This is used to estimate the growth in labor costs. Realized Benefits (Probable) Year 1 Year 2 Year 3 Solution A Current (As Is) Environment $720,362 $749,176 $779,143 Solution B IBM Server Solution $479,839 $499,033 $518,994 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $240,523 $250,143 $260,149 Q1 $0.00 $51, $59, Q2 $0.00 $51, $59, Q3 $51, $59, $65, Q4 $51, $59, $65, Realized Total Benefits $102,222 $221,040 $248,892 Unplanned Downtime - Business Costs The IBM server solution supports high availability capabilities, which can significantly reduce business interruptions due to system failures. Cumulative Benefits (3 - Year): $238,731 Organization financial benefit type: Revenue or Equivalent Values map to benefit class: Indirect Benefits Goal: Improve IT System Availability / Service Levels Stakeholder: Sales and Marketing Unplanned Downtime Current (As Is) Environment Expected Benefits with Proposed Solution Expected Availability for Proposed Solution Average annual system availability % 66.7% % n1 Annual hours of unplanned system downtime Estimated revenue or equivalent cost per hour of unplanned downtime $283,800 $283,800 Annual business losses due to availability issues $7,463,940 $4,976,149 $2,487,791 Net incremental contribution 10.0% 10.0% Annual incremental margin contribution $746,394 $497,615 $248,779 Unplanned Downtime Year 1 Year 2 Year 3 Year 4 Year 5 Current (As Is) costs $7,463,940 $7,837,137 $8,228,994 $8,640,444 $9,072,466 Incremental margin contribution $746,394 $783,714 $822,900 $864,045 $907,247 Proposed (To Be) costs $2,487,791 $2,612,181 $2,742,790 $2,879,930 $3,023,927 Incremental margin contribution $248,779 $261,218 $274,279 $287,993 $302,393 Reduction in business loss from improved availability $4,976,149 $5,224,956 $5,486,204 $5,760,514 $6,048,539 Incremental margin contribution $497,615 $522,496 $548,621 $576,052 $604,854 Annual benefit growth (starting in year 2) 5.0% n2 Note - Availability includes all aspects of potential downtime, including hardware system errors, software errors, configuration issues and administrative 20

21 issues. The IBM servers historically have delivered system availability approaching 5 9s, or %. The default expectations in this model assume much more conservative estimates based primarily on other factors which may impact total system availability. Notes: 1. The IBM server solution supports high availability capabilities, which can significantly reduce business interruptions due to storage failures. 2. Used to calculate annual benefits in ongoing years of the analysis. By default, equal to the annual growth in revenue or equivalent. Realized Benefits (Probable) Year 1 Year 2 Year 3 Incremental Revenue or Equivalent Solution A Current (As Is) Environment $7,463,940 $7,837,137 $8,228,994 Solution B IBM Server Solution $2,487,791 $2,612,181 $2,742,790 Worksheet / Ideal Benefit (to Solution $4,976,149 $5,224,956 $5,486,204 B from Current (AS IS)) Q1 $0.00 $211, $248, Q2 $0.00 $211, $248, Q3 $211, $248, $274, Q4 $211, $248, $274, Realized Total $422,973 $919,343 $1,044,991 Net Contribution: Incremental Revenue or Equivalent Solution A Current (As Is) Environment $746,394 $783,714 $822,900 Solution B IBM Server Solution $248,779 $261,218 $274,279 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $497,615 $522,496 $548,621 Q1 $0.00 $21, $24, Q2 $0.00 $21, $24, Q3 $21, $24, $27, Q4 $21, $24, $27, Realized Total $42,297 $91,934 $104,499 Business Agility - Productivity Impact Server consolidation and virtualization can often speed the deployment of new applications by reducing the time required for purchasing, installing and configuring new server resources. Often new server resources can simply be created by defining additional virtual machines on an existing physical server. Cumulative Benefits (3 - Year): $205,162 Organization financial benefit type: Operating Expense (Allocated) Values map to benefit class: Indirect Benefits Goal: Improve Time to Market for New Offerings Stakeholder: Enterprise-wide Target User Population Business Agility - Productivity Impact Current (As Is) Environment Benefits with Proposed Solution IBM Server Solution New application projects per year 3 3 Average system provisioning time per application (days) % 23 Average annual value in productivity improvement per application $2,365,000 $2,365,000 Average lost productivity improvement value per system provisioning $291,575 $142,548 $149,027 Annual value of productivity losses due to system provisioning $874,725 $427,644 $447,081 Business Agility - Productivity Impact Year 1 Year 2 Year 3 Year 4 Year 5 Current (As Is) costs $874,725 $918,461 $964,384 $1,012,603 $1,063,233 Proposed (To Be) costs $447,081 $469,435 $492,907 $517,552 $543,430 Reduction in productivity losses from improved agility $427,644 $449,026 $471,477 $495,051 $519,804 Annual benefit growth (starting in year 2) 5.0% n1 Notes: 21

22 1. Used to calculate annual benefits in ongoing years of the analysis. Default set equal to the growth in salaries. Realized Benefits (Probable) Year 1 Year 2 Year 3 Solution A Current (As Is) Environment $874,725 $918,461 $964,384 Solution B IBM Server Solution $447,081 $469,435 $492,907 Worksheet / Ideal Benefit B from Current (AS IS)) (to Solution $427,644 $449,026 $471,477 Q1 $0.00 $18, $21, Q2 $0.00 $18, $21, Q3 $18, $21, $23, Q4 $18, $21, $23, Realized Total Benefits $36,350 $79,007 $89,805 Planned Downtime - Business Costs The IBM server solution supports improved systems management capabilities, which can reduce or even eliminate planned downtime and business interruptions. Cumulative Benefits (3 - Year): $204,230 Organization financial benefit type: Revenue or Equivalent Values map to benefit class: Indirect Benefits Goal: Improve IT System Availability / Service Levels Stakeholder: Sales and Marketing Planned Downtime Current (As Is) Environment Expected Benefits with Proposed Solution Potential Planned Downtime for Proposed Solution Annual hours of planned system downtime per year % n1 Estimated revenue or equivalent cost per hour of planned downtime $28,380 $28,380 Annual business losses due to scheduled downtime $8,514,000 $4,257,000 $4,257,000 Net incremental contribution 10.0% 10.0% Annual incremental margin contribution $851,400 $425,700 $425,700 Planned Downtime Year 1 Year 2 Year 3 Year 4 Year 5 Current (As Is) costs $8,514,000 $8,939,700 $9,386,685 $9,856,019 $10,348,820 Incremental margin contribution $851,400 $893,970 $938,669 $985,602 $1,034,882 Proposed (To Be) costs $4,257,000 $4,469,850 $4,693,343 $4,928,010 $5,174,411 Incremental margin contribution $425,700 $446,985 $469,334 $492,801 $517,441 Reduction in business loss from reduced planned downtime $4,257,000 $4,469,850 $4,693,342 $4,928,009 $5,174,409 Incremental margin contribution $425,700 $446,985 $469,335 $492,801 $517,441 Annual benefit growth (starting in year 2) 5.0% n2 Notes: 1. The IBM server solution supports improved storage management capabilities, which can reduce or even eliminate planned downtime and business interruptions. 2. Used to calculate annual benefits in ongoing years of the analysis. By default, equal to the annual growth in revenue or equivalent. Realized Benefits (Probable) Year 1 Year 2 Year 3 Incremental Revenue or Equivalent Solution A Current (As Is) Environment $8,514,000 $8,939,700 $9,386,685 Solution B IBM Server Solution $4,257,000 $4,469,850 $4,693,343 Worksheet / Ideal Benefit (to Solution $4,257,000 $4,469,850 $4,693,342 B from Current (AS IS)) Q1 $0.00 $180, $212, Q2 $0.00 $180, $212, Q3 $180, $212, $234,