COMPARING COST MODELS - DETAILS

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1 COMPARING COST MODELS - DETAILS SOFTLAYER TOTAL COST OF OWNERSHIP (TCO) CALCULATOR APPROACH The Detailed comparison tab in the TCO Calculator provides a tool with which to do a cost comparison between the SoftLayer cloud configuration you specified and a comparable traditional on-premises implementation. This document provides a description of the comparison methodology and a motivation for the default parameters used. The comparison tool methodology attempts to strike a balance between completeness and simplicity. It is complete in the sense that it encompasses all of the generally accepted sources of IT cost, but, in the interest of simplicity and brevity, it does not try to model all cost details of an IT environment. The results should therefore be considered an approximation, and not a certifiable business case. The approximation is most accurate for full balanced configurations and less so for single services. To build a more accurate business case would require a more detailed knowledge of a given on-premises implementation and applicable accounting standards. For more information, consult The tool takes a conservative approach where possible, so as not to oversell the benefits of cloud. It does so in numerous ways, such as by not burdening the on-premises implementation with costs for things that may not be necessary and by applying price points that require volume purchases. For example, the SoftLayer cloud infrastructure has extensive duplication, fallback, spare capacity and other resilience features that are provided at no extra cost, but these features may not be relevant for all onpremises workloads, so the on-premises implementation is not burdened with these costs. Similarly, the on-premises implementation is not burdened with procurement and upgrade costs, or over-head costs for unused space and capacity, expenses that SoftLayer does not charge for. The tool provides considerable flexibility within the bounds of the methodology used making it a tool rather than a sales and marketing statement. It does so by exposing a long list of parameters used in the calculations - each one explained below. You can adjust the parameter default values for equipment prices and supplemental information used in the calculation (the yellow fields). If you adjust them, they turn green so you can keep track of your changes. The gray fields contain sums of equipment and costs for your SoftLayer cloud configuration. The blue fields hold the calculated results. Be aware, that with this flexibility comes the need evaluate the results in light of the parameters set. As an example, if you set server equipment default prices to zero with the justification that you already have equipment in stock, then the comparison may likely say that you should stick to a traditional on-premises implementation. Note: The default values have been set to approximate US average cost levels, current as of June The result of the Detailed comparison calculations is a comparison of the estimated total monthly SoftLayer cost and the cost of a comparable on-premises implementation, plus an estimate of the total capital expense required to establish the on-premises implementation. These totals consist of amounts attributable to Software licenses, Server components, Additional storage, Data transfer costs, Networking equipment, Infrastructure support costs, Data center facilities and Electrical power. The sections below explain the calculations behind each of these amounts. pg. 1

2 SOFTWARE LICENSES In order to provide the same services on-premises as the SoftLayer cloud, you will need to acquire license entitlements for all software you have configured for use on the cloud. Software acquisition costs vary widely with volume and license terms, and are complex to specify. The software cost comparison therefore takes the approach that your on-premises software license costs will be the same as your SoftLayer cloud software costs, with two modifications: Cloud software costs with hourly charges are scaled up to full monthly charges, and maintenance and support charges will be added. This effectively amounts to assuming that you can acquire software at nearly the same volume prices as SoftLayer. OPERATING SYSTEM LICENSES You will need to acquire operating systems licenses for the servers you have configured and pay the annual maintenance fees for those licenses. Number of servers. The number of servers configured on the SoftLayer cloud, by operating system type; Linux, Windows Server, bare metal Hypervisors and Other. Other servers include OSNEXUS storage servers, Vyatta firewalls and unspecified user supplied operating systems. Total SoftLayer operating system charges, by operating system type. Calculating on-premises operating system monthly costs: For servers with hourly charge option (e.g. with 75% monthly usage), scale the SoftLayer operating system charge up to 100% monthly usage, since the on-premises implementation will need to acquire full licenses. Add the scaled up hourly costs to the costs for servers with monthly charge option, by operating system. Calculating the capital expense requirement for purchase of operating system licenses: Multiply the on-premises monthly cost by 12 months and by the expected Useful life, in years, to arrive at an average effective purchase price of one new operating system license with standard terms and base support. Parameter: Useful life, for each operating system. For Linux operating systems, the default value is set to 1, since most of these have annual license terms and charges. For Windows Server and all other operating systems, the default is set to 3, i.e. it assumes that a new version is purchased every three years. Calculating annual maintenance/support fees Multiply the operating system license purchase cost by the annual maintenance/support fee percentage and add it to the on-premises monthly cost. Note, this effectively adds maintenance costs every month, including in the first year, to cover procurement costs. pg. 2

3 Parameter: Annual maintenance/support fee percentage, for each operating system type. For Linux, with annual licensing, the percentage default is set to zero, i.e. it assumes these fees are included in the annual license fee. For Windows Server and all other operating systems, the percentage is set to 20%. DATABASE AND OTHER ADD-ON SOFTWARE LICENSES The calculations are identical to the operating system license calculations, with the default parameters set to values similar to those for Windows Server licenses. SERVER COMPONENTS You will need to acquire and pay annual maintenance fees for server components to match your cloud configuration. The model assumes you use a high-density rack environment, without duplication or fallback and that you purchase components in volume (Note: SoftLayer provides duplication and fallback at several levels, without extra cost). To provide server virtualization, you will need a hypervisor license for each physical processor. The calculations size the on-premises implementation so it is able to handle peak load, i.e. all cloud servers specified, irrespective of utilization, are included in the on-premises implementation. The sum of cores for all servers configured on the SoftLayer cloud, for both virtual servers, bare metal servers, and 2 cores per Message Queue site configured. Average clock speed (GHz) for the cores configured. SoftLayer virtualized cores have a minimum clock speed of 2.0 GHz. Bare metal servers generally have clock speeds in the range GHz. GB Memory in total for all servers, plus 4 GB per Message Queue site configured. TB solid-state storage (SSD) on all servers configured. TB magnetic storage (spindle) on all servers configured. Virtualized physical processor(s) required for virtual servers, assuming 8 cores per processor. The SoftLayer cost is the sum of all server costs. Calculating processor capital expense The number of cores is multiplied by the cost per core. Parameter: Cost per core. Cost per core with the average clock speed configured, including its share of processor board and cabling. The default value is a linear interpolation between the price point of a 2.0 GHz core and of a 3.5 GHz core. Both price points are derived from the negotiated price of generally available two-processor rack servers, e.g. Dell PowerEdge and HP ProLiant, by dividing by the number of cores on the board. Calculating memory capital expense The total amount of server memory is multiplied by an average cost per GB. pg. 3

4 Parameter: Cost per GB memory. The default value is an approximate negotiated cost of one GB of DDR memory (Note: SoftLayer provides faster memory for high end servers, without extra cost) Calculating attached storage capital expense (SSD and magnetic) The total amount of storage is multiplied by the cost of one TB of storage Parameters: Cost per TB of SSD and magnetic (SATA drives) storage including its share of rack mountable unit and cabling. The default values are approximate negotiated cost of one TB of storage assuming 400GB SSD drives and 2TB magnetic drives. Annual maintenance costs for physical hardware is by default set to 10% of the capital expense. The total monthly cost for server components is calculated as a linear write-off of the capital expense over the useful life (in years) plus maintenance. The useful life for hardware is by default set to 3 years. For virtualized servers, the physical server components will need to be virtualized. For that, there is a capital expense for hypervisor licenses. This translates to a monthly cost in the form of a linear write-off over the useful life of a hypervisor version. The default useful life for a hypervisor version is set to 3 years. The capital expense for a hypervisor license is by default set to an approximate negotiated price per processor, e.g. for a VMWare processor license. Limitation: The model does not currently support on-premises costs for high performance (HPC) and graphic processing unit (GPU) add-on boards. These boards are included in the SoftLayer cost, but not in the on-premises cost. This may lead to cost comparison results for HPC/GPU workloads that unfairly makes an on-premises implementation look less expensive than the SoftLayer cloud service. ADDITIONAL STORAGE You will need to acquire a storage configuration to match your cloud additional storage requirements (e.g. for Object storage, EVault and other storage not dedicated to a server). The model assumes use of network-attached SAS drives with RAID. OBJECT STORAGE SoftLayer Object Storage total usage (TB) Number of data center locations with Object Storage usage Calculation of on-premises object storage capital expense: Round up the total SoftLayer Object Storage usage by site to nearest multiple of 2 TB (object storage uses 2 TB storage devices). Add up the site storage numbers (TB). Multiply by 3, since Object Storage stores 3 copies in each location, for availability and serviceability. Multiply by the capital expense for a 1 TB object storage unit. pg. 4

5 Parameter: Cost of a 1 TB object storage hardware unit, consisting of one half of a 2 TB SATA drive, 1 core and 2 GB memory, including its share of rack mountable unit and cabling. Notes: The calculation does not include costs for hardware maintenance; due to the redundancy built into the SWIFT based SoftLayer Object Storage system. The calculation assumes use of the SWIFT OpenStack open source software and therefore does not add a software cost (Note: the on-premises implementation would have additional cost, which is not accounted for here). The total monthly cost for on-premises object storage is calculated as a linear write-off of the capital expense over the useful life (in years). The useful life for hardware is by default set to 3 years. BLOCK, FILE AND EVAULT STORAGE Total amount of other additional storage (TB) allocations, consisting of block, file and Evault storage. The SoftLayer cost is the sum of all additional storage costs, including additional storage specified with a server. Calculation of on-premises additional storage capital expense: Multiply the total amount of other additional storage by the capital expense for 1 TB of RAID protected magnetic storage space. Parameter: Cost of a 1 TB RAID protected magnetic storage space. The calculation assumes a RAID storage factor of 1.5, i.e. that 1TB of usable space requires 1.5 TB of SAS drive space. The cost includes necessary network storage access software, rack mountable unit and cabling. The total monthly cost for other on-premises additional storage is calculated as a linear write-off of the capital expense over the useful life (in years). The useful life for hardware is by default set to 3 years. STORAGE RACK SPACE REQUIREMENTS Input (gray field): used in later calculations Total number of storage blocks requiring rack space and power. This includes all storage not directly attached (local) to a server as well as Object Storage. The approximation assumes storage is allocated and packed as far as possible, by data center, on 2 TB storage blocks with an average RAID factor of 1.5. NETWORKING DATA TRANSFER COSTS You will need to install and pay monthly charges for sufficient bandwidth to transfer the data you specified and to handle your peak loads. Data transfer out (GB): The sum of the monthly outbound data transfers specified for each server. pg. 5

6 The SoftLayer data transfer cost is the sum of any data transfer services configured, including monthly charge options and overages. Calculation of monthly on-premises bandwidth costs: Parameter: Ratio of outbound to inbound. SoftLayer does not charge for in-bound data transfer, but an on-premises implementation will need to allocate bandwidth for inbound data. This ratio enables an estimate of inbound based on outbound data transfer. The Default has been set to 3, i.e. three times as much outbound as inbound. Divide the SoftLayer Data transfer out (GB) by the above ratio and add it to the outbound to produce an estimate of the total amount of inbound and outbound data transfer. Convert Data transfer in GB to an average Mbps bit rate by multiplying by 10 bits per byte of data and by 1024 MB per GB, and dividing by the number of seconds per month. Parameter: Expected peak to average bandwidth ratio. The on-premises implementation will need to install enough bandwidth to meet peak requirements. This ratio enables an estimate of peak bandwidth based on average bandwidth requirements. The default has been set to 3; i.e. three times as much traffic during peaks compared to the average. If, for example, nearly all data is transferred during 8 hours a day, the ratio is 3 or higher. Multiply the 'Average bandwidth' times the above 'Peak to average bandwidth ratio' parameter to produce an estimate of the total on-premises bandwidth (Mbps) required. Parameter: On-premises monthly cost per Mbps bandwidth. This cost varies widely by location, volume and contractual terms and should be evaluated in each case. Multiply the bandwidth (Mbps) required by the monthly cost per Mbps. Note: This calculation ignores any one-time network provider charges for setting up the required network connections. You will need to provide or contract for data transfer services you have configured. The model takes the approach that you can purchase any CDN and Distribution services you have configured from a third party at the same price as you pay SoftLayer, i.e. the on-premises monthly cost is set equal to the SoftLayer cost. On-premises costs for any Message Queue (MQ) services you have configured have been accounted for in Server components section in the form of one extra server with 2 cores, 4 GB RAM and 1TB disk per MQ site. The comparison ignores on-premises MQ software costs. NETWORKING EQUIPMENT You will need to acquire network equipment and maintain it. The model assumes this cost is proportional to the sum of all other hardware costs. This is a fairly rough estimate that works well for most interactive workloads, but requires adjustment for workloads that either have high network security and availability requirements (e.g. require HA network appliances) or are compute intensive, e.g. data analytics workloads. Calculating networking equipment capital expense: pg. 6

7 Parameter: On top % of server and storage costs for networking equipment. The default has been set to 20%, which is representative for many interactive workloads, e.g. e-commerce, but needs to be evaluated and adjusted for other types of workloads; increased for high network security and availability requirements (that e.g. require HA network appliances) and decreased for very compute intensive workloads, e.g. data analytics workloads. Multiply the above parameter by the sum of server and additional storage costs, including maintenance. The total monthly cost for on-premises network equipment is calculated as a linear write-off of the capital expense over the useful life (in years). The useful life for hardware is by default set to 3 years. The calculation ignores any network equipment maintenance costs. The SoftLayer cost is the sum of all network related services, except data transfer costs. This includes load balancers, firewalls, extra VLANs, Direct Links. INFRASTRUCTURE SUPPORT COSTS You will need to hire, manage and pay for additional IT staff to support the server environment you have configured. The model assumes that you already have an IT organization that you can expand, so it simply calculates the costs of the additional work measured in full time equivalents (FTEs) without concern for organization, shifts, skills or other HR requirements. The defaults set for 'servers per FTE' assumes an efficient 24x7 organization using traditional IT methods, i.e. not a highly automated 'private cloud', that provides the same level of infrastructure support as the cloud. FTE annual costs are assumed to be fully burdened, including task related tools. Servers to (re)build and maintain: Includes the virtual and bare metal servers you configured plus three servers for managing Object Storage per object storage site configured Units to monitor and operate: Includes the virtual and bare metal physical servers, additional storage blocks plus three servers for managing Object Storage per object storage site configured. Servers to support and manage: Includes the virtual and bare metal server servers configured plus three servers for managing Object Storage per object storage site configured. SoftLayer does not charge for infrastructure support, so the SoftLayer monthly costs in this section are zero. Calculating Build support costs: Parameter: Build servers per FTE. The number of servers, with accompanying network and security features, a full time worker can build, re-build and maintain. Divide Servers to (re)build and maintain input by the Build servers per FTE to arrive at an estimate of the workload, measured in full time equivalents (FTEs), that the configuration represents. pg. 7

8 Parameter: Annual cost per 'Build' FTE. The fully loaded cost of one full-time worker with the skills to build, re-build and maintain servers, including salary, benefits, education, housing, management etc. Multiply the workload (FTE) estimate by the Annual cost per 'Build' FTE and divide by 12 to arrive at an estimate of the on-premises monthly build support cost. Calculating Operation support costs: Parameter: Operations units per FTE. The number of servers and storage devices, with accompanying network and security features but excluding applications, a full time worker can provide monitoring and operations support DIVIDED by three, to account for 24*7 three-shift operational support. Divide Units to monitor and operate input by the Operations units per FTE to arrive at an estimate of the workload, measured in full time equivalents (FTEs), that the configuration represents. Parameter: Annual cost per 'Operations' FTE. The fully loaded cost of one full-time worker with the skills to monitor and operate a (complex) virtualized server and storage environment, including salary, benefits, education, housing, management etc. Multiply the workload (FTE) estimate by the Annual cost per 'Operations' FTE and divide by 12 to arrive at an estimate of the on-premises monthly Operations support cost. Calculating Support costs: Parameter: Servers supported per FTE. The number of servers for which a full-time worker can provide technical user and incident support, online as well as via chat and phone - DIVIDED by three, to account for 24*7 three-shift operational support. Divide Servers to support and manage input by the Servers supported per FTE to arrive at an estimate of the workload, measured in full time equivalents (FTEs), that the configuration represents. Parameter: Annual cost per 'Support' FTE. The fully loaded cost of one full-time worker with the skills to provide users with access to the parts of the (virtualized) server environment they require, support them in using that environment, provide operating system level support etc., including salary, benefits, education, housing, management etc. Multiply the workload (FTE) estimate by the Annual cost per 'Support' FTE and divide by 12 to arrive at an estimate of the on-premises monthly Support cost. DATA CENTER FACILITIES The model assumes you have access to a data center with racks in which to mount and run your equipment. You will need to pay for the space your equipment takes up and for the facilities needed to run it. The facilities include power, cooling, networking, access control, etc. The facility costs are assumed to be proportional to the kw power rating of your configuration. pg. 8

9 Rack units required to hold your configuration: Is the sum of the rack space required to hold the cores you configured, assuming 2 8-core processors per rack unit, plus rack space required to hold the specified storage blocks (see under additional storage above), assuming 6 storage blocks per rack unit. Floor space required: Assumes 42 rack units per rack and 22 square feet per rack. Expressed using the unit set in the dropdown in the line above (square feet or square meters). Rated power total (kw): The rated power of the rack units required to hold your configuration, assuming 18 kw per fully loaded rack. SoftLayer does not charge for use of data center space, so SoftLayer costs are zero. Calculating data center building capital expense and monthly cost: Parameter: Construction cost per square foot/meter. Fully loaded construction cost per useable unit of machine room floor space, including cost for all data center support facilities, for example office space and parking. The cost is adjusted according the unit of measure set in the dropdown in the line above (square feet or square meters). Multiply the Floor space required input by the Construction cost per square foot/meter to arrive at an estimate of the capital expense required to construct the share of a data center that your configuration occupies. Parameter: Useful life for data center space: Is by default set to 15 years. This number is set somewhat lower than the life expectancy of a building to allow for maintenance costs. The total monthly cost for on-premises use of a data center building is calculated as a linear write-off of the floor space capital expense over the useful life (in years). Calculating data center equipment capital expense and monthly cost: Parameter: Cost per kw to equip a data center. Cost per kw to equip and set up power (uninterruptible), cooling, networking, access control, racks, flooring, etc. for a data center. Multiply the Rated power total (kw) input by the Cost per kw to equip a data center to arrive at an estimate of the capital expense required to equip the share of a data center that your configuration occupies. Parameter: Useful life for data center equipment: Is by default set to 5 years. This number is set somewhat lower than the life expectancy of professional equipment to allow for maintenance costs. The total monthly cost for on-premises use of a data center equipment is calculated as a linear write-off of the equipment capital expense over the useful life (in years). ELECTRICAL POWER You will have to pay for the power consumed by your servers and other equipment. pg. 9

10 Rated power total (kw): Calculated based on the number cores and storage block specified, assuming energy efficient rack mounted equipment with peak power requirements that match a an 18 kw 42-unit rack. SoftLayer does not charge for use of electrical power, so SoftLayer costs are zero. Calculating the monthly electrical power costs: Parameter: % of rated power actually consumed. Modern servers generally consume only a fraction of their fully rated power, i.e. they can power up and down to match the load. This percentage is an indicator of the average load. The default is set to 50%. Multiply the Rated power total (kw) input by the % of rated power actually consumed to arrive at an estimate of the Average power consumed (kw). Parameter: % data center power use efficiency. Average power used by IT equipment in a data center compared to the total power used by the data center (including power for cooling). The default value is set to 40%, i.e. that 40% of all power consumed by the data center is consumed directly by servers and storage, whereas the remainder is for other uses, primarily cooling. Divide Average power consumed (kw) by the % data center power use efficiency and multiply by 730 hours per month to arrive at an estimate of the total monthly power consumption (kwh) of your configuration. Parameter: Electricity cost per 100 kwh. Your on-premises cost for data center electrical power. Note that the cost is per 100 kwh, not per kwh. This cost varies widely by location, volume and contractual terms and should be evaluated in each case. Multiply the total monthly power consumption (kwh) divided by 100 times the Electricity cost per 100 kwh to arrive at an estimate of the on-premises monthly electrical power costs. MISCELLANEOUS This section provides you with opportunity to add costs and capital expenses not supported by the model. These costs could include such things as: The on-premises cost of running multiple interconnected data centers, if required. The model does not take this into account and SoftLayer allows you to distribute your workload over as many sites as you like at no extra charge. The on-premises cost and capital expense of periodically upgrading the infrastructure. SoftLayer maintains and upgrades the infrastructure at no extra cost to you. The cost and capital expense of spare or unused data center space, equipment, servers, software license etc. In many data centers, this amounts to 5-10% or more. The model assumes no on-premises overhead of this kind. SoftLayer does not charge you for the flexibility of scaling up and down or for having spare equipment. The SoftLayer cost of special services not supported by this tool, for example hosting of customer owned equipment. pg. 10