IT Transformation Through ESPCs

Contents Integration of IT with Facilities ESPCs as Related to Data Centers Measurement and Verification Tools Q&As Page 2

Strategic Role of CIO Changing CIO becomes the builder and broker of services TRANSFORM legacy infrastructure and applications and processes CONSUME off-premises services securely BUILD on-premises cloud services MANAGE AND SECURE across legacy applications and cloud assets Page 3

IT and Facilities Often Misaligned Page 4

Energy Savings Performance Contracting (ESPC) A Federal Contracting Method under the Department of Energy and Army Corps Vehicles Requires no up-front cost to Government Pre-Contract Performance Post-Contract Period Period Period Budget Savings Requires no special appropriations from Congress Government retains excess generated savings Prime contractor guarantees savings to cover payments over the contract term Performance of projects installed through the ESPC contract is guaranteed Operating Expense ESPC O&M and Loan Repayment Budget Savings Measurement and verification of savings is required Stabilizes planning and budgeting of energy and project-related operating costs Operating Expense Operating Expense Source: Practical Guide to Savings and Payments in FEMP ESPC Task Orders, Rev. 3, January 2009 Page 5

Details of the ESPC Process Agency contacts FEMP or Army Corps POC & identifies internal stakeholders Agency conducts opportunity assessment Send NOO or RFQ to all eligible ESCOs Review responses and down selects ESCO(s) (Orals are optional) ESCO(s) performs preliminary assessment (PA) to identify target ECMs If viable, ESPC enters investment grade audit phase ESCO issues final proposal and implementation begins Performance measurement and verification begins Page 6

Siemens PRIME Siemens PRIME: ESPC Program Measurement & Verification, Finance, Performance Guarantees, Contract Negotiation, Safety & Risk Mgmt Siemens Project Manager IT Transformation and Cloud Vitalization/optimization of platforms and applications IT Infrastructure - Networking storage/servers CRAH/CRAC/PDUs Energy Engineers, Project Developers and Coordinators Utilities & Distribution Central Plant Optimization Alternative Energy Sources Building performance and sustainability Energy Conservation Measures Agency stakeholders drive requirements Agency Program Coordinator Page 7

Performance Contracting Basics Interest Service ESPCs are paid from savings as a utility expense Payment comes from reduction of energy bill No increase in government spending occurs Project Cost Page 8

Federal ESPC Guidelines Established under legislation in 1992 Energy Policy Act (EPAct) Bill Energy Independence Act of 2007 provides permanent authorization for ESPC ESPC legislation allows Federal agency to: Sign multiple year contract for up to 25 years Have ESCO finance the project's capital cost Government pays ESCO for project from Open to all Federal energy savings backed by ESCO guarantee agencies worldwide Allow ESPC to be an operating expense and (DOE) not score project as capital budget ESPC program closely follows commercial PC process to develop projects Page 9

How Are Savings Verified? M&V Option Performance Factors Usage Factors Savings Calculation Option D Stipulated and Measured Factors Option A & B Measured Factors Combination of measured and stipulated factors: Measurements are spot or short-term taken at the component or system level. The stipulated factor is supported by historical or manufacturer s data. Spot or short-term measurements taken at the component or system level when variations in factors are not expected. Continuous measurements taken at the component or system level when variations in factors are expected. Engineering calculations, component or system models. Engineering calculations, component or system models. Option C Utility Long-term whole-building utility meter, facility level, or Based on regression analysis of Billing Data Analysis sub-meter data. utility billing meter data. Calibrated Computer Simulation N/A for most Siemens work Reasonable assumptions based on historical data gathered at facilities. Performance specifications of equipment or system being installed, engineering estimates, spot-, shortterm, or long-term measurements of system components. Long-term whole-building utility meter data. Based on computer simulation model calibrated with wholebuilding or end-use metered data or both. Page 10

ESPCs for IT 1. Identification, Education & Empowerment of Stakeholders 5. Planning & Managing Hyper- Dynamic ESPCs 2. Bridging the Gap Between IT & Facilities ESPCs for IT 4. Measurement & Verification Tools 3. Controlling Scope Page 11

Identifying Energy Conservation Measures through IT Transformation Operating Cost Optimization Slower ROI 8 ~ 5-10% per year Converged Incremental improvement Management 7 Consolidation o Physical and Logical 1 2 Automation 5 6 Virtualization 4 3 Transformation Investment Private cloud Application Rationalization Transformation Faster ROI 35-50% 50% for program New operating cost basis Hybrid cloud Transformed cost basis for operating Physical Growth Scale in IT Infrastructure Page 12

What is the IT Return on Investment? Green Grid Benchmark Cumulative Cost Simple payback Target PUE Highest rated customer: PUE 1.70 PUE 2.0-2.75 $300k - $400k 1.7 years PUE 2.8-3.0 $600k - $1M 2.5 years PUE 3.15-4.0 $2.5M-$3M 5.7 years Page 13

Considerations for Measurement & Verification Establishing an Accurate Asset Inventory Developing an Accurate Baseline Using Current State & Utilization Executing Measurement & Verifying Performance Data is often: Know what, when and Live by the risk & how long to monitor responsibility matrix Decentralized Use your ESPC Manage the baseline! Incomplete resources! Inaccurate Leverage your stakeholders! Page 14

Data Center Management HD 4D management Real-time data It will be important to utilize a data center infrastructure management tool (DCIM) in order to adequately manage data center performance Better decisions with CFD and virtual models Page 15 Siemens AG 2013. All Rights Reserved.

What is Datacenter Infrastructure Management (DCIM)? Data center infrastructure management (DCIM) software tools monitor, measure, manage and/or control data center performance, utilization and energy consumption Ideally, DCIM provides this functionality for all IT-related equipment (such as servers, storage and network switches) and infrastructure components (such as PDUs and CRACs). DCIM enables IT professionals to understand energy consumption from a holistic data center perspective DCIM tools integrate facets of system management with building management and energy management, with a focus on IT assets and the physical infrastructure needed to support them Source: Courtesy of Gartner Page 16

IT / Building / Fire Safety / Security Asset Lifecycle Management Data Center asset lifecycle management As planned, as built As operated / maintained As optimized (what-if scenario) Semantic / logical relationship management IT / mechanical yard / building assets Collaboration management Standard procedures and workflow Work orders Security management Planning and scheduling Enterprise systems integration Concept Planning As built As upgraded Page 17 Change Management Configuration Open API Collaboration

Datacenter Clarity LC Smarter Decisions Optimized Efficiencies Proven Technologies Page 18

Datacenter Clarity DCIM powered by Siemens PLM Software Landing on Mars is one of the hardest jobs on Earth. On August 5, the Mars rover Curiosity landed successfully on the surface of Mars. There was only one chance to get it right. For this unprecedented challenge, NASA employed Siemens PLM software solutions. The development team at NASA s Jet Propulsion Laboratory digitally designed, tested, assembled, and simulated the entire Mars rover before a single physical prototype was created..and all from a mission control data center consolidated by HP. Page 19

Summary ESPCs offer a practical solution to funding mandated data center consolidation and efficiency improvements ESPCs are a timely way to fund innovation in a time of flat and declining budgets Data Centers are one of the largest energy hogs PA phase due diligence helps to support FDCCI and PortfolioStat t initiative, long before implementation kickoff (i.e., solid inventory development, cost accounting, prioritizing/rationalization, etc ) ESPCs often help to enhance existing IT service management processes (Configuration Management, Change Mangement, etc.) ESPCs improve stakeholder alignment, both mission i and financiali DCIM measures, verifies and manages the entire solution Page 20

Questions? Questions? Page 21