The ROI of SOA?

Several recent research reports indicate that companies are having a hard time tying thier SOA efforts to quantifiable value.

We offer the following tools to help assess the value of SOA initiatives to quantify if the returns merit the investment:

The ROI from SOA is often elusive, check here to see what value SOA can deliver for you:

IBM : http://www-304.ibm.com/jct03004c/businesscenter/smb/us/en/soatool

TIBCO : http://roianalyst.alinean.com/calculators/tibco/soa_roi/

Assess your current progression on implementing SOA and SOA best practices:

TIBCO (develops a great planning guide customized for your organization)
http://www.tibco.com/solutions/soa/default.jsp#

HP (includes comparison to peer's and how far they are along on SOA)
https://roianalyst.alinean.com/HPSOA/HP_SOA_Maturity_Assessment.html

Is there ROI from Windows Vista?

This ROI calculator can help determine whether there is ROI for your particular Windows Vista deployment. Using independent research from IDC and WiPro, plus our own metrics, we developed this calculator to see if there is truly value in proposed Windows Vista upgrades.

Click here to begin:

http://www.alinean.com/microsoft/vistavalue/microsoft_Vista_Calculator.html


No registration required.
Private / no information stored or saved.

The Business Value of Virtual Desktops

Managing desktop PC environments remains costly in most IT environments. First, most PCs are on a schedule to be ripped and replaced every 3 years, requiring a recurring hardware investment and labor to be budgeted to affect the change.

Even more so, PCs continue to place a management burden on the IT organization. According to IDC, in a white paper entitled “The relationship between IT labor costs and best practices for managing the Windows desktop” , IT labor costs were found in a survey of over 1,000 enterprises worldwide to range from $580 for a well managed, but not optimized PC environment, to $1,320 per PC per year for a poorly managed PC environment. The IT staff tasks for managing the PCs included PC support via the service desk, managing user adds, moves and changes, managing hardware install, moves adds and changes (iMACs), break-fix desk side support, managing software patches and installs / upgrades, security, backup and asset / financial and procurement management. As one example of the PC burden, the average PC user in these surveys generated 8.4 calls to the support desk per year.

Similar research from Gartner shows PC costs on average to be slightly less expensive each year, but still a sizable recurring burden:

PC Technical Services / Cost per PC per Year

• User administration (Adds and Changes) - $11.00
• Hardware configuration/reconfiguration (MACs) - $26.00
• Hardware deployment - $7.00
• Software deployment - $121.00
• Application Management - $32.00
• Backup, archiving, recovery - $7.00
• Service Desk (Tier 0/1) - $239.00
• Security Management - $30.00
• IT Administration - $15.00

Total per desktop per year - $488.00

Reference: “TCO Comparison of PCs with Server-Based Computing" , Gartner, 15 June 2006

The Opportunity

One of the ways to reduce the PC management burden is via virtualized desktops. A virtual desktop lets the organization create and host desktops inside virtual machines running on centralized servers in a data center. With this feature, users can access their virtual desktops remotely from a traditional PC, thin client or re-purposed computer using a remote display protocol.

This enables users to be provided with the same look and feel functionality as they have today with their normal desktop, but provides IT with some drastic benefits:

1. Eliminate the need to rip and replace PC hardware every 3 years, extending the lifecycle investment of the core desktop infrastructure to six years or more

2. Simplify the management, support and administration of desktops, managing them centrally, simplifying desktop installations, patches, backups and maintenance.

3. Control access to sensitive data and intellectual property by maintaining information in a secure data center.

4. Provide for less issues and higher availability of the desktop systems – less user downtime.

5. Drive PC power savings replacing standard desktop PCs with more power friendly thin clients

6. Deliver higher business agility to handle user and system moves, adds and changes, particularly for major company events such as reorganizations or M&A support.


The Business Case for Virtual Desktops

In analyzing hardware savings, the 3 year rip and replace costs of the desktop is replaced by the investment in a centralized server infrastructure to support virtualization.

For a typical 500 PC environment, using a per PC cost of $1,399 per desktop, replacement costs are over $699,000. This cost is usually amortized over the lifecycle, three years, for an average annual cost of over $233,000 per year.

For a typical virtual PC environment, the costs are expected to be about 60% of the cost of the traditional desktop strategy, and can be amortized over six years. Overall costs are estimated to be about $437,000, and average $72,900 per year – a savings of almost 70% per year, or $160,000 per year for this typical 500 PC environment.

Examining potential IT management savings, we find that virtual PCs can deliver savings in specific areas including:

• User administration – 80.5%
• Hardware deployment – 28%
• Software deployment – 95%
• Application Management – 30%
• Backup, archiving, recovery – 100%
• Service Desk (Tier 0/1) – 62%
• Security Management – 50%
• IT Administration – 50%
  

One task is estimated to require more workload in the virtualized environment and that is hardware configuration and reconfiguration – managing the central server infrastructure, at a 27% increment over the desktop environment.

Overall, PC technical services labor is reduced by $306 per PC per year, from $488 on average to just $182 per PC per year, a savings of $153,000 per year for a typical 500 PC environment.

The Bottom-Line

For a typical 500 desktop virtualization just the replacement and labor savings add up to NPV Savings of over $80,000 (with a 10% cost of capital), achieving a payback in less than 12 months.

Even with this great of a case, there is still plenty of upside additional savings in this business case for improved availability, improved disaster recovery, higher business agility, and substantial PC power savings – making virtual desktops for certain environments worthy of immediate consideration.

The bigger issue is how to implement as there are many options including server based computing (eg. Wyse), virtual desktop infrastructure (eg. VDI), and streaming desktop (eg. Softricity).

For a personal quantification as to the potential value of virtual desktop, visit:
http://www.vmware.com/go/calculator

The Business Value of Virtual Lab Automation

If you are an ISV, or even if you are managing an internal application development group, you know that application testing and development labs are inefficient with regard to the number of test systems and managing these systems.

Lab systems are usually configured based on the current active development project. Only when a team is actively developing and testing an application is the equipment needed. Given the "peaks and valleys" of development cycles, and given the ease with which even the most complex software configurations can be "spun up and spun down," managing the systems and configurations can be daunting, and leads to either a proliferation of systems, or a huge workload in system configuration / reconfiguration.

This means that a typical development and QA lab requires:
1) Dedicated systems and these systems are woefully underutilized often sitting idle and often preconfigured for support of only a dedicated test set
2) Constant reconfiguration for testing and development support
3) Reconfiguration for replicating client environments for support contact resolution

Besides the direct cost of the inefficiencies, perhaps more important is the lack of lab automation and a better way to manage the configurations can delay development lifecycles, and potentially lead to quality issues (difficult replication of complex issues, less testing because of configuration delays).

The Opportunity

Alinean estimates that virtual lab automation can:

1) Improve net utilization of lab systems by more than 50%, resulting in a typical 60 to 95% reduction in the number of systems required. With a virtualized infrastructure, organization is empowered to create a centralized pool of virtualized servers, storage and networking equipment shared across software development and test teams. With this feature, the team can reduce the number of systems needed to support testing and development lab requirements - resulting in less annual support and maintenance contracts, reduced facilities and space costs, and reduced administrative and support overhead to maintain and manage systems. This helps the team retire or reallocate existing systems, and helps to avoid future growth / system additions.


2) As well, in typical virtualized environments, there is still usually a virtual machine (VM) deployed in the system pool for each physical machine replaced (often even more since it is so easy to create new VMs and few ever seem to get turned off). With intelligent virtual lab automation, it is very easy to turn VMs on and off as needed, reducing the total number that are "live" and occupying space on the systems at any given time. The more teams you have sharing a lab, or the more applications you are supporting, the higher this consolidation benefit will be.

3) With a virtual lab environment, a shared storage library is created whereby users can check out fully provisioned systems "on demand." With this feature, provisioning task time can be reduced by 90% or more through the automatic, rapid set up and tear down of complex, multi-machine software configurations for use in development and test activities. This can help to reduce the tasks and person hours needed to reconfigure systems to support testing requests, helping to improve productivity and reallocate precious resources to more strategic tasks. By empowering the team with self service capability, every developer or test engineer now has the equivalent of their own fully equipped lab / test data center with dedicated provisioning staff.

4) During development cycles, it is often difficult to replicate complex issues when they are found. In a virtual lab environment, the team is empowered to effectively and efficiently suspend and capture “live” multi-machine configurations to a shared library, allowing them to reliably capture, reproduce and share bugs across the team. This reduces the hours spent reproducing bugs for troubleshooting, decreases the constant cycling between developers and testers, and improves overall team collaboration. According to Alinean's estimates, this feature can help to reduce the efforts in setting up environments and reproducing bug / error conditions by 80% or more.

5) Enable automated provisioning and rapid reproduction of software defects, accelerating cycle times and as a result, often increasing the amount of testing that can be performed in a given release time-frame, resulting in a 50% or more improvement in quality (reduction in bugs shipped).

6) Improve time to market responsiveness of the application development group, helping to reduce development lifecycles by 10-15% on average by reducing provisioning / reproduction and support time

The Bottom-Line

With these overall savings, and tallying typical investment in lab automation software (using VMware’s Lab Manager as the benchmark), a typical 100 CPU lab automation project can:

· Achieve an ROI of 1125% on an investment of $105,047
· Derive NPV Savings of $937,000[1]
· Achieve payback in 3 months

Examining lab automation projects in general we find that the benefits are significant:

On average, generates double the ROI of other comparable IT infrastructure projects, 800%+ risk adjusted ROIs vs. 200-400% for most infrastructure projects

Delivers payback on investment of less than 8 months, compared to most IT infrastructure projects which take 10 to 16 months to reach breakeven

Reduces net TCO by >30%, where most infrastructure IT projects deliver only 5% to 15%

Delivers significantly higher availability and agility up-side benefits than projected up-front.

Overall lab automation with virtualization is a low risk, high reward project that any significant ISV or internal application development group should consider today.

For a personalized analysis of the value of virtual lab automation, visit: http://www.vmware.com/go/lm_calculator

The Business Value of Server Virtualization

One of the key issues in IT today is that normal operating expenses consume way too much of the annual budget – 61% on average in most organizations is spent keeping the lights on, and 25% spent on regular migrations and upgrades. That leaves a scant 14% on average for innovative investments that can give the business a true game changing competitive edge.
To help address the lack of innovation spending, server virtualization is being considered and implemented in data centers as one means to drive “keeping the lights on” costs lower, so as to provide more budget to innovation.

The Opportunity

Data center servers are notoriously under-utilized. Most servers do not come close to peak operating capacity on any given day. In fact, according to Gartner’s white paper on Data Center Power and Cooling Scenario Options for the World Ahead, April 2007 during a 24 hour period less than 10% of the typical x86 /x64 server computing capacity is used.

Server virtualization tackles this issue by abstracting the application / operating system sets from the physical systems providing for more than one set to be run on each physical system. As current systems are underutilized and difficult to reallocate based on demand, virtualization lets the IT team place more work quickly and appropriately on less physical servers – optimizing usage and minimizing the amount of physical assets to manage and support.

By decoupling the physical hardware from the operating system and applications, virtualization allows you to consolidate servers, improve utilization and improve manageability. This can yield significant cost savings and benefits including:

1. Reducing server, storage and networking costs

2. Reducing growing power / cooling / facilities costs\

3. Improving IT productivity

4. Reducing business risks

5. Improving business agility


How expensive is a data center server? Here are a few typical server costs to consider:

1. On average a 2 x CPU server costs $4,000 per year in three-year amortized hardware purchase, and annual support and maintenance contract costs.

2. Each server has additional amortized costs of more than $1100 per year for storage and networking costs.

3. Server provisioning for new and lifecycle replacement servers consumes 20 hours /server, an average of $333 per server per year based on normal three year replacement cycles and normal 10% server growth. If your environment is more dynamic and growing faster, your costs can be significantly higher.

4. On-going server administration drives $2,720 in labor costs per server per year, with an average of 40 servers per FTE. The tasks that can be reduced include on-going moves, add and change management, problem and incident management, monitoring, performance and availability management, asset management, security management, patch and upgrade management, demand management, backup and recovery, restores, storage management, disaster planning, compliance management/reporting, vendor and contracts management, chargeback, and financial/budget management.


5. Power, cooling and data center space issues are gorwing. Today, constructing a new data center costs an estimated $400 to $1,000 per sq ft. {1,2} For powering and cooling a server, IDC estimates $0.50 for each $1 in server capital spending, increasing to $0.70 by 2010 [2]. Crunching the numbers, a typical 2 CPU server consumes $589 in annual power and cooling costs per year, and $310 in amortized data center build-out and space costs.

6. As companies worldwide become more environmentally conscious, carbon emissions costs supersede the annual power costs as a growing data center issue. And savings from server virtualization can have a significant environmental impact, because taking 100 x 2 CPU servers out of the data center via virtualization is equivalent to taking 122 cars off the road.[4]


In total, each 2 CPU server averages $9,000 per year in total direct ownership costs, a significant opportunity for potential savings.

The Business Case for Server Virtualization

Alinean estimates that implementing server virtualization can address this rising cost of ownership issue by:

1. Consolidating server workloads typically in the range of 8:1 to 15:1, resulting in:
a. A reallocation or retirement of existing servers and elimination of on-going server maintenance and support costs
b. Avoidance of adding any / as many servers in future to support growth
c. Elimination of not only the server, but related storage and networking costs for host bus adapters, network interface cards and storage / network switch infrastructure
d. Reduction in growing power and data center space issues

2. Reducing server provisioning to 1.5 hours / server with virtual environment (92%+)

3. Reducing server administration workload from 60% to 90%

As well as the direct savings, server virtualization can provide additional benefits including driving business resilience including reducing DR recovery time / risks and improving availability by 80%

The Bottom-Line

Examining a typical 100 2 x CPU server virtualization, we tally the following potential benefits (using VMware VI3 pricing):

1. Consolidate to 7 x 4 CPU virtualized servers (net 93 server savings), a 14.3 to 1 consolidation ratio.
2. Deliver $575,000+ in average net TCO savings per year
3. $1.38M in net present value (NPV) savings over 3 years (with a 10% discount rate)
4. Deliver payback on investment of 5 months with a $217,000 initial investment
5. Drive a 670%+ Return on Investment (ROI)

Examining server virtualization projects in general we find that the benefits are significant:

1. On average, generates double the ROI of other comparable IT infrastructure projects, 400 to 800% risk adjusted ROIs vs. 200-400% for most infrastructure projects

2. Delivers payback on investment of less than 8 months, compared to most IT infrastructure projects which take 10 to 16 months to reach breakeven

3. Reduces net TCO by >30%, where most infrastructure IT projects deliver only 5% to 15%

4. Delivers significantly higher availability and agility up-side benefits than projected up-front.

Overall server virtualization is a low risk, high reward project that any significant data center should consider today. It can be performed in stages easily, whereby “virtualizing” specific data center areas and application / OS sets can be performed – using the progressive savings on successful virtualization projects to pay for subsequent deployments.

For a personal quantification as to the potential value of server virtualization, visit:
http://www.vmware.com/go/calculator








[1] Anthes, Gary, “Data Centers Get a Makeover”, Computerworld news article, published November 1, 2005.
http://www.computerworld.com/databasetopics/data/datacenter/story/0,10801,97021,00.html?SKC=home97021
[2] IDC Enterprise Class Virtualization 2.0 #DR2007_5MEW, Feb 2007
[3] 2 CPU server = 2U, each rack can support 24 U space net, 7 sq feet per rack in net space including overhead space
$310 in net lease and build-out amortized costs per year per sq ft. based on $1,200 in build out and $1,500 in electrical power and cooling equipment cap ex, amortized over a 5-year period.
[4] Shulz, Gary, “Storage Power and Cooling Issues Heat Up”, May 21, 2007
http://www.enterprisestorageforum.com/ - the U.S. national average CO2 emission for electrical power is 1.341lbs per kWh. , for comparison, a typical gallon of gasoline (octane level will vary) will on average generate about 20 lbs of CO2. A typical car over an annual operating period is estimated to produce about 12,000 lbs of CO2 emissions per year (600 gallons of fuel per year, 12,000 miles / 20 mpg)