Identifying and Reducing IT Transition Costs Mark Tellez Manager, Business Development Servers Advanced Micro Devices 9 th September, 2003

2 Enterprise Spending Patterns Are Shifting … With less money to spend, corporations are taking a much more disciplined look at how and how much to spend on IT. Global Corporate Profits and IT Spending Growth Source: IDC, After Iraq: IT Spending Q03

3 … As Are Enterprise Priorities Purchase Criteria: Financial metrics such as TCO are displacing product performance metrics. 0%5%10%15%20%25%30% Scalability Performance Ability to Integrate Total Cost of Ownership Reliability Source: Evans Data; Luxury models face cost-conscious buyers; CNET News.com May 13, 2003 Survey of Database Customers

4 What Is Going On? PastFuture Focus AutomationReplacement IT Strategy

5 What Is Going On? PastFuture Focus AutomationReplacement ReturnInvestment ROI IT Strategy

6 What Is Going On? PastFuture AutomationReplacement ReturnInvestment SystemTransitionCost ROI IT Strategy Focus

7 Many Of Todays Transition Costs Are Unnecessary Does upgrading to the next generation of technology require you to… … hire on additional staff or consultants? … upgrade additional components? … retrain the user base? … retool software? … throw away existing infrastructure?

8 Disruption costs are unnecessary transition penalties in the form of costs and/or time to either IT staff or end- users Unnecessary Transition Costs = Disruption Costs These excessive transition penalties we call disruption costs demand more attention in todays IT environment. Does upgrading to the next generation of technology require you to… … hire on additional staff or consultants? … upgrade additional components? … retrain the user base? … retool software? … throw away existing infrastructure? Does upgrading to the next generation of technology require you to… … hire on additional staff or consultants? … upgrade additional components? … retrain the user base? … retool software? … throw away existing infrastructure?

9 Origins of Disruption Costs Technology for technologys sake Race for fastest and best, ie: Moores law Vendor–centric innovation Secure and control Lack of competition Allows inefficiencies to continue

10 Understanding the Migration Penalty Significant investment: –New Hardware, Software certification, training, services –New instruction set requires steep learning curve –Optimization can require intimate compiler knowledge Legacy applications must either migrate or perform poorly in emulation mode Downtime during migration Cost to rewrite and implement new administration policies Y2K revisited – research shows that the average migration project involves 100,000 lines of code, a four- to six-month time frame, and costs $821,000 for little perceived benefit. (Aberdeen Group – Strategically Attacking Software Sclerosis An Executive White Paper February 2001) Who pays for all of this? … one way or another YOU DO !!!

11 Effects of Disruption Costs Higher Disruption Costs… Result in lower… - Service levels - Productivity - IT job satisfaction - Discretionary budget -More expensive software -More expensive hardware -More expensive services

12 Start measuring disruption costs Implications for IT decision-makers Ask for guarantees Engage consultants for customization, not base level integration

13 Implications for IT vendors Future success in the IT industry will go to those companies that focus on lowering disruption costs. Start with customer needs 1. Drive innovation within standards 2. Collaborate with partners OS, SW, motherboard manufacturers, system builders, OEMS, etc. 3.

14 x86 32-bit – Content Delivery Servers Proprietary UNIX 64-bit Large Business-Critical Databases Mainframe x86 32-bit – Messaging Server Proprietary UNIX 64-bit Server – Compute Farm x86 32-bit File/Print Servers x bit File/Print Servers Handle more users x bit Transaction Servers Reduce wait time Mainframe x bit Databases Servers Deliver data faster x bit Content Delivery Servers Reduce wait time x bit Messaging Server Handle more users x bit Compute Farm Calculate data faster Example: x86-based 64-bit Architecture AMD64 has the potential to provide a single platform for the complex needs of the data center – reducing the costs by as much as 25 %. (Giga Information Group– Total Economic Impact Study, 2003

15 X86 based 64bit technology: A Low Disruption Cost Future One Enterprise, One Platform By lowering disruption costs with an x86-based 64-bit architecture, we envision a day when a single processor platform will efficiently fulfill the needs of an enterprise IT architecture.

16 x86-based 64-bit technology in action 88 Systems 6 Systems 256 Systems 490 Systems 35 Systems 1058 Systems 20 Systems 256 Systems 1400 Systems 10,136 Systems 24 Systems 152 Systems 20 Systems 1250 Systems >500 Systems

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