Business Alert: How to Gain Control of your Budget and Reduce TCO John McArthur Group Vice President IDC

Why Use Financial Measurements? Old Days –Technology choice was limited and the value was often obvious Today –Many choices, often replacing current technology and strategies –Decision must be based on sound business criteria

Is it ROI or TCO? ROI For determining whether to acquire a solution –The question is “IF” Estimates or measures the costs and financial returns before and after a solution is implemented To evaluate the financial benefits of a solution TCO For determining the most cost effective solution –The question is “WHICH” Compares the expected costs of one solution to the expected costs of another over its useful life To evaluate the competitiveness of a solution Key Features

Components of TCO: The Life Cycle Costs Acquire Retire Implement Manage

Components of TCO: The Life Cycle Costs Acquire Warning! Delayed acquisition can be one of the greatest costs

Know Your Stakeholders Data Center Operations Database Administrators Facilities Management Human Resources Application Developers Operational Server Suppliers Business Customers E-Business Executive LOBFinancial Business Unit Comptroller IT Financial Management Chief Financial Officer Storage Suppliers N ETWORKED S TORAGE Software Suppliers Best Practice

Know Your Company Favors established suppliers Selects proven technology Focuses on cost containment and profit growth over revenue acceleration Invests to reduce risk Open to start-ups Considers innovative solutions Focuses on revenue generation over cost containment Considers slow time-to- market the greatest risk Checklist

Know Your Bidders Visit the primary service location Talk to current and former customers Call the support desk at all hours Use your credit department to complete a financial analysis and credit check –Privately-held suppliers should not be exempt Checklist

Components of TCO: The Life Cycle Costs Warning! Slow implementation increases TCO. Implement

Poor Planning is Your Worst Enemy EnvironmentalTechnologyPersonnel PowerCapacityEducation CoolingPerformanceStaffing changes CablingCompatibilityScheduling Floor and rack space ConnectivityChange control Physical securityAvailabilityPersonnel resistance Leverage Professional Services

Components of TCO: The Life Cycle Costs Warning! The only constant is change Manage

The view from early 2001 no longer applies… Storage capacity was increasing 80% per year.Storage capacity was increasing 80% per year. Storage managers had to improve efficiency more than 60% per year.Storage managers had to improve efficiency more than 60% per year.

Disk Storage Systems Spending Growth -18.2%

But the more things change… The more they stay the same Shipments grew little more than 20% due to: –Dot-com shakeout –Economic slowdown –Telco meltdown –Decline in capital spending Personnel budgets are frozen or declining… So do more with less

The strategy with the best track record for lowering TCO is consolidation of: Location Devices Management And virtualization is the key

Components of TCO: The Life Cycle Costs Always know where the exit is Retire Tip

Retirement Costs Data ablation Data migration Equipment disposal and asset recovery

What suppliers doing to lower TCO… Acquire RetireImplement Manage Streamlined ordering Private Web sites Automated manufacturing Standardization Interoperability testing Design and implementation services Customer certification Remote monitoring Remote management Virtualization Automated and predictive management Asset management Equipment finance Asset recovery

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