ROI Analysis for Mid-sized SAP Landscape:

Transcription

1 ROI Analysis for Mid-sized SAP Landscape: HP 9000 to HP Integrity Blades, including upgrade to SAP ERP 6.0 By : Jim Satko 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice

2 HP Can Improve your ROI on IT This study identifies how moving to HP Integrity can save you money and create a more capable, change-ready infrastructure Here s what we did: Created a cost analysis of a typical HP 9000 server infrastructure using Alinean s industry-standard model Support Operations Depreciation Created an HP Integrity blade server alternative Production and non-production environments Created cost comparisons across current servers and HP Integrity Compared ROI relative to your current environment The results demonstrate the benefits of consolidating your applications to HP Integrity blade servers 2

3 Project Participants, Roles and Recap ROI Analysis Project Overview ROI analysis conducted to assess the costs and benefits of implementing the SAP PA RISC to Integrity Blades Example Tool, model and data are all third-party standard information created by leading industry research firms: IDC the premier global market intelligence and advisory firm in the information technology and telecommunications industries. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets, and our management team is comprised of experienced and respected industry luminaries. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations. Alinean the leading developer of ROI and TCO analysis methodologies and tools. Over 10 years of intense experience in developing ROI and TCO models and tools. Largest database of IT spending and TCO benchmarks. Formed by Gartner alumni and original creators of Gartner TCO Manager/Analyst product line. 3

4 Existing HP SAP Landscape Not SAP 6.0 UC Ready Summary: 14 servers with a total of 68 processors 3 cabinets 68 HP-UX MC licenses 24 Oracle Licenses Landscape Component Observations: Legacy servers Inefficient use of space, power costly maintenance Integrity can save money, power, processing time Expensive to upgrade to ERP 6.0 Current Investments Application Servers Database Servers QA Servers Development Server SBX Server 4 L3000 each w/4 550 MHz CPU and 16GB memory 2 rp5470 each w/4 650 MHz CPU and 16GB memory 1 rp5470 w/4 875 MHz CPU and 16GB memory 1 rp8400 w/ GHz CPU and 32GB memory 1 rp5470 w/8 750 MHz CPU and 16GB memory (fail-over) 1 L3000 w/2 550 MHz CPU and 16GB memory 1 rp5470 w/4 875 MHz CPU and 12GB memory (QA DB) 1 L3000 each w/2 550 MHz CPU and 16GB memory 1 rp3440 w/4 1GHz MHz CPU and 16GB memory (Dev DB) 1 L3000 each w/4 550 MHz CPU and 8GB memory 4

5 Proposed HP Integrity - SAP Landscape SAP 6.0 UC Ready Summary: (PA-RISC vs Integrity Blades) Total servers: 14 vs 7 Total Number of Cores 68 vs 48 (Parity = 40, ERP 6.0 = 48) HP UX License 68 vs 48 (Parity = 40, ERP 6.0 = 48) Oracle DB Licenses 24 vs 17 Observations: Fewer cores Fewer OS and DB licenses Less power/cooling/space Lower maintenance/support Free up staff for other projects Faster CPUs save proc time Xfer OS & DB licenses no charge Landscape Component Application Servers Database Servers QA Servers Development Server Failover DB and SBX Server Current Investments 2 BL870c 4cpu/8core Blade Servers 2 BL870c 4c/8core Blade Server (two CPUs used per app) 1 BL860c 2c/4core Blade Server 1 BL860c 2c/4core Blade Server 1 BL870c 4cpu/8core Blade Server 5

6 Cash Outlay Totals Over 3 Year Analysis Period Legacy versus Integrity Blades 3 Year Cash Outlay - Legacy vs Integrity Blades $2,500, $2,000, $1,500, $1,000, $500, $- Legacy PA RISC Integrity Blade Soln Year 1 Year 2 Year 3 Total 3 year 6

7 Cumulative Investment versus Cumulative Benefits Break Even at 15 months! Purchasing the last 8 cores and OS licenses at ERP 6.0 deployment further improves the ROI Calculations are list price. Discounts also improve ROI. 7

8 TCO Assumptions Software: HPUX Licenses and Oracle Licenses transferable to Integrity Blades solution at zero cost No other application SW costs included in example No application or SW upgrade costs included in example SAP version remains the same in migration from PA-RISC to Integrity Blade solution Hardware All hardware system costing at list price Facilities costs Power is.099 per kw/hr Cooling is.099 per kw/hr Data Center cost is $68.75 per square foot IT Administration and Operation costs Based on third-party standard information created by leading industry research firms Average number of servers per IT operations staff FTE is Average number of server per IT administration staff FTE is Change costs are about 5% of total costs Includes: Planning, Training, Validation, Deployment 8

9 TCO Summary TCO Comparison Cumulative 3 Year Solution A SAP w/oracle on HP RISC running HP-UX 11i Solution B SAP w/oracle on HP Integrity Blades running HP-UX 11i Difference (A-B) Difference (A-B)% IT Costs Server Hardware $407,640 $782,543 ($374,903) -92.0% Server Software $1,290,984 $603,240 $687, % IT Operations $433,473 $196,186 $237, % IT Administration $49,908 $24,952 $24, % Facilities $115,851 $21,300 $94, % Change Costs $93,384 ($93,384) 0.0% Total IT Costs $2,297,856 $1,721,605 $576, % Reduce SW costs by more than 50% Reduce facilities costs (power, cooling, space) by more than 80% - Go Green! Non-discounted Integrity Blade HW purchase price plus 3 yr Blade HW maintenance about commensurate with 3yr maintenance of legacy HW 9

10 TCO Breakdown Software and Operations Costs Exceed Hardware TCO Bar Chart $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Legacy Integrity Blade Soln Hardware Software IT Ops IT Admin Facilities Change 10

11 Financial Summary 3 year cumulative hard benefits ($avings) of $1,975,868 Payback period of 15.0 month(s) Return on Investment (ROI) of 34% Risk Adjusted Return on Investment (RA ROI) of 18% Net Present Value (NPV) savings of $266,716 Internal Rate of Return (IRR) of 25% Based on the costs and benefits of the proposed project using discounted cash flow analysis and factoring in a risk-adjusted discount rate of 9.5% 11

12 Cash Outlay Over 3 Year Analysis Period Legacy versus Integrity Blades 3Year Costs - Legacy PA RISC Servers Operations cost drop over 60% $800, $700, $600, $500, $400, $300, $200, Change Facilities Admin Operations SW Support SW Software support drops over 60% $100, $- Year 1 Year 2 Year 3 HW Support HW 3 Year Costs - Integrity Blades Hardware support costs become negligible $1,200, $1,000, $800, $600, $400, $200, $- Year 1 Year 2 Year 3 Change Facilities Admin Operations SW Support SW HW Support HW 12

13 Investment Summary Investment Summary Initial Year 1 Year 2 Year 3 Total Total Investment $771,926 $298,003 $204,619 $204,619 $1,479,167 Capital Expenditure Server Hardware Cost - Capital Expense (IT) $771,926 $3,539 $3,539 $3,539 $782,543 Server Software Cost - Capital Expense (IT) $201,080 $201,080 $201,080 $603,240 Total Capital Expenditure $771,926 $204,619 $204,619 $204,619 $1,385,783 Operating Expenditure IT Change Cost - Operating Expenditure (IT) $93,384 $93,384 Server Software Cost - Operating Expense (IT) Server Hardware Cost - Operating Expense (IT) Total Operating Expenditure $93,384 $93,384 These numbers do not include discounts or trade-ins. 13

14 Direct Benefits and Investment Overview To implement the proposed project will require a 3 year cumulative investment of $1.479M plus initial expenses: $ 772K in initial expenses $1386K in capital expenditures $ 93K in operating expenditures Hard benefits include $1.97M in cumulative 3 year in IT cost reductions 14

15 Revisit Deal with Discounts and Trade-Ins Using 20% Hardware discount Using Trade-in of legacy PA-RISC servers $18,000 trade-in dollars applied to new sale 15

16 Cash Outlay Totals Over 3 Year Analysis Period Legacy versus Integrity Blades 3 Year Cash Outlay - Legacy vs Integrity Blades w/discount $2,500, $2,000, $1,500, $1,000, Legacy PA RISC Integrity Blade Soln $500, $- Year 1 Year 2 Year 3 Total 3 year 16

17 Cumulative Investment versus Cumulative Benefits Break Even down to 14 months! 17

18 TCO Summary w/integrity Blade Discounts and Trade-In TCO Comparison Cumulative 3 Year Solution A SAP w/oracle on HP RISC running HP-UX 11i Solution B SAP w/oracle on HP Integrity Blades running HP-UX 11i Difference (A - B) Difference (A - B)% IT Costs Server Hardware $407,640 $620,353 ($212,713) -52.2% Server Software $1,290,984 $603,240 $687, % IT Operations $433,473 $196,186 $237, % IT Administration $49,908 $24,952 $24, % Facilities $115,851 $21,300 $94, % Change Costs $93,384 ($93,384) 0.0% Total IT Costs $2,297,856 $1,559,415 $738, % Reduce overall 3 yr costs by more than 32% Over $738K savings over 3 years Reduce facilities costs (power, cooling, space) by more than 80% - Go Green! Discounted Integrity Blade HW purchase price with trade-in plus 3 yr Blade HW maintenance about commensurate with 3yr maintenance of legacy HW 18

19 Financial Summary with Discounts and Trade-In 3 year cumulative hard benefits ($avings) of $1,995,948 Payback period of 14.0 month(s) Return on Investment (ROI) of 50% Risk Adjusted Return on Investment (RA ROI) of 35% Net Present Value (NPV) savings of $428,906 Internal Rate of Return (IRR) of 40% Based on the costs and benefits of the proposed project using discounted cash flow analysis and factoring in a risk-adjusted discount rate of 9.5% 19

20 Investment Summary with Discounts and Trade-In Investment Summary Initial Year 1 Year 2 Year 3 Total Total Investment $609,736 $298,003 $204,619 $204,619 $1,316,977 Capital Expenditure Server Hardware Cost - Capital Expense (IT) $609,736 $3,539 $3,539 $3,539 $620,353 Server Software Cost - Capital Expense (IT) $201,080 $201,080 $201,080 $603,240 Total Capital Expenditure $609,736 $204,619 $204,619 $204,619 $1,223,593 Operating Expenditure IT Change Cost - Operating Expenditure (IT) $93,384 $93,384 Server Software Cost - Operating Expense (IT) Server Hardware Cost - Operating Expense (IT) Total Operating Expenditure $93,384 $93,384 20

21 Direct Benefits and Investment Overview with Discounts and Trade-In To implement the proposed project will require a 3 year cumulative investment of $1.362M plus initial expenses: $ 610K in initial expenses $1224K in capital expenditures $ 93K in operating expenditures Hard benefits include $1.99M in cumulative 3 year in IT cost reductions 21

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