Building the Business Case for Capacity Planning and Management
Download as PPTX, PDF3 likes988 views
This document outlines the business case for capacity planning and management by quantifying the potential savings in various areas. It estimates that 30% of outages are capacity-related, costing businesses around $30 billion annually despite massive overprovisioning. Implementing automated capacity management solutions could avoid 50% of capacity outages, saving $3 million annually, as well as driving infrastructure efficiencies through 30% consolidation to save $1.8 million. Additional operational efficiency savings of $120,000 and cost avoidance of $500,000 capital plus $1 million annually are also projected. The total estimated first year savings are $6.42 million with ongoing annual savings of $5.92 million.
![Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL
9
Example calculation…
FTE cost = $80K/year
Size of current team = 5 people
Efficiency gain = assume just 30%
Saving = [$80K x 5] x 30%
= $120K/year](https://image.slidesharecdn.com/sumeriancpaasbusinesscasecustomer18aug2016forslideshare-160901093947/85/Building-the-Business-Case-for-Capacity-Planning-and-Management-9-320.jpg)
Building the Business Case for Capacity Planning and Management
- 1. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL BUILDING THE BUSINESS CASE For Capacity Planning & Management
- 2. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 2 The business case in a nutshell… ~30% ~$30Bn Even on critical systems a third of all outages are still capacity-related1 1. Populus, 2015 2. Anthesis, 2015 3. Freeform Dynamics, 2016 4. Gartner, 2014 5. Beaming/Opinium, 2016 ‘Overprovision & forget’ remains the most common approach (~75%) 3 90% rely on ad hoc tools/practices & instinct/vigilance of IT staff 3 ~60% Most businesses are still experiencing capacity-related outages & service degradation3 ~50% Half experience costly & disruptive emergency procedures as a result3 ~$5.6K/min The cost of datacenter downtime will vary depending on your business – but the numbers are big!4 ~$12Bn Overall the annual cost of outages to businesses, even just in the UK, is huge5 Most businesses are failing at Capacity management The outcome… Despite a massive overspend on server capacity2 ‘Capacity management? We just order more than we need…’
- 3. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 3 Taking a proactive approach to capacity management using the latest automated technologies can add significant business value: Outage avoidance – Proactively assuring service performance by avoiding service degradations and outages Infrastructure efficiencies – Rightsizing by identifying areas of under and over provisioning for optimization – Maximising the use of infrastructure resources while assuring customer performance is protected Operational efficiencies – Automation of data gathering, analysis and reporting – Freeing up staff headcount and time for other value-add activities (e.g. proactive action and business liaison) Cost avoidance – Improved investment profile, by only investing in what’s really needed, at the right time and right cost – Reduced power, cooling and software licensing costs through rightsizing as part of investment program Change management – Accurate scenario modelling and impact assessment ensuring planned change is de-risked
- 4. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 4 Let’s run through an example calculation for outage avoidance First, we need to gather the relevant data or make some assumptions: No. of outages each year: Let’s assume an estate experiencing 350 critical outages in a year. No. of these that are capacity related: we know from market research that around 30% of all critical outages are capacity-related Cost of an outage: let’s also assume each outage costs roughly $56,000 (this takes the cost of downtime from the first slide ($5.6K per minute) and assumes an ave. downtime of around only 10 mins –an extremely conservative estimate given the revenue levels transacted on online systems for example, where downtime of even a few minutes could cost millions).
- 5. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 5 Now the calculation… No. of outages/year = 350 Average duration = 10 minutes No. of capacity-related outages/year = 350 x 30% = 105 Average cost of an outage = $5.6K per minute x 10 = $56K Ave. cost to the business of capacity-related outages/year = $56K x 105 = $5.88M Even if we make a really conservative assumption that by investing in a new Capacity Planning and Management capability you will only avoid 50% of these – i.e. just over 50 outages a year - that’s still: A financial saving of nearly $3M/year
- 6. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 6 Now let’s look at the potential savings from driving infrastructure efficiencies Using the latest capacity planning technologies customers typically identify improved infrastructure consolidation ratios of between 24% and 40% Let’s assume current infrastructure spend levels (including hardware and software costs, and datacenter space, cooling and power costs) are $6M annually And let’s assume we can identify a 30% consolidation opportunity (the midpoint of typical ratios found)
- 7. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 7 The calculation Current infrastructure costs/year = $6M Consolidation opportunity = 30% Potential savings = $6M x 30% Infrastructure cost savings = $1.8M/year
- 8. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 8 There are also operational efficiency gains to be made… By taking an automated approach and integrating capacity management with your ITSM platform and workflows, for example ServiceNow, there are obvious gains to be made through team productivity and operational efficiency. For example, especially in these days of highly complex IT environments and massive data volumes, it can take a whole team of people just to collect data, model and analyse the relevant data, and then to produce capacity reports. And then there’s the support costs associated with all that fire-fighting and trouble-shooting trying to work out if issues are capacity-related or not and get to root cause and resolve the ones that are.
- 9. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 9 Example calculation… FTE cost = $80K/year Size of current team = 5 people Efficiency gain = assume just 30% Saving = [$80K x 5] x 30% = $120K/year
- 10. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 10 Often in IT, when refreshing technology platforms or migrating to cloud, etc., the low risk approach is taken of ‘lift and shift’ – i.e. enterprises make the assumption that they need and use everything they already have and so they replicate the same levels of resource in the new environment. However, as we’ve already outlined, most enterprises are massively over- provisioned. In fact, some server estates are only 20% utilised – with 80% lying dormant! Next let’s take a look at cost avoidance
- 11. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 11 Using the latest capacity management solution customers can quickly identify where they are over-provisioned and understand their real levels of utilization This means that when they are planning a refresh or migration they no longer need to take that ‘lift and shift’ approach but can rightsize at the same time and avoid unnecessary investment in hardware that they don’t really need More importantly, they can also avoid those much higher ongoing operational costs associated with software licenses, power ,cooling and datacenter space. In fact, they may even be able to avoid building a new datacenter altogether (saving millions in capital investment)! Cost avoidance continued…
- 12. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 12 Example calculation Planned investment: let’s assume a technology refresh costing $5M in capital investment with associated operating costs of $10M a year Projected savings: now let’s assume by applying capacity planning we can identify a very conservative 10% saving Capital saving = $5M x 10% Operating cost saving = $10M x 10% Total saving = $500K capital investment and ongoing operating costs of $1M a year avoided
- 13. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 13 In addition to all the cost savings already identified, there is significant value to be gained by de-risking change In today’s enterprise IT environments change is a constant – and with change comes business risk. Risk of things not getting to market on time, systems not performing properly and impacting customer satisfaction and revenue, the list is endless By applying the latest capacity planning solutions all proposed IT change can be quickly and accurately modelled For example: cloud migrations, physical to virtual migrations, technology refreshes, datacenter consolidation, supporting business growth
- 14. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 14 The value… Planned changes can by optimized and costs reduced Potential risks can be identified early and mitigated Timelines can be optimized – working through the best order in which to do things to keep costs and risk to the business to a minimum
- 15. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 15 Bringing it all together… Value category Example value quantification Outage avoidance $3M/year Infrastructure efficiencies $1.8M/year Operational efficiencies $120K/year Cost avoidance $500K $1M/year Reduced risk - Total $6.42M (year 1) $5.92M/year (year 2…)
- 16. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 16 It’s a no-brainer! Not all the categories we’ve gone through may be relevant to you, but you can see that even just taking 1 on it’s own – building a convincing business case for capacity planning and management is a no-brainer! If you’re interested in learning more about the value the latest capacity planning and management solutions can deliver, visit www.sumerian.com or give us a call on +44 (0)131 226 9300
- 17. Copyright © 2016 Sumerian EuropeSUMERIAN CONFIDENTIAL 17 WK 1 WK 2 WK 3 WK 4 WK 5 WK 6 WK 7 WK 8 Kick off Set up CPaaS Set up data collection Add any additional data sources Establish Baselines Set up reporting ITSM Integration CPaaS go live Sumerian CPaaS offers rapid benefits realization Quick to implement, low impact • SaaS cloud-based solution • No agents to deploy • Uses existing data sources Fully integrated with market leading ITSM platform, ServiceNow • Automated integration across all key ITSM workflows Flexible service • Range of value-add expert services to augment your in-house capability as required
Editor's Notes
- #3: Capacity Management? We just order more than we need… At the moment most enterprises are failing at Capacity Management ‘Overprovision and forget’ remains the most common approach With 90% of enterprises relying purely on ad hoc tools or practices (e.g. Excel spreadsheets) and the instinct and vigilance of IT staff The business outcome of this… Despite massive overprovisioning of server capacity across enterprises (in the region of $30Bn globally), IT capacity-related service outages and poor service performance remain commonplace. Proving that as a strategy ‘just buying more’ doesn’t work. Nearly 60% of businesses are still experiencing regular capacity-related outages and service degradation And even if we just look at their most important, business critical systems, 30% of all outages on these are capacity-related Internet downtime alone is estimated to cost UK businesses around $12Bn annually, with the average cost of datacenter downtime estimated at $5.6K a minute! In addition to the financial costs to the business, there’s the potential damage to their brand (for customer-facing services) and the internal disruption of emergency procedures to operating efficiency.
- #4: A better approach to capacity management is to use the latest automated technologies such as Sumerian CPaaS. This can help: Avoid outages: by using predictive analytics to identify threats to service for proactive action. Drive infrastructure efficiencies: by highlighting areas that are over-provisioned and can be rightsized, and by making sure workloads are placed in a way that ensures all resources are being fully utilized. Drive operational efficiencies: by automating the data gathering, modelling, analysis and reporting required to do capacity management, and so free up headcount for other activities, like proactive engagement with business teams. Avoid costs: by using ‘what if’ scenario modelling to model future requirements and ensure investments are only made when they are really needed. By planning well in advance you can also ensure enough time to negotiate effectively with suppliers on price. It’s also worth noting that the major expense of running servers isn’t necessarily the initial purchase cost – the ongoing power, cooling and software licensing costs can far outweigh those. So there are major ongoing operational cost savings to be gained from ensuring your estate is rightsized. Manage risk: using ‘what if’ scenario modelling to accurately assess the impact of planned change.