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To Virtualize or Not To Virtualize? Determine Real Data Center Costs.

November 26, 2012 / Scott Kinka

If you’re thinking about moving to the cloud, you know that every vendor is more than willing to promise massive savings. So you might be wondering: Who is telling the truth? Are the savings real? And if they are real, how much can I save? How quickly can I see those savings?

While many consultants and experts purport to “know” how much an organization can save by moving to the cloud, the truth is, nobody can tell for sure unless they actually run the numbers. Our Vice President of Cloud Services, Joe Corvaia, recently posted a great article on how to pull the numbers out of your IT organization by organizing them into vaults. They are:

–          Vault #1: Physical data center/hardware
–          Vault #2: Software licensing
–          Vault #3: Power and environmental
–          Vault #4: Hardware maintenance and software assurance
–          Vault #5: Support (personnel) and training
–          Vault #6: Disaster recovery and continuity
–          Vault #7: The intangibles

We call them vaults because when they are unlocked them organizations generally see big savings.

While we were writing the article we quickly realized that there were literally no comprehensive calculators available online for IT professionals to build out the costs associated with the vaults. In fact, some of the efforts we found literally boiled down all of the expenses of an IT department into 5 questions. That’s kind of like saying we’ll fix the deficit by cutting funding to Sesame Street and taxing the top 2%. It may work as a sound bite but we all know reality is a lot more complicated.

Instead, we undertook a massive effort to format an internal tool that we’ve used with hundreds of companies over the past few years and make it easy for any IT executive to use. The result is a projected path virtualization TCO calculator that we subsequently tested and reviewed with a dozen or so CIOs and other IT executives. It produces an accurate 5 year projection of the costs of an on-premise data center for the first 6 vaults including hardware, software, operational costs and more.

So why not include the 7th vault (The Intangibles)? Take a look at some of the details we’d need to include:

–          Cost per employee per hour of downtime
–          Mitigation of financial loss due to the elimination of power outages
–          How much a lost transaction or sales order costs your firm on average
–          The risks for being out of compliance to regulatory standards
–          And more

As you can tell these would vary significantly by organization. So much so that we felt their inclusion in the calculator would unnecessarily complicate its use. Instead, we left you a spot to include them independently.

In the end, when the tool is completed and compared to a cloud services quote, you’ll be able to accurately determine which solution is right for your organization. To download the calculator and Joe’s article click here: Virtualization TCO Calculator. You’ll be prompted to save the spreadsheet calcualtor (.xls) and the 7 vaults article .(pdf) I referenced above.

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