TCO Calculator Improves Data Center Budgeting for Financial Services Firms

Helps create more accurate IT cost estimates

To help senior corporate finance and IT executives to create the most accurate IT budgets, the Uptime Institute has developed the True TCO Calculator. Commissioned by IBM’s Deep Computing and Data Center Capacity on Demand business units, the calculator addresses problems that result when operating expenses (such as power costs) are underestimated.

According to Ken Brill, founder and executive of the institute, one result of underestimating costs is that CIOs and data center operators frequently discover late in the planning (sometimes after the purchase of IT hardware such as computer, network, and storage servers) that their data center infrastructure lacks the capacity for the new workloads.

Data center costs have grown rapidly and budgets must be allocated differently to accommodate changes in the environment. For example, the Uptime Institute estimates that the traditional one to three percent of IT’s total budget allocated to power costs has grown to between five and 15 percent.

The institute says that traditional IT hardware lifecycle total cost of ownership (TCO) calculations and cost justifications have ignored or significantly underestimated the “True TCO” because they fail to correctly capture and allocate the capital and operating expenses of the data center during planning.

“In one recent case,” Brill says, “a major global financial institution purchased $15 million worth of blade servers, only to discover that the new or upgraded facilities necessary to handle the power and cooling requirements required an additional $50 million in unplanned and unbudgeted investment. And that’s just one of a number of such examples.”

The institute also has published a white paper, “A Simple Model for Determining True Total Cost of Ownership for Data Centers, ” written by Dr. Jonathan Koomey, a senior fellow of the Uptime Institute, a project scientist at the Lawrence Berkeley National Laboratory, and a consulting professor at Stanford University/

The calculator gathers important data center costs such as site infrastructure capital costs, computer equipment costs, energy bills, and other operating expenses incurred when IT builds or operates a new data center.

The calculator is designed to model a “high-density, high-performance computing facility” that runs financial services applications which analysts can use to explore tradeoffs between energy-efficient computing equipment and infrastructure capital and energy costs over the facility’s expected life. According to Koomey, “This early model shows that investment costs for more energy-efficient servers in a new data center can be more than offset by the avoided capital and operating investments in infrastructure systems for power supply and cooling. Without such a calculator, that result might not have been so readily apparent.” For more information, visit Note: Access to the white paper and spreadsheet model requires user regististration with the Institute.

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