How to Reduce Data Center TEI Through Streamlined Hardware Maintenance

By: Sean McCormick| - Leave a comment


Forrester Consulting

Sponsored by IBM

IBM commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study to examine the value IBM Multivendor Support Services (MVS) customers could achieve by deploying IBM MVS. Forrester spoke with one asset manager in a multinational retail organization and surveyed 24 other organizations in the U.S. and U.K. regarding the benefits, costs, risks and flexibility of IBM hardware support services. The survey respondents’ roles ranged from IT managers to the most senior IT decision-makers. The organizations ranged in size from 500 to more than 20,000 employees. The number of devices managed by IBM ranged from 30 to over 4,000, including servers, storage and networking.

According to Forrester Research, between 70 percent and 75 percent of a typical tech budget goes to keeping the lights on and the business running, even if there are no new projects.[i] Prior to deploying IBM MVS, the interviewed and surveyed organizations used OEMs as well as third-party and internal resources to support their hardware. As various hardware devices approached end of life or were no longer covered by OEM warranty, the organizations sought to extend the useful life of these devices with the least amount of risk. They also wished to lower their equipment maintenance expense while proactively planning for equipment upgrades. Improving support vendor service-level agreements (SLAs) and regaining control of their infrastructure from the OEMs were also important components of their support strategies.

After investing in IBM Multivendor Services, the interviewed and surveyed companies experienced a broad range of benefits, which include:

  • Reduced support and maintenance spending of $114,939 over a three-year period. These savings stem primarily from reducing the number of support vendors that are used and possibly obtaining more favorable pricing from IBM.
  • Reduced time needed for hardware support tasks amounting to $26,368 over a three-year period. The reductions ranged from 7 percent to over 80 percent and were loosely correlated with the number of devices supported by IBM. These labor savings may arise for multiple reasons, including outsourcing support tasks that were previously done internally and improved support from IBM versus previous support vendors.
  • Reduced time needed for vendor relationship management amounting to $37,363 over a three-year period. These reductions ranged from 12 percent to over 85 percent. This labor saving is a direct result of reducing the number of support vendors that the surveyed organizations use and supports their goal of lowering their equipment maintenance expense. The surveyed organizations reduced their number of support vendors by an average of four.

In addition to these benefits, the organizations were also able to extend the useful life of their equipment resulting in capital expense deferred or saved (for new equipment purchases or upgrades). The amount of capital spending deferred ranged from $15,000 to more than $200,000. The variance correlates with the number of devices that are supported by IBM. The length of deferment ranged from one to five years, with an average two and a half years.

Based on the interview and survey results, Forrester constructed a TEI framework, a composite company and an associated financial analysis. The composite organization that Forrester synthesized from these results represents an organization with the following characteristics:

  • It is a U.S.-based company with 2,000 employees and over $500 million in revenue.
  • The organization has 50 x86 servers, as well as one tier-1 and three tier-2 storage arrays. It also had seven network devices that had an OEM warranty that was about to expire or were approaching end of life. These devices were installed in a single data center.
  • The organization had been using a mix of OEM and third-party providers to provide support services for these devices. The basic support SLA was 24x7x365.

After accounting for all benefits and risk-adjusting for realistic and conservative estimates of the future value and scalability of IBM MVS, Forrester found that the composite organization experiences a $178,670 savings over three years or $71,846 per year.

For more information on the full September 2016 case study, “The Forrester Total Economic Impact of IBM Multivendor Support Services,” please reach out to your IBM representative.

[i] Source: “U.S. Tech Market Outlook for 2016 and 2017: Cloud and Business Caution Will Slow Growth,” Forrester Research, Inc., May 6, 2016.

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About The Author

Sean McCormick

Senior Consultant, Forrester

Sean McCormick is a senior consultant for Forrester's TEI service. With multiple years of experience in developing business cases for mobile and digital technologies, Sean specializes in helping clients justify the value of their investment using Forrester's Total Economic Impact (TEI) framework. Sean also works with clients to measure and communicate the value of vendor solutions for IT and business initiatives, providing ROI business cases based on the costs, benefits, flexibility and risk associated with specific investments. Sean previously worked with Target Corporation, where he supported, Target Canada and Target's business intelligence technology team. Sean earned his Bachelors of Science in Finance and his M.B.A from the University of Minnesota's Carlson School of Management.