Maximize the value of IT assets –from procurement to disposition

Neil Peters-MichaudApril 18, 2012

Proprietary and Confidential

Topics

• Understanding the TCO of computers• Optimize the economic and

environmental lifecycle of IT assets• Tool introduction

– EPEAT product catalog– Life cycle costing worksheet

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What goes into the cost of a PC?

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• Total Cost of Ownership is a method for the systematic accounting of all costs (direct & indirect) related to IT investments

• The initial purchase price is relatively small part of total cost or owning and operating IT products.– Networked PC costs: $13,200 annually

• 15% purchase, 80% operations, 5% disposal (Gartner)

Examples of CostsLife cycle Costs

Acquisition & Procurement

• Hardware purchase or lease, including all accessories• Software licenses• Admin costs (bid specs, contracts, tracking purchases,

delivery, installation)

Operations & Maintenance

• IT and personnel training• IT support such as network and software management, help

desk• Internet, energy, furniture and floor space costs• Software & hardware upgrades & related staff downtime

Disposition costs • Admin costs (asset management, inventory tracking, contract services)

• Sanitizing data• Storing, shipping and disposition costs

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IT Lifecycle – survey of practitioners

• IBM/Wipro PSA analysts gathered detailed data from large enterprises in 2009. (50 North American, 25 UK, and 25 German companies) on the costs of PC management and current refresh practices

• The analysts selected a set of key cost drivers from the analyzed customer data and modeled the projected costs and benefits of maintaining refresh cycles, buying mobile PCs, and upgrading to new technology.

• Analysts then translated the findings into a financial model that quantifies the value of proactive refresh rates, mobile PCs, and Intel vPro technology.

Participant Screener

• Wipro interviewed 106 participants who were screened for the following profiles:– IT/IS Titles such as CIO,

VP/Director/Manager of IT– Involved in the management or

deliver PC support services, such as remote/on-site support, PC management

– Understand the costs and technical requirements of providing PC support services

Participant Industry and Firmographics

• Organizations with: – 5000+ PCs for North America and 2500+ PCs for Europe– At least 25% mobile PCs– Must handle at least some aspects of PC support with internal IT staff

After 3 years, Mobile PC support costs exceed $1100, making it less expensive to refresh

Mobile PCs in Year 4 experience a

59% increase over year 1 support costs

Updating PCsUpdating PCs

Cost DriversCost Drivers

PC Diagnosis and RepairPC Diagnosis and Repair Isolate and Recover Infected PCs

Isolate and Recover Infected PCs Hard Disk FailuresHard Disk Failures

Source: Wipro Consulting Product Strategy and Architecture Practice primary research with 100 US and European companies, March 2009

Mobile PCs deployed on a three-year cycle offer the lowest total equivalent annual cost

The Equivalent Annual Cost of

owning a Mobile PC is lowest for a 3-year lifecycle –

indicating that a 3-year refresh is the

optimal refresh option for Mobile

PCs

*TCO comprises of the PC Acquisition Cost, Support Costs (including the costs of Updating PCs, Diagnosing and Fixing PCs, Isolating and Recovering PCs after a security incident), and Out of Warranty Repair Costs

After 3 years, Desktop PC support costs exceed $600, making it less expensive to refresh

Updating PCsUpdating PCs

Cost DriversCost Drivers

Diagnosis and Repair PCs

Diagnosis and Repair PCs

Isolate and Recover Infected PCs

Isolate and Recover Infected PCs

Desktop PCs in Year 4 experience a 59% increase over

Year 1 support costs

Hard Disk FailuresHard Disk Failures

Source: Wipro Consulting Product Strategy and Architecture Practice primary research with 100 US and European companies, March 2009

Desktop PCs deployed on a three-year cycle offer the lowest total equivalent annual cost

The Equivalent Annual Cost of

owning a Desktop PC is lowest for a 3-

year lifecycle – indicating that a 3-year refresh is the

optimal refresh option for Desktop

PCs

*TCO comprises of the PC Acquisition Cost, Support Costs (including the costs of Updating PCs, Diagnosing and Fixing PCs, Isolating and Recovering PCs after a security incident), and Out of Warranty Repair Costs

Optimize economic and environmental benefits to reduce TCOCosts related to energy use, upgradeability, service/maintenance and disposal affect the environment similarly

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EPEAT

• Electronic Product Environmental Assessment Tool (www.epeat.net)

• Voluntary environmental performance standard for computer desktops, monitors, laptops and (soon) imaging devices

• Addresses multiple environmental attributes• Three-tier rating system: bronze, silver & gold• Verification process to ensure conformance

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EPEAT acceptance• Large number of available products

– Searchable web database– Over 1,900 products and 30 manufacturers

• All federal agencies ($70 billion/year)• Private sector users:

– KPMG– McKesson– Kaiser Permanente

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TCO Worksheet

This TCO Calculator Tool allows users to compare the costs of different options for the life cycle management of IT equipment with an emphasis on decisions that may have an environmental impact. For example, what is the annualized cost of purchasing ENERGY STAR qualified equipment compared to a conventional unit? What will be the cost savings of extending the period of use for equipment from 4 years to 5 years, or purchasing only desktop processing units and keeping the current desktop monitors?

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Microsoft Office Excel 97-2003 Worksheet

Best practice discussion

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