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A Forrester Total Economic Impact™ Study Prepared For NetApp


The Total Economic Impact Of NetApp’s Storage
Solutions For Server Virtualization
Project Director: Bob Cormier, Vice President, Principal Consultant
Forrester Consulting
January 2012
Forrester Consulting
The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization




TABLE OF CONTENTS
Executive Summary ................................................................................................................................................................................. 2 

     Key Findings........................................................................................................................................................................................ 4 

     Disclosures ........................................................................................................................................................................................... 4 

About NetApp’s Storage Solutions For Server Virtualization And VMware............................................................................... 5 

Customer Interview Highlights............................................................................................................................................................. 6 

Composite Organization Description .................................................................................................................................................. 7 

TEI Framework ...................................................................................................................................................................................... 11 

     Costs.................................................................................................................................................................................................... 11 

     Benefits And Savings: Quantified.................................................................................................................................................. 13 

     Benefits: Unquantified..................................................................................................................................................................... 17 

     Risk...................................................................................................................................................................................................... 18 

     Flexibility............................................................................................................................................................................................ 20 

Financial Summary................................................................................................................................................................................ 21 

Study Conclusions ................................................................................................................................................................................. 22 

Appendix A: Total Economic Impact™ Overview ........................................................................................................................... 24 

Appendix B: Glossary ............................................................................................................................................................................ 25 

Appendix C: About The Project Manager ........................................................................................................................................ 26 


© 2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources.
Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total
Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional
information, go to www.forrester.com.


About Forrester Consulting
Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in
scope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who apply
expert insight to your specific business challenges. For more information, visit www.forrester.com/consulting.




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Executive Summary
In late 2011, Forrester Research started work on a research project commissioned by NetApp that focused on
examining the potential return on investment (ROI) enterprises may realize by adopting NetApp’s storage solutions for
server virtualization in conjunction with VMware’s ESX Server virtualization platform.

This study highlights the benefits and costs of deploying NetApp’s storage solutions for server virtualization across the
enterprise of a composite Organization (see section titled Composite Organization Description). The findings in this
study are in large part based on in-depth interviews conducted by Forrester with a total of 12 NetApp customers: five
customers in late 2011 and seven customers in 2009, each of which are using NetApp’s storage solutions for server
virtualization. As with the interviewed customers, our composite Organization is focusing on the benefits virtualization
brings to business-critical applications such as Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and
financials. In addition, it intends to virtualize the following: file, print, Active Directory, small database, domain name
system (DNS), and web servers. The Organization will also be considering the benefits of NetApp’s Data ONTAP
operating system, NetApp OnCommand including Virtual Storage Console, and back-up and recovery of virtual data.
The study examines the estimated ROI for the composite Organization and presents the aggregate findings derived
from the interview and analysis process as well as our independent research.

The study found that for our composite Organization, a successful, well-planned implementation will allow quantifiable
benefits and cost savings to accrue to the Organization in the following areas totaling $987,620 (risk adjusted):

     $56,420 — reduction in storage hardware and software costs — using data deduplication.

     $16,800 — reduction in storage hardware and software costs — using thin provisioning and FlexClone.

     $158,400 — media and software associated with centralized backup.

     $264,000 — labor savings for backup and recovery storage administration.

     $132,000 — labor savings using NetApp Virtual Storage Console.

     $360,000 — benefits of faster eCommerce application deployment (gross profits).

The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server
virtualization, but they were not able to quantify the benefits at the present time:

     Most interviewed customers acknowledged savings in power and cooling costs as a result of server and storage
         virtualization. However, savings dollars could not be specifically apportioned to NetApp storage because of legacy
         server use of direct-attached storage.

     About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or
         eliminate) the eventual expansion of their data centers. Each customer estimated the cost avoidance savings with
         a wide range of results ($300,000 to $2.3 million); however it’s not possible to apportion savings specific to
         NetApp due to other variables such as: pre-virtualization data center utilization, company growth rates, and its
         current and future plans to outsource data center expansion to cloud service providers.




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Purpose
The purpose of this study is to provide readers with a framework to evaluate the potential financial impact on their
organizations of NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and
virtualization platform. Forrester’s aim is to show all calculations and assumptions used in the analysis. Readers should
use this study to better understand and communicate a business case for investing in NetApp’s storage solutions for
server virtualization.


Methodology
NetApp selected Forrester for this project because of our industry expertise in server consolidation, virtualization,
storage technologies, and Forrester’s Total Economic Impact™ (TEI) methodology. TEI not only measures costs and
cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in
increasing the effectiveness of overall business processes.

For this study, Forrester employed four fundamental elements of its TEI methodology in modeling NetApp’s storage
solutions for server virtualization:

          1.    Costs and cost reduction.

          2.    Benefits to the entire organization.

          3.    Flexibility.

          4.    Risk.

Given the increasing sophistication that enterprises have regarding cost analyses related to IT investments, Forrester’s
TEI methodology serves an extremely useful purpose by providing a complete picture of the total economic impact of
purchase decisions. Please see Appendix A for additional information on the TEI methodology.


Approach
Forrester used a five-step approach for this study:

          1.    Forrester gathered data from existing Forrester research relative to NetApp’s storage solutions for server
                virtualization.

          2.    Forrester interviewed NetApp’s marketing, product management, and sales personnel to fully understand
                the potential (or intended) value proposition of its solutions.

          3.    Using knowledge of the NetApp solution, as well as input from existing Forrester research, a Forrester
                representative conducted in-depth discussions with 12 of NetApp’s customers regarding their experiences
                with NetApp’s storage solutions for server virtualization.

          4.    Forrester constructed a financial model representative of data collected in the interviews.

          5.    Forrester created this study, which represents and examines the estimated value of the findings derived
                from the customer interview and analysis process and from Forrester’s independent research.




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Key Findings
Our interviews and subsequent financial analysis found that the Organization experienced the risk-adjusted ROI,
payback period, benefits, and costs shown in Table 1.


Table 1
The Organization — Three-Year Risk-Adjusted ROI, Payback Period, Costs, And Benefits

  Risk-adjusted            Payback         Total benefits         Total costs
                                                                                      NPV
       ROI                  period             (PV)                  (PV)

         152%             11 months           $823,210             $326,780         $496,430


Source: Forrester Research, Inc.



The three-year risk-adjusted total net present value (NPV) of $496,430 represents the net cost savings and benefits
attributed to using the NetApp solution when compared with the costs of the Organization’s storage environment
before consolidation and virtualization (see details below in the Costs, Benefits, Flexibility, and Risks sections). In
addition, the risk-adjusted ROI was a very favorable 152%.

Table 1 illustrates the risk-adjusted cash flow for the composite Organization, based on data and characteristics
obtained during the customer interview process. Forrester risk-adjusts these values to take into account the potential
uncertainty that exists in estimating the costs and benefits of a technology investment. The risk-adjusted value is meant
to provide a conservative estimate, incorporating any potential risk factors that may later affect the original cost and
benefit estimates. For this study, Forrester applied a 20% risk adjustment — i.e., a reduction of 20% — to all benefits
to reflect the risks. For a more in-depth explanation of risk and the risk adjustments used in this study, please see the
Risk section.

The objective of this study is not to illustrate savings that other enterprises can obtain by deploying the NetApp solution
but rather to identify savings that the interviewed customers experienced. These results can be used as a guide to allow
other enterprises to determine the appropriate benefits for their particular environment.


Disclosures
The reader should be aware of the following:

     The study was commissioned by NetApp and delivered by the Forrester Consulting group.

     NetApp reviewed and provided feedback to Forrester, but Forrester maintained editorial control over the study
         and its findings and did not accept changes to the study that contradicted Forrester’s findings or obscured the
         meaning of the study.

     NetApp provided the customer names for the interviews.




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     Forrester makes no assumptions as to the potential return on investment that other organizations will receive.
         Forrester strongly advises that readers should use their own estimates within the framework provided in the study
         to determine the appropriateness of an investment in NetApp’s storage solutions for server virtualization.

     Forrester does not endorse NetApp or its storage solutions.

     The study is not a direct or implied market or competitive comparison.




About NetApp’s Storage Solutions For Server Virtualization And VMware

NetApp Storage Solutions For Server Virtualization
According to NetApp, its storage solutions for server virtualization complement the benefits provided to servers by
VMware, enabling organizations to:

     Save up to 50% on storage power, cooling, and space and lower overall data center costs using thin provisioning
         and snapshot copies.

     Bring products, services, and projects to market faster with instant storage provisioning.

     Frequently and efficiently back up data with various recovery points using many space-efficient snapshot copies,
         each representing a potential rollback point.

     Provide self-service tools for virtual server administrators to schedule snapshot frequency and perform data
         restores in the event of system or user corruption or deletion.

Organizations may also experience a smooth transition to their storage infrastructure with NetApp’s specialized
virtualization services, including assessment, implementation, and management delivered by experienced, certified
professionals, using proven methodologies and best practices.


VMware ESX Server
According to NetApp, VMware and its Cloud Infrastructure and Management Suite is comprised of products that help
organizations deploy and manage highly available and dynamic data centers. The foundation of the Cloud
Infrastructure and Management Suite is vSphere, the hypervisor or virtualization layer that allows a traditional physical
server to be provisioned into multiple virtual machines. A key value of a virtual machine is that it acts just like a
traditional server, thus requiring no or only minimal change to an application in order for it to operate within the
virtual infrastructure. The hypervisor layer addresses one of the main goals of the legacy data center — maintain
application isolation by running each application on its own server — yet ESX allows organizations to aggregate
multiple virtual servers onto a single physical hosting platform.




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Customer Interview Highlights
Forrester derived its conclusions in large part from information received in a series of in-depth interviews conducted by
Forrester with executives and personnel at five NetApp customers in late 2011 and seven NetApp customers in 2009, all
of which are using NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and
virtualization platform. The following is a brief description of the interviewed customers, all of which were promised
anonymity:


Customers Interviewed In 2011
          1.    An international specialty insurance and benefit management company headquartered in the United
                States. It has been using NetApp storage solutions for server virtualization in conjunction with VMware
                ESX Server for more than 12 months. This includes OnCommand unified manager, SnapManager, and
                NetApp Virtual Storage Console. It has virtualized 75% of its business-critical applications, including
                Microsoft SharePoint, SQL, and MySQL database production servers and web servers.

          2.    A northeastern US state university with four campuses offering undergraduate and graduate degrees in a
                full range of disciplines. Its IT staff of 13 supports the needs of more than 15,000 students and 1,400 faculty
                and staff. It has been using NetApp storage solutions for server virtualization in conjunction with VMware
                ESX Server since 2006. It has virtualized 97% of its data center, including the following business critical
                applications: Microsoft Exchange, Oracle, and SQL application servers.

          3.    A Canadian-based not-for-profit organization that specializes in providing data to broadcasters,
                advertisers, and agencies. It has been using NetApp storage solutions for server virtualization in
                conjunction with VMware ESX Server for six years. It has virtualized 95% of its data center, including the
                following business-critical applications: Microsoft Outlook, SharePoint, SQL, Oracle, MySQL, and
                proprietary databases of customer data. It also uses NetApp Provisioning Manager and OnCommand
                Insight Balance (formerly Akorri BalancePoint).

          4.    A midwestern US community credit union with more than 200 employees working at headquarters and 14
                branch offices. It has been using NetApp storage solutions for server virtualization in conjunction with
                VMware ESX Server for six months. It has virtualized 80% of its data center, including business-critical
                applications SQL Server and Oracle 10g database.

          5.    One of the US’ largest home healthcare providers with product and service offerings that include
                respiratory services, infusion therapy, and medical equipment for patients in their homes. It has been using
                NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for seven
                months to virtualize 80% to 85% of its data center, including business-critical applications such as: Oracle,
                Exchange front end, Active Directory, and custom applications built on WebLogic.


Customers Interviewed In 2009
          1.    An institute of science for one of the leading universities in the US whose server and storage needs have
                grown dramatically from 16 physical servers and 4 TB of disk to 100 physical servers, 30 virtual servers, and




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                more than 200 TB of NetApp storage in the past 4.5 years. It has been using NetApp storage solutions for
                server virtualization in conjunction with VMware ESX Server for more than four years.

          2.    A leader in remote online data backup and managed data protection solutions, including online data
                backup, disk-based recovery, high-availability, email archiving, and data life-cycle solutions. It has been
                using NetApp’s storage for almost three years and has consolidated 40 physical servers onto three VMware
                ESX Servers with 20 TB of NetApp storage.

          3.    A 25-year-old leading medical device company developing and manufacturing less-invasive devices. It has
                been using NetApp’s storage solutions for server virtualization in conjunction with VMware for more than
                four years to eliminate 125 physical servers and replace them with 18 VMware ESX hosts with 180 TB of
                NetApp storage.

          4.    A world leader in cosmetics, skin care, fragrance, and personal care products. It has been using NetApp’s
                storage solutions for server virtualization in conjunction with VMware for three years to eliminate 300
                physical servers and replace them with 36 VMware ESX hosts with 35 TB of NetApp storage.

          5.    A not-for-profit provider of government information technology and telecommunication solutions to a
                major US city and the surrounding county. It has been using NetApp’s storage solutions for server
                virtualization in conjunction with VMware for more than six years. It has more than 300 virtual servers
                running on 22 VMware ESX hosts accessing 275 TB of NetApp storage across three data centers.

          6.    The central IT group of a large US city in the Northeast consisting of 40 employees who support the city
                and board of education’s IT needs. It has been using NetApp’s storage solutions for server virtualization in
                conjunction with VMware for almost three years to eliminate 20 physical servers and replace them with
                four VMware ESX hosts using 13.2 TB of NetApp storage.

          7.    The community college system of an East Coast state in the US supporting 23 colleges and more than
                240,000 students. It has been using NetApp’s storage solutions for almost four years to establish an
                automated disaster recovery site that today uses 100 TB of NetApp storage.




Composite Organization Description
The Organization is a $2 billion-plus multinational manufacturer headquartered in North America with operations in
Europe and Asia. Prior to implementing NetApp’s storage solutions for server virtualization, it had 400 Intel x86
physical servers being used to run business-critical applications such as Oracle, Exchange, Outlook, SharePoint, SQL,
Active Directory, and financials. The server population was a mix of Windows 2008, Windows 2003 and Unix
operating systems. The Organization recently made the strategic decision to implement server virtualization across all
400 servers in the data center and to focus on the benefits virtualization brings to the business-critical applications
mentioned above. In addition, it intends to virtualize the following servers: file, print, small database, domain name
system (DNS), and web servers. The Organization wants to include the benefits of NetApp’s OnCommand
Management Suite, including Virtual Storage Console, the Data ONTAP operating system, and back-up and recovery
of virtual data.




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Prior to implementing NetApp’s storage solutions for server virtualization the Organization:

     Was using a Fibre Channel SAN.

     Backed up files to tape using a legacy tape-to-tape system.

     Recovered files from tape. In the event of a disaster, it would have tapes shipped in from remote storage facility.

As with the NetApp customers interviewed by Forrester, the sample Organization’s high-level business objectives for
pursuing a NetApp storage for server virtualization strategy were as follows:

     Cost reduction: Reduce the time and money spent on managing its servers and associated storage.

     Supporting business needs: Create a more flexible and agile storage infrastructure to respond to the business
         needs faster.

     Extending virtualization to 100% of the data center: Achieve the benefits of extending virtualization to
         business-critical applications such as Oracle, Exchange, Outlook, SharePoint, SQL, Active Directory, and
         financials.

     Disaster recovery: Improve insufficient disaster recovery plans and minimal coverage in the event of a disaster.

The Organization’s tactical goals and objectives for pursuing a NetApp storage for server virtualization strategy were as
follows:

     Consolidation: Reduce the number of servers, reduce its storage footprint, and consolidate to one storage
         vendor.

     Green IT: Improve the data center, which was reaching its space, power, and cooling capacity.

     Higher availability: Focus on higher availability for its critical business applications.

     Disaster recovery: Replace its tape-based backup and recovery systems with replication in the next two years.

     Faster application deployment: Create a more efficient and faster way to deploy both business-critical and non-
         business-critical applications and patches.

     Reduce labor costs: Make the storage solution easier to manage with fewer resources needed.

Forrester assumes that the sample Organization had already purchased VMware ESX software prior to investing in
NetApp’s storage solutions for server virtualization, therefore the cost for VMware is not included in this case study
ROI analysis; however, we are listing the configuration below.

     VMware ESX software with:

         o    vSphere 5.

         o    vCenter Server 5.




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         o    vMotion.

         o    High Availability.

         o    Distributed Resource Scheduler.

         o    vCenter Site Recovery Manager 5.


NetApp Configuration For The Organization
The Organization contacted NetApp, its primary storage vendor, to purchase the following hardware, software,
services, features, and functionalities (prices in bold):

     FAS3240A with 28 TB of raw capacity of SAS drives for primary storage ($164,790) (assumes initial use of 14 TB
         after deduplication and 25% annual growth thereafter, reaching 28 TB at end of Year 3). Configuration includes:

         o    Data ONTAP Essentials:

                            Includes all efficiency, management, high availability, and multi-tenancy features.

         o    NetApp complete software bundle, including:

                            All protocols — iSCSI, FC, FCoE, NFS, and CIFS.

                            SnapRestore.

                            SnapMirror.

                            SnapVault.

                            FlexClone.

                            SnapManager Suite.

                            Virtual Storage Console.

         o    Three-year SupportEdge Premium — 4-hour on-site support.

     FAS3240A with 48 TB of raw capacity SATA drives as replication and backup target ($134,490) (assumes initial
         use of 14 TB after deduplication and 25% annual growth thereafter, reaching 28 TB* at end of Year 3). System
         includes double the amount of storage for backup repository and development and test scratch spaces.
         Configuration includes:

         o    Data ONTAP Essentials:

                            Includes all efficiency, management, high availability, and multi-tenancy features.

         o    NetApp complete software bundle, including:




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                            All protocols — iSCSI, FC, FCoE, NFS, and CIFS.

                            SnapRestore.

                            SnapMirror.

                            SnapVault.

                            FlexClone.

                            SnapManager Suite.

                            Virtual Storage Console.

        o     Three-year SupportEdge Premium — 4-hour on-site support.

     NetApp University training units (60) — system administration courses ($4,500).

*Note: Without deduplication, the Organization would need to buy an additional 44 TB of raw storage capacity (disk
shelves and drives) for primary and backup storage at an incremental cost (or savings for this analysis) of $70,525.


Assumptions
     Prior to implementing NetApp’s storage for virtualization solutions, the Organization had 400 X86 one- and two-
        socket servers and had plans to virtualize all of those running the following: Exchange, SQL, and Oracle
        applications, file, print, Active Directory, small database, domain name system (DNS), and web servers.

     The Organization’s storage needs are expected to grow by 25% annually for the three years of this analysis, which
        Forrester sees as a reasonably conservative data growth rate for such a firm.

     During the next 18 months, it will replace 400 physical servers with 20 ESX host (virtual) servers (quad core
        servers with 512 MB of memory such as HP DL380 or IBM x3650 and quad port Ethernet HBAs) with a
        projected ratio of 20 virtual servers per physical server.

     The new future backup and disaster recovery plans will incorporate NetApp storage for virtualization solutions.

     Backup:

        o     Before: primary storage backed up to tape with legacy tape-to-tape system.

        o     After: backup using NetApp FAS3240A as replication and backup target.

     Disaster recovery:

        o     Before: recovered from tape; would have tapes shipped back in the event of a disaster.

        o     After immediate failover to disaster recovery site using NetApp FAS3240A.




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TEI Framework

Introduction
From the information gathered in the in-depth customer interviews, Forrester has constructed a TEI framework for
those organizations considering implementation of NetApp’s storage solutions for server virtualization in conjunction
with VMware’s ESX Server and virtualization platform. The objective of the framework is to identify the cost, benefit,
flexibility, and risk factors that affect the investment decision.


Composite Organization
Based on the interviews with the 12 existing customers that NetApp provided, Forrester constructed a TEI framework,
a composite Organization, and an associated ROI analysis that illustrates the areas affected financially. The composite
Organization that Forrester synthesized from these results is described above.


Framework Assumptions
Table 2 lists the discount rate used in the present value (PV) and net present value (NPV) calculations, the time horizon
used for the financial modeling, and other costs.


Table 2
General Assumptions

                       General assumptions                               Value

 Discount rate used to compute NPV                                                  10%

 Length of analysis                                                     Three years

 Annual fully loaded cost of a storage administrator                       $110,000


Source: Forrester Research, Inc.



Costs
Costs are an important part of the TEI model. Costs, or IT impact, are calculated as a change in costs primarily for IT as
a result of the introduction of the technology to the Organization. Therefore, the introduction of NetApp’s solution
affects IT budgets with the purchase of the solution; it also affects the Organization positively, in terms of the cost
savings and efficiencies created by the investment (see the Benefits And Savings section below).

The impact of cost is accrued in two different areas described below. NetApp solution costs (see pages 9 and 10 for
more details and pricing of hardware, software, services, features, and functionalities); and the Organization’s internal
preparation, planning, and migration costs, which total $326,780.




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Costs For The NetApp Solution: $303,780
     Primary storage: FAS3240A with 28 TB of raw capacity of SAS drives for primary storage ($164,790).

     Secondary storage: FAS3240A with 48 TB of raw capacity SATA drives as replication and backup target
        ($134,490).

     NetApp University training units (60): system administration courses ($4,500).

NetApp pricing is based on normal and average discounts off NetApp’s list price as of December 2011.


Cost For Internal Preparation And Planning Labor: $8,000
A readiness assessment that looks at costs, benefits, and risks along with detailed planning is essential for a successful
storage consolidation initiative for server virtualization. Based on interviews with current NetApp customers, our
Organization required two full-time equivalent (FTE) (storage administrator and data center manager) to spend
approximately two weeks of their time — before and during implementation — planning, i.e., identifying LUNs, Fibre
Channel loops, and network interfaces; and testing methods (e.g., vMotion) of migrating data from legacy storage to the
virtual storage environment.


Cost For Internal Labor For Data Migration: $15,000
Internal labor associated with the actual data migration from the previous storage system to the NetApp array. Based on
customer interviews, Forrester estimates the work to be equal to eight weeks of full-time effort, or $15,000.

The costs associated with implementing NetApp storage solutions for server virtualization are reflected in Table 3.




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Table 3
The Organization — Total Costs (Non-Risk-Adjusted)

          Total costs               Year 0           Year 1            Year 2        Year 3        Total


Primary storage and
associated hardware,                $164,790                  $0                $0            $0   $164,790
software, services

Secondary storage and
associated hardware,                $134,490                  $0                $0            $0   $134,490
software, services

NetApp University
                                       $4,500                 $0                $0            $0     $4,500
training units


Cost for internal
preparation and planning               $8,000                 $0                $0            $0     $8,000
labor


Cost for internal labor for
                                     $15,000                  $0                $0            $0    $15,000
data migration


Total costs                        $326,780                   $0                $0            $0   $326,780


Source: Forrester Research, Inc.



Benefits And Savings: Quantified
In addition to the costs associated with the NetApp solution, there were positive IT cost savings and benefits with
NetApp’s storage solutions for server virtualization. The most recently interviewed five customers are moving toward
virtualizing close to 100% of their data centers, including business-critical applications such as Oracle, Exchange,
SharePoint, SQL, Active Directory, SAP, and financials. Another trend is the use of NetApp Virtual Storage Console,
which presents a single pane of glass for end-to-end storage management for VMware infrastructures and improved
administrative efficiency for both VMware and storage administrators.

Interviewed organizations, however, were challenged with segregating the benefits from server virtualization with the
benefits from NetApp’s storage solutions. With Forrester’s assistance, a majority of the organizations agreed that the
quantified benefits focused on: reduced storage hardware and software costs through data deduplication, thin
provisioning technologies, and FlexClone; improvements in the backup and recovery processes; savings in media and
software associated with centralized backup; and storage administration labor savings from the use of Virtual Storage
Console.

Based on an analysis of the interviews with the participating customers, we could quantify the following benefits as a
result of implementing NetApp’s storage solutions for server virtualization.




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Cost Savings — Reduction In Storage Hardware And Software Costs: $91,525
The interviewed organizations reported using combinations of the three NetApp technologies, listed below, that
reduced their storage costs. For our composite Organization, we assumed that during a six-month period, our storage
administrators became aware of and fully proficient at all three technologies. The interviewed customers using these
technologies reported significant storage cost savings averaging 60% to 70% in their production VMware
environments.

     Data deduplication. NetApp provides the benefit of sharing identical data among multiple virtual machines that
        reside on disk storage through its data deduplication technology, resulting in the contents of virtual machines
        being reduced to a single copy per data store. Several customers reported using NetApp’s deduplication across all
        storage protocols (NFS, FC, and iSCSI) supported by VMware and saving 50% in future storage costs. Our
        Organization was able to avoid purchasing 44 TB of primary and back-up storage (disk shelves and drives) at an
        initial cost avoidance savings of $70,525.

The interviewed customers reported savings of another 15% in future primary storage hardware using the combination
of NetApp thin provisioning and FlexClone features, although it was difficult for these customers to segregate the
savings between the two. Our Organization was able to avoid purchasing another 13 TB of storage hardware (disk
shelves and drives) over three years at a cost of $21,000 ($7,000 savings annually). These features are described below.

     Thin provisioning. The seven interviewed customers each described a traditional (pre-virtualization) storage
        environment where server administrators would overprovision storage to avoid running out and to avoid the
        downtime related to expanding the provisioned storage. NetApp’s thin provisioning feature provides storage on
        demand by treating storage as a shared resource that is consumed only when individual virtual machines require
        it, rather than reserving physical storage capacity for each individual server workload. This sharing increases the
        total utilization rate of storage by eliminating the significant quantity of allocated but unused capacity that is
        typical with traditional storage.

Thin provisioning and data deduplication are mutually inclusive features that can reduce the need for more storage,
thereby increasing the overall utilization rate of existing storage. Thin provisioning allows for on demand of shared,
pooled storage capacity, while deduplication removes any redundancy of data stored on the array. Both deduplication
and thin provisioning can be enabled or disabled on a per-volume basis.

     FlexClone. With NetApp’s FlexClone feature, an existing storage object (file, LUN, or volume) can be copied and
        made available for writeable access. With FlexClone, the copy of the original data set consumes no additional
        physical storage space. Clones can increase in size as new changes are written.

Should any of this cloned data become redundant, data deduplication technology will remove the redundancies,
returning the previously used storage back to the pool for reuse later.


Cost Savings — Improvements In Backup And Recovery Processes: $528,000
Several interviewed customers reported improvements in their backup and recovery processes. Our composite
Organization originally considered using its legacy tape-to-tape system to back up its VMware data. However, it soon
realized that as storage requirements continued to grow at 25% annually, it would not be able to complete the tape-to-
tape backup process within an appropriate backup window. The Organization chose to purchase a NetApp FAS3240A




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with 48 TB of raw capacity SATA drives as replication and backup target, and to use NetApp Snapshot technology to
perform local backups. Snapshot will create point-in-time copies of file systems for use as backup in significantly less
time than the previous tape-to-tape system, reducing the future need for media and software associated with tape
backup processes. There were two specific savings categories identified with our Organization’s improvement in its
backup and recovery processes:

1. Media And Software Associated With Centralized Backup: $198,000
After the storage needs of the eliminated servers (file, print, Active Directory, small database, DNS, and web) are
consolidated onto NetApp storage systems and backed-up to the FAS3240A device using Snapshot, there will no longer
be a need for the legacy tape-to-tape systems including equipment, software, and media costs. Instead of having a
backup solution for each of the original 400 (now virtualized) servers, our Organization now has only one storage
system (FAS3240A) from which to perform data backups. In addition, the Organization did not have to grow its legacy
tape-to-tape system and off-site facilities avoiding incremental hardware, software, media, and storage costs. The
composite Organization was able to save $66,000 annually in media (tape), backup tape drives, software costs, and off-
site tape storage.

The total three-year cost savings associated with centralized backup is $198,000.

2. Labor Cost Avoidance Savings For Backup And Recovery Administration: $330,000
Several interviewed organizations highlighted savings in the time it takes for administrators to restore data from
backups when using the NetApp solution. Prior to deploying NetApp’s storage solutions for server virtualization,
several organizations reported that the time to restore from backup tapes was significant, both in terms of inefficient
use of IT resources and end user downtime. Based on input from the interviewed customers, we estimate that the IT
administrative savings resulting from improving the labor efficiencies of backup and restore will allow our Organization
to avoid hiring one FTE or $110,000 annually, based on a fully burdened storage administrator’s salary of $110,000
annually.

The total three-year cost savings associated with simplification of backup and recovery tasks is $330,000.


Cost Savings — Labor Savings From Use Of NetApp Virtual Storage Console: $165,000
Virtual Storage Console was being used by three of the five recently interviewed customers and on average saved ½ FTE
or $55,000 each year based on a fully burdened storage administrator’s salary of $110,000 annually. The common
benefits that each of the three customers and our Organization experienced include:

     Reduced cost and complexity with integrated, end-to-end storage management for VMware infrastructures.

     Improved labor efficiency for both their VMware and storage administrators.

     Increased availability with near-instant backups, granular restores, and cost-effective DR.

     Reduced storage costs with automatic thin provisioning and deduplication of data stores (hardware benefits
        included in the thin provisioning and deduplication sections above).




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     Enabled a dynamic infrastructure by rapidly provisioning and cloning VMs for new applications, test and
        development.

The total three-year labor cost savings associated with the use of NetApp Virtual Storage Console is $165,000.


Incremental Revenue And Profit — Benefits Of Faster Application Deployment: $450,000
Each of the recently interviewed customers reported the ability to quickly clone and move applications into test and
development environments, which enabled them to develop and upgrade applications faster than without NetApp
storage solutions for server virtualization. In addition, one of the most important benefits was the achievement of
revenue and profit acceleration due to the ability to provision and subsequently deploy eCommerce applications at a
faster time to market. This acceleration enables our Organization to gain incremental revenues and profits a month
early for the one customer facing eCommerce application that it deploys each year. This results in average incremental
revenue of $500,000 per application for the first (accelerated) month. Prior to implementing NetApp storage solutions
for server virtualization, it took the Organization at least one month longer to roll out new eCommerce applications. In
this study, Forrester will include a benefit equal to a 30% gross profit margin of the Organization’s incremental revenue
or $150,000 gross profit per year. Readers of this study should assess their organization’s potential revenue
acceleration opportunities, which may vary widely (up or down) from what is portrayed in this study As a result of
using NetApp storage solutions for server virtualization, the Organization achieved $450,000 in incremental profit over
three years.

The total three-year gross profit benefit associated with the ability to provision and subsequently deploy eCommerce
applications at a faster time to market is $450,000 over three years.

The quantified benefits and cost savings associated with implementing NetApp storage solutions for server
virtualization are reflected in Table 4.




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Table 4
The Organization — Total Quantified Benefits And Cost Savings (Non-Risk-Adjusted)

  Total benefits and cost savings              Year 1           Year 2              Year 3          Total


Reduction in storage hardware and
software costs — using data                     $70,525                  $0                  $0      $70,525
deduplication

Reduction in storage hardware and
software costs — using thin                       $7,000           $7,000             $7,000         $21,000
provisioning and FlexClone

Media and software associated
                                                $66,000           $66,000            $66,000        $198,000
with centralized backup


Labor savings for backup and
                                               $110,000         $110,000            $110,000        $330,000
recovery storage administration

Labor savings using NetApp Virtual
                                                $55,000           $55,000            $55,000        $165,000
Storage Console

Benefits of faster eCommerce
application deployment (gross                  $150,000         $150,000            $150,000        $450,000
profits)


Total benefits and cost savings               $458,525         $388,000             $388,000      $1,234,525


Source: Forrester Research, Inc.



Benefits: Unquantified
The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server
virtualization, but they were not able to quantify the benefits at the present time:

     Each of the recently interviewed customers were proactive in virtualizing business-critical applications such as
        Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. Specific benefits cited by the
        customers include: faster disaster recovery of business-critical data and the ability to back up and clone business-
        critical applications into test and development environments to enable faster application development, upgrades,
        and patch testing. For this study we found it difficult to segregate quantified benefits of business-critical
        applications vs. from other applications. The total benefits for all applications are quantified in Table 4.

     Most of the interviewed customers acknowledged savings in power and cooling costs as a result of server and
        storage virtualization. However, savings dollars could not be specifically apportioned to the NetApp storage
        solution because of legacy server use of direct-attached storage.




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     About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or
        eliminate) eventual expansions of their data centers. Each organization estimated the cost avoidance savings with
        a wide range of results ($300,000 to $2.3 million). In addition, it was difficult to apportion the savings to NetApp
        storage virtualization solutions, as there were several other variables associated with the customer’s expansion
        needs, including: pre-virtualization data center utilization, company growth rates, and its current and future
        plans to outsource data center expansion to cloud service providers. Readers of this study should assess their own
        data center capacity and include prorated savings associated with NetApp server virtualization solutions.


Risk
Risk-adjusted and non-risk-adjusted ROI are both discussed in this study. The Organization’s individual costs and
benefits are quoted in non-risk-adjusted (best-case) terms and before risk adjustments are made. The assessment of risk
provides a range of possible outcomes based on the risks associated with IT projects in general and specific risks relative
to NetApp’s storage solutions for server virtualization projects. In our research, we discovered that implementing the
NetApp solutions was a relatively low-risk endeavor if organizations took the time to thoroughly plan the server
virtualization and storage transition process.

TEI uses risk factors to widen the possible outcomes of the costs and benefits (and resulting savings) associated with a
project. As the future cannot be accurately predicted, there is risk inherent in any project. TEI captures risk in the form
of risks-to-benefits and risks-to-costs.

Measurement of risk is a way of incorporating the levels of confidence and uncertainty regarding the cost and benefit
estimates of a given investment. Higher confidence that the cost and benefit estimates will be met implies that the level
of risk is lower and the variation between the risk-adjusted and non-risk-adjusted outcomes is minimized.

Forrester considered the following general risks in this study:

     A lack of organizational discipline in creating processes and procedures to best take advantage of the benefits.

     A lack of appropriate training for the storage administrators who will be responsible for optimizing the full
        benefit potential of storage consolidation and taking advantage of the future simplification of backup and
        recovery tasks.

     Failures to reduce, transfer, or redeploy IT support headcount made redundant by deploying storage solutions for
        server virtualization.

     The possibility that the benefits will not be measured and quantified in the future; as a result, no TEI benefit
        would be captured and acknowledged.

     Internal inertia, conflicting priorities, and turnover, reducing an organization’s ability to achieve the benefits.

     Once consolidated, having fewer points of failure in storage environment will put significantly more data at risk.

The following risk associated with NetApp storage solutions for server virtualization was considered in this study:




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     The inability of the Organization to find, train, and retain administrators fluent in technologies such as VMware
        ESX and NetApp’s Data ONTAP 7G operating system, to take full advantage of the benefits outlined in this
        study.

For this study, Forrester applied a 20% risk adjustment — i.e., a reduction of 20% — to all benefits to reflect the risks
listed above. We did not risk-adjust costs, as these were primarily fixed quotes from NetApp.

Table 5 represents the total costs, benefits, and cost savings (risk-adjusted by 20%) of implementing NetApp’s storage
solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform.


Table 5
The Organization — Total Benefits And Cost Savings (Risk-Adjusted By 20%)

                                                                                                             Present
  Total benefits and cost savings              Year 1           Year 2              Year 3        Total
                                                                                                              value

Reduction in storage hardware and
software costs — using data                     $56,420                  $0                  $0    $56,420     $51,291
deduplication

Reduction in storage hardware and
software costs — using thin                       $5,600           $5,600             $5,600       $16,800     $13,926
provisioning and FlexClone

Media and software associated
                                                $52,800           $52,800            $52,800      $158,400   $131,306
with centralized backup

Labor savings for backup and
                                                $88,000           $88,000            $88,000      $264,000   $218,843
recovery storage administration


Labor savings using NetApp Virtual
                                                $44,000           $44,000            $44,000      $132,000   $109,421
Storage Console

Benefits of faster eCommerce
application deployment (gross                  $120,000         $120,000            $120,000      $360,000   $298,422
profits)


Total benefits and cost savings               $366,820          $310,400            $310,400      $987,620   $823,210


Source: Forrester Research, Inc.



The risk-adjusted NPV of benefits is $823,210. If a risk-adjusted NPV and ROI still demonstrates a compelling business
case, it raises confidence that the investment is likely to succeed as the risks that threaten the project have been taken
into consideration and quantified. The risk-adjusted numbers should be taken as “realistic” expectations, as they




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represent the expected value considering risk. Assuming normal success at mitigating risk, the risk-adjusted numbers
should more closely reflect the expected outcome of the investment.


Flexibility
Flexibility, as defined by TEI, represents investing in additional capacity or agility that can be turned into benefit for
some future additional investment. We believe organizations that invest in NetApp’s storage solutions for server
virtualization lay the groundwork to take advantage of migrating to a virtualized disaster recovery environment. For
our Organization, virtualization is the future foundation to enhance and simplify disaster recovery and high availability.

Over a two year period the Organization will be putting business-critical applications on virtual machines, and with
this, disaster recovery becomes a more important issue. The limitations of tape will cause difficulty in a disaster
recovery situation because of tape device data transfer speeds, and the physical distance between a primary data center
and the Organization’s disaster recovery site.

Interviewed customers expressed an interest or the intent to take advantage of the option to use NetApp SnapMirror
replication technology along with VMware’s Site Recovery Manager (SRM) to reduce the impact of a site disaster on the
business. With SnapMirror technology, a virtual infrastructure can be replicated over the WAN to a remote data center.
The future recovery of virtual machines affected by a site disaster can be completed in minutes instead of hours or days.
In addition, SRM can leverage NetApp’s FlexClone technology to make immediate zero-cost clones of the DR data,
allowing storage administrators to test their disaster recovery policies at any time without interrupting the production
environment or disaster recovery replication. Our Organization also plans to leverage NetApp’s data deduplication
technology in their disaster recovery plans.

Most of the 12 interviewed organizations indicated that their original investment in NetApp’s storage solutions for
server virtualization provided them with the flexibility and agility to take advantage of this disaster recovery “option”
and the potential savings that a virtualized disaster recovery environment can bring to their organizations. At present,
only five of the customers Forrester interviewed were currently taking advantage of VMware’s Site Recovery Manager
and SnapMirror technologies; therefore, this study will not attempt to quantify its benefits. However, we encourage the
reader to learn more about these technologies to determine the potential quantifiable benefits within their
organizations.

The value of flexibility is clearly unique to each organization, and the willingness to measure its value varies from
organization to organization. For the purpose of this analysis, we have assumed that the Organization sees the future
value in being able to reduce future backup storage acquisition costs or achieve longer intervals between storage
capacity upgrades using deduplication. The value of the option (when calculated) is based on the Black-Scholes Option
Pricing formula. (For additional information regarding the flexibility calculation, please see Appendix A.)




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Financial Summary
The financial results calculated in the Costs, Benefits, and Risks sections can be used to determine the risk-adjusted
NPV of benefits, ROI, and payback period for the Organization’s investment in NetApp’s storage solutions for server
virtualization. Table 6 below shows the summarized risk-adjusted values, applying the risk-adjustment method
indicated in the Risk section, which was to apply a 20% risk adjustment — i.e., a reduction of 20% — to all benefits to
reflect the risks listed above. No risk adjustments were made to the costs, as these represented fixed quotes from
NetApp or internal planning costs.


Table 6
The Organization — Cash Flow, ROI, And Payback Period (Risk-Adjusted)

                                                                                                               Present
                              Year 0           Year 1            Year 2             Year 3         Total
                                                                                                                Value

 Costs                       ($326,780)                 $0                $0                 $0   ($326,780)   ($326,780)

 Benefits                              $0       $366,820          $310,400          $310,400       $987,620     $823,210

 Net benefits
                             ($326,780)         $366,820          $310,400          $310,400       $660,841    $496,430
 (NPV)

 ROI (risk-
                                   152%
 adjusted)

 Payback period             11 months


Source: Forrester Research, Inc.



The three-year, risk-adjusted total NPV of $496,430 represents the net cost savings and benefits attributed to using
NetApp storage solutions for server virtualization when compared with the costs of the Organization’s legacy server and
storage environment (see details above in the Costs, Benefits, Flexibility, and Risks section). In addition, the risk-
adjusted ROI was a very favorable 152%.




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Study Conclusions
As the data in this study indicates, NetApp’s storage solutions for server virtualization have the potential to provide a
very good return on investment. In addition, the very favorable risk-adjusted ROI of 152%, along with an 11 month
payback period (breakeven point), raises confidence that the investment is likely to succeed, as the risks that may
threaten the project have already been taken into consideration and quantified. In this study, risks have been modeled
conservatively in the hopes of showing worst-case expectations.

A successful, well-planned implementation will allow quantifiable benefits and cost savings to accrue to the
Organization in the following areas totaling $987,620 (risk adjusted):

     $56,420 — reduction in storage hardware and software costs — using data deduplication.

     $16,800 — reduction in storage hardware and software costs — using thin provisioning and FlexClone.

     $158,400 — media and software associated with centralized backup.

     $264,000 — labor savings for backup and recovery storage administration.

     $132,000 — labor savings using NetApp Virtual Storage Console.

     $360,000 — benefits of faster eCommerce application deployment (gross profits).

The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server
virtualization, but they were not able to quantify the benefits at the present time:

     Each of the recently interviewed customers were proactive in virtualizing business-critical applications such as
        Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. Specific benefits cited by the
        customers include: faster disaster recovery of business-critical data and the ability to back up and clone business-
        critical applications into test and development environments to enable faster application development, upgrades
        and patch testing. For this study we found it difficult to segregate quantified benefits of business-critical
        applications versus from other applications. The total benefits for all applications are quantified in Table 4.

     Most of the interviewed customers acknowledged savings in power and cooling costs as a result of server and
        storage virtualization. However, savings dollars could not be specifically apportioned to the NetApp storage
        solution because of legacy server use of direct-attached storage.

     About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or
        eliminate) eventual expansions of their data centers. Each organization estimated the cost avoidance savings with
        a wide range of results ($300,000 to $2.3 million). In addition, it was difficult to apportion the savings to NetApp
        storage virtualization solutions, as there were several other variables associated with the customer’s expansion
        needs including: pre-virtualization data center utilization, company growth rates, and its current and future plans
        to outsource data center expansion to cloud service providers. Readers of this study should assess their own data
        center capacity and include prorated savings associated with NetApp server virtualization solutions.

Organizations that are likely to achieve similar results have the following characteristics:




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     Organizations that have the desire to virtualize nearly 100% of their server and storage environments, including
        business-critical applications.

     Organizations that want to extend the agility of business critical applications and be able to provision new
        applications and new storage very quickly.

     Organizations where the costs of pre-virtualization server infrastructure (servers, storage, networks) continue to
        increase, sacrificing new investment opportunities.

     Organizations that are large enough to have distinctly delineated IT administration roles, such as system, storage,
        and network.

     Organizations with an interest in adopting a disk-to-disk backup strategy environment either before or after
        implementing NetApp’s primary storage solutions.

     Organizations with an IT staff with the requisite skills to manage virtual server and storage environments,
        including knowledge of VMware’s ESX Server and virtualization platform, as well as NetApp’s Data ONTAP
        operating system.

For our Organization, NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server
and virtualization platform carried a low level of risk, a very positive 152% risk-adjusted ROI, and an 11-month
horizon to recoup the investment.

We make no assumptions regarding the effects of NetApp’s storage solutions for server virtualization in conjunction
with VMware’s ESX Server and virtualization platform at other organizations. This study examines the potential impact
attributable to the 12 organizations that participated in our examination and applies the common costs and benefits to a
representative composite Organization. The underlying objective of this document is to provide guidance to technology
decision-makers seeking to identify areas where value can potentially be created based on using NetApp’s storage
solutions for server virtualization.




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Appendix A: Total Economic Impact™ Overview
Total Economic Impact is a methodology developed by Forrester Research that enhances an organization’s technology
decision-making processes and assists vendors in communicating the value proposition of their products and services
to clients. The TEI methodology helps organizations demonstrate, justify, and realize the tangible value of IT initiatives
to both senior management and other key business stakeholders.

The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility.
For the purpose of this analysis, the impact of flexibility was not quantified.


Benefits
Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product
or project. Often product or project justification exercises focus just on IT cost and cost reduction, leaving little room to
analyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial model
place equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of
the technology on the entire organization. Calculation of benefit estimates involves a clear dialogue with the user
organization to understand the specific value that is created. In addition, Forrester also requires that there be a clear line
of accountability established between the measurement and justification of benefit estimates after the project has been
completed. This ensures that benefit estimates tie back directly to the bottom line.


Costs
Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business
units may incur costs in the forms of fully burdened labor, subcontractors, or materials. Costs consider all the
investments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures
any incremental costs over the existing environment for ongoing costs associated with the solution. All costs must be
tied to the benefits that are created.


Risk
Risk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured
in two ways: the likelihood that the cost and benefit estimates will meet the original projections and the likelihood that
the estimates will be measured and tracked over time. TEI applies a probability density function known as “triangular
distribution” to the values entered. At a minimum, three values are calculated to estimate the underlying range around
each cost and benefit.


Flexibility
Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can
typically be the primary way to justify a project, Forrester believes that organizations should be able to measure the
strategic value of an investment. Flexibility represents the value that can be obtained for some future additional
investment building on top of the initial investment already made. For instance, an investment in an enterprise wide
upgrade of an office productivity suite can potentially increase standardization (to increase efficiency) and reduce
licensing costs. However, an embedded collaboration feature may translate to greater worker productivity if activated.
The collaboration can only be used with additional investment in training at some future point in time. However,




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having the ability to capture that benefit has a present value that can be estimated. The flexibility component of TEI
captures that value.




Appendix B: Glossary
Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Although the
Federal Reserve Bank sets a discount rate, organizations often set a discount rate based on their business and
investment environment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use
discount rates between 8% and 15% based on their current environment. Readers are urged to consult their
organization to determine the most appropriate discount rate to use in their own environment.

Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the
discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects
have higher NPVs.

Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate
(the discount rate). The PV of costs and benefits feed into the total net present value of cash flows.

Payback period: The breakeven point for an investment, or the point in time at which net benefits (benefits minus
costs) equal initial investment or cost.

Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated by
dividing net benefits (benefits minus costs) by costs.


A Note On Cash Flow Tables
The following is a note on the cash flow tables used in this study (see the Example Table below). The initial investment
column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash
flows in Years 1 through 3 are discounted using the discount rate shown in Table 2 at the end of the year. Present value
(PV) calculations are calculated for each total cost and benefit estimate. Net present value (NPV) calculations are not
calculated until the summary tables and are the sum of the initial investment and the discounted cash inflows and
outflows in each year.


Table [Example]
Example Table

  Ref.           Category           Calculation             Year 0            Year 1   Year 2   Year 3   Total




Source: Forrester Research, Inc.




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Appendix C: About The Project Manager
                             Bob Cormier
                             Vice President, Principal Consultant

                             Bob is a vice president and principal consultant for Forrester’s TEI service. He is a leading
                             expert on deriving business value from technology investments, specializing in advising clients
                             on the TEI framework — services that help organizations understand the overall financial
                             value of IT strategies and investments. He serves the following client roles:

                                Technology vendor marketing and sales enablement professionals. Bob works with these
        professionals in their efforts to clearly articulate the unique value proposition of their solutions to prospects and
        customers using Forrester’s TEI methodology.

Bob has authored numerous TEI case studies for Forrester’s vendor clients. He has also delivered his acclaimed
Justifying Technology Investments (JTI) workshop to more than 800 participants representing 400 organizations.

Bob has more than 25 years of experience in the IT and consulting industries. Prior to joining Forrester, he held senior-
level positions at two leading eBusiness consulting firms, Zefer and Cambridge Technology Partners. Bob has
successfully led company efforts to optimize financial, operational, and resource planning activities, incorporating
leading-edge, professional service automation (PSA) applications and enterprise resource planning (ERP) systems. He
has also held senior financial management positions at Digital Equipment and Anixter International.

During his career, Bob has consulted with global users and vendors of IT and has been a frequent speaker at
conferences, events, and seminars.


Education
Bob earned an M.B.A. from Bentley University and a B.S. in business from the University of New Hampshire. As an
adjunct professor, he has taught finance and economics courses for more than 10 years at Southern New Hampshire
University and Daniel Webster College.




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The Total Economic Impact of NetApp's Storage Solutions For Server Virtualization

  • 1. A Forrester Total Economic Impact™ Study Prepared For NetApp The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Project Director: Bob Cormier, Vice President, Principal Consultant Forrester Consulting January 2012
  • 2. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization TABLE OF CONTENTS Executive Summary ................................................................................................................................................................................. 2  Key Findings........................................................................................................................................................................................ 4  Disclosures ........................................................................................................................................................................................... 4  About NetApp’s Storage Solutions For Server Virtualization And VMware............................................................................... 5  Customer Interview Highlights............................................................................................................................................................. 6  Composite Organization Description .................................................................................................................................................. 7  TEI Framework ...................................................................................................................................................................................... 11  Costs.................................................................................................................................................................................................... 11  Benefits And Savings: Quantified.................................................................................................................................................. 13  Benefits: Unquantified..................................................................................................................................................................... 17  Risk...................................................................................................................................................................................................... 18  Flexibility............................................................................................................................................................................................ 20  Financial Summary................................................................................................................................................................................ 21  Study Conclusions ................................................................................................................................................................................. 22  Appendix A: Total Economic Impact™ Overview ........................................................................................................................... 24  Appendix B: Glossary ............................................................................................................................................................................ 25  Appendix C: About The Project Manager ........................................................................................................................................ 26  © 2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. About Forrester Consulting Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit www.forrester.com/consulting. Page 1
  • 3. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Executive Summary In late 2011, Forrester Research started work on a research project commissioned by NetApp that focused on examining the potential return on investment (ROI) enterprises may realize by adopting NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server virtualization platform. This study highlights the benefits and costs of deploying NetApp’s storage solutions for server virtualization across the enterprise of a composite Organization (see section titled Composite Organization Description). The findings in this study are in large part based on in-depth interviews conducted by Forrester with a total of 12 NetApp customers: five customers in late 2011 and seven customers in 2009, each of which are using NetApp’s storage solutions for server virtualization. As with the interviewed customers, our composite Organization is focusing on the benefits virtualization brings to business-critical applications such as Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. In addition, it intends to virtualize the following: file, print, Active Directory, small database, domain name system (DNS), and web servers. The Organization will also be considering the benefits of NetApp’s Data ONTAP operating system, NetApp OnCommand including Virtual Storage Console, and back-up and recovery of virtual data. The study examines the estimated ROI for the composite Organization and presents the aggregate findings derived from the interview and analysis process as well as our independent research. The study found that for our composite Organization, a successful, well-planned implementation will allow quantifiable benefits and cost savings to accrue to the Organization in the following areas totaling $987,620 (risk adjusted):  $56,420 — reduction in storage hardware and software costs — using data deduplication.  $16,800 — reduction in storage hardware and software costs — using thin provisioning and FlexClone.  $158,400 — media and software associated with centralized backup.  $264,000 — labor savings for backup and recovery storage administration.  $132,000 — labor savings using NetApp Virtual Storage Console.  $360,000 — benefits of faster eCommerce application deployment (gross profits). The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server virtualization, but they were not able to quantify the benefits at the present time:  Most interviewed customers acknowledged savings in power and cooling costs as a result of server and storage virtualization. However, savings dollars could not be specifically apportioned to NetApp storage because of legacy server use of direct-attached storage.  About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or eliminate) the eventual expansion of their data centers. Each customer estimated the cost avoidance savings with a wide range of results ($300,000 to $2.3 million); however it’s not possible to apportion savings specific to NetApp due to other variables such as: pre-virtualization data center utilization, company growth rates, and its current and future plans to outsource data center expansion to cloud service providers. Page 2
  • 4. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Purpose The purpose of this study is to provide readers with a framework to evaluate the potential financial impact on their organizations of NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform. Forrester’s aim is to show all calculations and assumptions used in the analysis. Readers should use this study to better understand and communicate a business case for investing in NetApp’s storage solutions for server virtualization. Methodology NetApp selected Forrester for this project because of our industry expertise in server consolidation, virtualization, storage technologies, and Forrester’s Total Economic Impact™ (TEI) methodology. TEI not only measures costs and cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in increasing the effectiveness of overall business processes. For this study, Forrester employed four fundamental elements of its TEI methodology in modeling NetApp’s storage solutions for server virtualization: 1. Costs and cost reduction. 2. Benefits to the entire organization. 3. Flexibility. 4. Risk. Given the increasing sophistication that enterprises have regarding cost analyses related to IT investments, Forrester’s TEI methodology serves an extremely useful purpose by providing a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology. Approach Forrester used a five-step approach for this study: 1. Forrester gathered data from existing Forrester research relative to NetApp’s storage solutions for server virtualization. 2. Forrester interviewed NetApp’s marketing, product management, and sales personnel to fully understand the potential (or intended) value proposition of its solutions. 3. Using knowledge of the NetApp solution, as well as input from existing Forrester research, a Forrester representative conducted in-depth discussions with 12 of NetApp’s customers regarding their experiences with NetApp’s storage solutions for server virtualization. 4. Forrester constructed a financial model representative of data collected in the interviews. 5. Forrester created this study, which represents and examines the estimated value of the findings derived from the customer interview and analysis process and from Forrester’s independent research. Page 3
  • 5. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Key Findings Our interviews and subsequent financial analysis found that the Organization experienced the risk-adjusted ROI, payback period, benefits, and costs shown in Table 1. Table 1 The Organization — Three-Year Risk-Adjusted ROI, Payback Period, Costs, And Benefits Risk-adjusted Payback Total benefits Total costs NPV ROI period (PV) (PV) 152% 11 months $823,210 $326,780 $496,430 Source: Forrester Research, Inc. The three-year risk-adjusted total net present value (NPV) of $496,430 represents the net cost savings and benefits attributed to using the NetApp solution when compared with the costs of the Organization’s storage environment before consolidation and virtualization (see details below in the Costs, Benefits, Flexibility, and Risks sections). In addition, the risk-adjusted ROI was a very favorable 152%. Table 1 illustrates the risk-adjusted cash flow for the composite Organization, based on data and characteristics obtained during the customer interview process. Forrester risk-adjusts these values to take into account the potential uncertainty that exists in estimating the costs and benefits of a technology investment. The risk-adjusted value is meant to provide a conservative estimate, incorporating any potential risk factors that may later affect the original cost and benefit estimates. For this study, Forrester applied a 20% risk adjustment — i.e., a reduction of 20% — to all benefits to reflect the risks. For a more in-depth explanation of risk and the risk adjustments used in this study, please see the Risk section. The objective of this study is not to illustrate savings that other enterprises can obtain by deploying the NetApp solution but rather to identify savings that the interviewed customers experienced. These results can be used as a guide to allow other enterprises to determine the appropriate benefits for their particular environment. Disclosures The reader should be aware of the following:  The study was commissioned by NetApp and delivered by the Forrester Consulting group.  NetApp reviewed and provided feedback to Forrester, but Forrester maintained editorial control over the study and its findings and did not accept changes to the study that contradicted Forrester’s findings or obscured the meaning of the study.  NetApp provided the customer names for the interviews. Page 4
  • 6. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  Forrester makes no assumptions as to the potential return on investment that other organizations will receive. Forrester strongly advises that readers should use their own estimates within the framework provided in the study to determine the appropriateness of an investment in NetApp’s storage solutions for server virtualization.  Forrester does not endorse NetApp or its storage solutions.  The study is not a direct or implied market or competitive comparison. About NetApp’s Storage Solutions For Server Virtualization And VMware NetApp Storage Solutions For Server Virtualization According to NetApp, its storage solutions for server virtualization complement the benefits provided to servers by VMware, enabling organizations to:  Save up to 50% on storage power, cooling, and space and lower overall data center costs using thin provisioning and snapshot copies.  Bring products, services, and projects to market faster with instant storage provisioning.  Frequently and efficiently back up data with various recovery points using many space-efficient snapshot copies, each representing a potential rollback point.  Provide self-service tools for virtual server administrators to schedule snapshot frequency and perform data restores in the event of system or user corruption or deletion. Organizations may also experience a smooth transition to their storage infrastructure with NetApp’s specialized virtualization services, including assessment, implementation, and management delivered by experienced, certified professionals, using proven methodologies and best practices. VMware ESX Server According to NetApp, VMware and its Cloud Infrastructure and Management Suite is comprised of products that help organizations deploy and manage highly available and dynamic data centers. The foundation of the Cloud Infrastructure and Management Suite is vSphere, the hypervisor or virtualization layer that allows a traditional physical server to be provisioned into multiple virtual machines. A key value of a virtual machine is that it acts just like a traditional server, thus requiring no or only minimal change to an application in order for it to operate within the virtual infrastructure. The hypervisor layer addresses one of the main goals of the legacy data center — maintain application isolation by running each application on its own server — yet ESX allows organizations to aggregate multiple virtual servers onto a single physical hosting platform. Page 5
  • 7. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Customer Interview Highlights Forrester derived its conclusions in large part from information received in a series of in-depth interviews conducted by Forrester with executives and personnel at five NetApp customers in late 2011 and seven NetApp customers in 2009, all of which are using NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform. The following is a brief description of the interviewed customers, all of which were promised anonymity: Customers Interviewed In 2011 1. An international specialty insurance and benefit management company headquartered in the United States. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for more than 12 months. This includes OnCommand unified manager, SnapManager, and NetApp Virtual Storage Console. It has virtualized 75% of its business-critical applications, including Microsoft SharePoint, SQL, and MySQL database production servers and web servers. 2. A northeastern US state university with four campuses offering undergraduate and graduate degrees in a full range of disciplines. Its IT staff of 13 supports the needs of more than 15,000 students and 1,400 faculty and staff. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server since 2006. It has virtualized 97% of its data center, including the following business critical applications: Microsoft Exchange, Oracle, and SQL application servers. 3. A Canadian-based not-for-profit organization that specializes in providing data to broadcasters, advertisers, and agencies. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for six years. It has virtualized 95% of its data center, including the following business-critical applications: Microsoft Outlook, SharePoint, SQL, Oracle, MySQL, and proprietary databases of customer data. It also uses NetApp Provisioning Manager and OnCommand Insight Balance (formerly Akorri BalancePoint). 4. A midwestern US community credit union with more than 200 employees working at headquarters and 14 branch offices. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for six months. It has virtualized 80% of its data center, including business-critical applications SQL Server and Oracle 10g database. 5. One of the US’ largest home healthcare providers with product and service offerings that include respiratory services, infusion therapy, and medical equipment for patients in their homes. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for seven months to virtualize 80% to 85% of its data center, including business-critical applications such as: Oracle, Exchange front end, Active Directory, and custom applications built on WebLogic. Customers Interviewed In 2009 1. An institute of science for one of the leading universities in the US whose server and storage needs have grown dramatically from 16 physical servers and 4 TB of disk to 100 physical servers, 30 virtual servers, and Page 6
  • 8. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization more than 200 TB of NetApp storage in the past 4.5 years. It has been using NetApp storage solutions for server virtualization in conjunction with VMware ESX Server for more than four years. 2. A leader in remote online data backup and managed data protection solutions, including online data backup, disk-based recovery, high-availability, email archiving, and data life-cycle solutions. It has been using NetApp’s storage for almost three years and has consolidated 40 physical servers onto three VMware ESX Servers with 20 TB of NetApp storage. 3. A 25-year-old leading medical device company developing and manufacturing less-invasive devices. It has been using NetApp’s storage solutions for server virtualization in conjunction with VMware for more than four years to eliminate 125 physical servers and replace them with 18 VMware ESX hosts with 180 TB of NetApp storage. 4. A world leader in cosmetics, skin care, fragrance, and personal care products. It has been using NetApp’s storage solutions for server virtualization in conjunction with VMware for three years to eliminate 300 physical servers and replace them with 36 VMware ESX hosts with 35 TB of NetApp storage. 5. A not-for-profit provider of government information technology and telecommunication solutions to a major US city and the surrounding county. It has been using NetApp’s storage solutions for server virtualization in conjunction with VMware for more than six years. It has more than 300 virtual servers running on 22 VMware ESX hosts accessing 275 TB of NetApp storage across three data centers. 6. The central IT group of a large US city in the Northeast consisting of 40 employees who support the city and board of education’s IT needs. It has been using NetApp’s storage solutions for server virtualization in conjunction with VMware for almost three years to eliminate 20 physical servers and replace them with four VMware ESX hosts using 13.2 TB of NetApp storage. 7. The community college system of an East Coast state in the US supporting 23 colleges and more than 240,000 students. It has been using NetApp’s storage solutions for almost four years to establish an automated disaster recovery site that today uses 100 TB of NetApp storage. Composite Organization Description The Organization is a $2 billion-plus multinational manufacturer headquartered in North America with operations in Europe and Asia. Prior to implementing NetApp’s storage solutions for server virtualization, it had 400 Intel x86 physical servers being used to run business-critical applications such as Oracle, Exchange, Outlook, SharePoint, SQL, Active Directory, and financials. The server population was a mix of Windows 2008, Windows 2003 and Unix operating systems. The Organization recently made the strategic decision to implement server virtualization across all 400 servers in the data center and to focus on the benefits virtualization brings to the business-critical applications mentioned above. In addition, it intends to virtualize the following servers: file, print, small database, domain name system (DNS), and web servers. The Organization wants to include the benefits of NetApp’s OnCommand Management Suite, including Virtual Storage Console, the Data ONTAP operating system, and back-up and recovery of virtual data. Page 7
  • 9. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Prior to implementing NetApp’s storage solutions for server virtualization the Organization:  Was using a Fibre Channel SAN.  Backed up files to tape using a legacy tape-to-tape system.  Recovered files from tape. In the event of a disaster, it would have tapes shipped in from remote storage facility. As with the NetApp customers interviewed by Forrester, the sample Organization’s high-level business objectives for pursuing a NetApp storage for server virtualization strategy were as follows:  Cost reduction: Reduce the time and money spent on managing its servers and associated storage.  Supporting business needs: Create a more flexible and agile storage infrastructure to respond to the business needs faster.  Extending virtualization to 100% of the data center: Achieve the benefits of extending virtualization to business-critical applications such as Oracle, Exchange, Outlook, SharePoint, SQL, Active Directory, and financials.  Disaster recovery: Improve insufficient disaster recovery plans and minimal coverage in the event of a disaster. The Organization’s tactical goals and objectives for pursuing a NetApp storage for server virtualization strategy were as follows:  Consolidation: Reduce the number of servers, reduce its storage footprint, and consolidate to one storage vendor.  Green IT: Improve the data center, which was reaching its space, power, and cooling capacity.  Higher availability: Focus on higher availability for its critical business applications.  Disaster recovery: Replace its tape-based backup and recovery systems with replication in the next two years.  Faster application deployment: Create a more efficient and faster way to deploy both business-critical and non- business-critical applications and patches.  Reduce labor costs: Make the storage solution easier to manage with fewer resources needed. Forrester assumes that the sample Organization had already purchased VMware ESX software prior to investing in NetApp’s storage solutions for server virtualization, therefore the cost for VMware is not included in this case study ROI analysis; however, we are listing the configuration below.  VMware ESX software with: o vSphere 5. o vCenter Server 5. Page 8
  • 10. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization o vMotion. o High Availability. o Distributed Resource Scheduler. o vCenter Site Recovery Manager 5. NetApp Configuration For The Organization The Organization contacted NetApp, its primary storage vendor, to purchase the following hardware, software, services, features, and functionalities (prices in bold):  FAS3240A with 28 TB of raw capacity of SAS drives for primary storage ($164,790) (assumes initial use of 14 TB after deduplication and 25% annual growth thereafter, reaching 28 TB at end of Year 3). Configuration includes: o Data ONTAP Essentials:  Includes all efficiency, management, high availability, and multi-tenancy features. o NetApp complete software bundle, including:  All protocols — iSCSI, FC, FCoE, NFS, and CIFS.  SnapRestore.  SnapMirror.  SnapVault.  FlexClone.  SnapManager Suite.  Virtual Storage Console. o Three-year SupportEdge Premium — 4-hour on-site support.  FAS3240A with 48 TB of raw capacity SATA drives as replication and backup target ($134,490) (assumes initial use of 14 TB after deduplication and 25% annual growth thereafter, reaching 28 TB* at end of Year 3). System includes double the amount of storage for backup repository and development and test scratch spaces. Configuration includes: o Data ONTAP Essentials:  Includes all efficiency, management, high availability, and multi-tenancy features. o NetApp complete software bundle, including: Page 9
  • 11. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  All protocols — iSCSI, FC, FCoE, NFS, and CIFS.  SnapRestore.  SnapMirror.  SnapVault.  FlexClone.  SnapManager Suite.  Virtual Storage Console. o Three-year SupportEdge Premium — 4-hour on-site support.  NetApp University training units (60) — system administration courses ($4,500). *Note: Without deduplication, the Organization would need to buy an additional 44 TB of raw storage capacity (disk shelves and drives) for primary and backup storage at an incremental cost (or savings for this analysis) of $70,525. Assumptions  Prior to implementing NetApp’s storage for virtualization solutions, the Organization had 400 X86 one- and two- socket servers and had plans to virtualize all of those running the following: Exchange, SQL, and Oracle applications, file, print, Active Directory, small database, domain name system (DNS), and web servers.  The Organization’s storage needs are expected to grow by 25% annually for the three years of this analysis, which Forrester sees as a reasonably conservative data growth rate for such a firm.  During the next 18 months, it will replace 400 physical servers with 20 ESX host (virtual) servers (quad core servers with 512 MB of memory such as HP DL380 or IBM x3650 and quad port Ethernet HBAs) with a projected ratio of 20 virtual servers per physical server.  The new future backup and disaster recovery plans will incorporate NetApp storage for virtualization solutions.  Backup: o Before: primary storage backed up to tape with legacy tape-to-tape system. o After: backup using NetApp FAS3240A as replication and backup target.  Disaster recovery: o Before: recovered from tape; would have tapes shipped back in the event of a disaster. o After immediate failover to disaster recovery site using NetApp FAS3240A. Page 10
  • 12. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization TEI Framework Introduction From the information gathered in the in-depth customer interviews, Forrester has constructed a TEI framework for those organizations considering implementation of NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform. The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Composite Organization Based on the interviews with the 12 existing customers that NetApp provided, Forrester constructed a TEI framework, a composite Organization, and an associated ROI analysis that illustrates the areas affected financially. The composite Organization that Forrester synthesized from these results is described above. Framework Assumptions Table 2 lists the discount rate used in the present value (PV) and net present value (NPV) calculations, the time horizon used for the financial modeling, and other costs. Table 2 General Assumptions General assumptions Value Discount rate used to compute NPV 10% Length of analysis Three years Annual fully loaded cost of a storage administrator $110,000 Source: Forrester Research, Inc. Costs Costs are an important part of the TEI model. Costs, or IT impact, are calculated as a change in costs primarily for IT as a result of the introduction of the technology to the Organization. Therefore, the introduction of NetApp’s solution affects IT budgets with the purchase of the solution; it also affects the Organization positively, in terms of the cost savings and efficiencies created by the investment (see the Benefits And Savings section below). The impact of cost is accrued in two different areas described below. NetApp solution costs (see pages 9 and 10 for more details and pricing of hardware, software, services, features, and functionalities); and the Organization’s internal preparation, planning, and migration costs, which total $326,780. Page 11
  • 13. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Costs For The NetApp Solution: $303,780  Primary storage: FAS3240A with 28 TB of raw capacity of SAS drives for primary storage ($164,790).  Secondary storage: FAS3240A with 48 TB of raw capacity SATA drives as replication and backup target ($134,490).  NetApp University training units (60): system administration courses ($4,500). NetApp pricing is based on normal and average discounts off NetApp’s list price as of December 2011. Cost For Internal Preparation And Planning Labor: $8,000 A readiness assessment that looks at costs, benefits, and risks along with detailed planning is essential for a successful storage consolidation initiative for server virtualization. Based on interviews with current NetApp customers, our Organization required two full-time equivalent (FTE) (storage administrator and data center manager) to spend approximately two weeks of their time — before and during implementation — planning, i.e., identifying LUNs, Fibre Channel loops, and network interfaces; and testing methods (e.g., vMotion) of migrating data from legacy storage to the virtual storage environment. Cost For Internal Labor For Data Migration: $15,000 Internal labor associated with the actual data migration from the previous storage system to the NetApp array. Based on customer interviews, Forrester estimates the work to be equal to eight weeks of full-time effort, or $15,000. The costs associated with implementing NetApp storage solutions for server virtualization are reflected in Table 3. Page 12
  • 14. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Table 3 The Organization — Total Costs (Non-Risk-Adjusted) Total costs Year 0 Year 1 Year 2 Year 3 Total Primary storage and associated hardware, $164,790 $0 $0 $0 $164,790 software, services Secondary storage and associated hardware, $134,490 $0 $0 $0 $134,490 software, services NetApp University $4,500 $0 $0 $0 $4,500 training units Cost for internal preparation and planning $8,000 $0 $0 $0 $8,000 labor Cost for internal labor for $15,000 $0 $0 $0 $15,000 data migration Total costs $326,780 $0 $0 $0 $326,780 Source: Forrester Research, Inc. Benefits And Savings: Quantified In addition to the costs associated with the NetApp solution, there were positive IT cost savings and benefits with NetApp’s storage solutions for server virtualization. The most recently interviewed five customers are moving toward virtualizing close to 100% of their data centers, including business-critical applications such as Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. Another trend is the use of NetApp Virtual Storage Console, which presents a single pane of glass for end-to-end storage management for VMware infrastructures and improved administrative efficiency for both VMware and storage administrators. Interviewed organizations, however, were challenged with segregating the benefits from server virtualization with the benefits from NetApp’s storage solutions. With Forrester’s assistance, a majority of the organizations agreed that the quantified benefits focused on: reduced storage hardware and software costs through data deduplication, thin provisioning technologies, and FlexClone; improvements in the backup and recovery processes; savings in media and software associated with centralized backup; and storage administration labor savings from the use of Virtual Storage Console. Based on an analysis of the interviews with the participating customers, we could quantify the following benefits as a result of implementing NetApp’s storage solutions for server virtualization. Page 13
  • 15. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Cost Savings — Reduction In Storage Hardware And Software Costs: $91,525 The interviewed organizations reported using combinations of the three NetApp technologies, listed below, that reduced their storage costs. For our composite Organization, we assumed that during a six-month period, our storage administrators became aware of and fully proficient at all three technologies. The interviewed customers using these technologies reported significant storage cost savings averaging 60% to 70% in their production VMware environments.  Data deduplication. NetApp provides the benefit of sharing identical data among multiple virtual machines that reside on disk storage through its data deduplication technology, resulting in the contents of virtual machines being reduced to a single copy per data store. Several customers reported using NetApp’s deduplication across all storage protocols (NFS, FC, and iSCSI) supported by VMware and saving 50% in future storage costs. Our Organization was able to avoid purchasing 44 TB of primary and back-up storage (disk shelves and drives) at an initial cost avoidance savings of $70,525. The interviewed customers reported savings of another 15% in future primary storage hardware using the combination of NetApp thin provisioning and FlexClone features, although it was difficult for these customers to segregate the savings between the two. Our Organization was able to avoid purchasing another 13 TB of storage hardware (disk shelves and drives) over three years at a cost of $21,000 ($7,000 savings annually). These features are described below.  Thin provisioning. The seven interviewed customers each described a traditional (pre-virtualization) storage environment where server administrators would overprovision storage to avoid running out and to avoid the downtime related to expanding the provisioned storage. NetApp’s thin provisioning feature provides storage on demand by treating storage as a shared resource that is consumed only when individual virtual machines require it, rather than reserving physical storage capacity for each individual server workload. This sharing increases the total utilization rate of storage by eliminating the significant quantity of allocated but unused capacity that is typical with traditional storage. Thin provisioning and data deduplication are mutually inclusive features that can reduce the need for more storage, thereby increasing the overall utilization rate of existing storage. Thin provisioning allows for on demand of shared, pooled storage capacity, while deduplication removes any redundancy of data stored on the array. Both deduplication and thin provisioning can be enabled or disabled on a per-volume basis.  FlexClone. With NetApp’s FlexClone feature, an existing storage object (file, LUN, or volume) can be copied and made available for writeable access. With FlexClone, the copy of the original data set consumes no additional physical storage space. Clones can increase in size as new changes are written. Should any of this cloned data become redundant, data deduplication technology will remove the redundancies, returning the previously used storage back to the pool for reuse later. Cost Savings — Improvements In Backup And Recovery Processes: $528,000 Several interviewed customers reported improvements in their backup and recovery processes. Our composite Organization originally considered using its legacy tape-to-tape system to back up its VMware data. However, it soon realized that as storage requirements continued to grow at 25% annually, it would not be able to complete the tape-to- tape backup process within an appropriate backup window. The Organization chose to purchase a NetApp FAS3240A Page 14
  • 16. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization with 48 TB of raw capacity SATA drives as replication and backup target, and to use NetApp Snapshot technology to perform local backups. Snapshot will create point-in-time copies of file systems for use as backup in significantly less time than the previous tape-to-tape system, reducing the future need for media and software associated with tape backup processes. There were two specific savings categories identified with our Organization’s improvement in its backup and recovery processes: 1. Media And Software Associated With Centralized Backup: $198,000 After the storage needs of the eliminated servers (file, print, Active Directory, small database, DNS, and web) are consolidated onto NetApp storage systems and backed-up to the FAS3240A device using Snapshot, there will no longer be a need for the legacy tape-to-tape systems including equipment, software, and media costs. Instead of having a backup solution for each of the original 400 (now virtualized) servers, our Organization now has only one storage system (FAS3240A) from which to perform data backups. In addition, the Organization did not have to grow its legacy tape-to-tape system and off-site facilities avoiding incremental hardware, software, media, and storage costs. The composite Organization was able to save $66,000 annually in media (tape), backup tape drives, software costs, and off- site tape storage. The total three-year cost savings associated with centralized backup is $198,000. 2. Labor Cost Avoidance Savings For Backup And Recovery Administration: $330,000 Several interviewed organizations highlighted savings in the time it takes for administrators to restore data from backups when using the NetApp solution. Prior to deploying NetApp’s storage solutions for server virtualization, several organizations reported that the time to restore from backup tapes was significant, both in terms of inefficient use of IT resources and end user downtime. Based on input from the interviewed customers, we estimate that the IT administrative savings resulting from improving the labor efficiencies of backup and restore will allow our Organization to avoid hiring one FTE or $110,000 annually, based on a fully burdened storage administrator’s salary of $110,000 annually. The total three-year cost savings associated with simplification of backup and recovery tasks is $330,000. Cost Savings — Labor Savings From Use Of NetApp Virtual Storage Console: $165,000 Virtual Storage Console was being used by three of the five recently interviewed customers and on average saved ½ FTE or $55,000 each year based on a fully burdened storage administrator’s salary of $110,000 annually. The common benefits that each of the three customers and our Organization experienced include:  Reduced cost and complexity with integrated, end-to-end storage management for VMware infrastructures.  Improved labor efficiency for both their VMware and storage administrators.  Increased availability with near-instant backups, granular restores, and cost-effective DR.  Reduced storage costs with automatic thin provisioning and deduplication of data stores (hardware benefits included in the thin provisioning and deduplication sections above). Page 15
  • 17. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  Enabled a dynamic infrastructure by rapidly provisioning and cloning VMs for new applications, test and development. The total three-year labor cost savings associated with the use of NetApp Virtual Storage Console is $165,000. Incremental Revenue And Profit — Benefits Of Faster Application Deployment: $450,000 Each of the recently interviewed customers reported the ability to quickly clone and move applications into test and development environments, which enabled them to develop and upgrade applications faster than without NetApp storage solutions for server virtualization. In addition, one of the most important benefits was the achievement of revenue and profit acceleration due to the ability to provision and subsequently deploy eCommerce applications at a faster time to market. This acceleration enables our Organization to gain incremental revenues and profits a month early for the one customer facing eCommerce application that it deploys each year. This results in average incremental revenue of $500,000 per application for the first (accelerated) month. Prior to implementing NetApp storage solutions for server virtualization, it took the Organization at least one month longer to roll out new eCommerce applications. In this study, Forrester will include a benefit equal to a 30% gross profit margin of the Organization’s incremental revenue or $150,000 gross profit per year. Readers of this study should assess their organization’s potential revenue acceleration opportunities, which may vary widely (up or down) from what is portrayed in this study As a result of using NetApp storage solutions for server virtualization, the Organization achieved $450,000 in incremental profit over three years. The total three-year gross profit benefit associated with the ability to provision and subsequently deploy eCommerce applications at a faster time to market is $450,000 over three years. The quantified benefits and cost savings associated with implementing NetApp storage solutions for server virtualization are reflected in Table 4. Page 16
  • 18. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Table 4 The Organization — Total Quantified Benefits And Cost Savings (Non-Risk-Adjusted) Total benefits and cost savings Year 1 Year 2 Year 3 Total Reduction in storage hardware and software costs — using data $70,525 $0 $0 $70,525 deduplication Reduction in storage hardware and software costs — using thin $7,000 $7,000 $7,000 $21,000 provisioning and FlexClone Media and software associated $66,000 $66,000 $66,000 $198,000 with centralized backup Labor savings for backup and $110,000 $110,000 $110,000 $330,000 recovery storage administration Labor savings using NetApp Virtual $55,000 $55,000 $55,000 $165,000 Storage Console Benefits of faster eCommerce application deployment (gross $150,000 $150,000 $150,000 $450,000 profits) Total benefits and cost savings $458,525 $388,000 $388,000 $1,234,525 Source: Forrester Research, Inc. Benefits: Unquantified The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server virtualization, but they were not able to quantify the benefits at the present time:  Each of the recently interviewed customers were proactive in virtualizing business-critical applications such as Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. Specific benefits cited by the customers include: faster disaster recovery of business-critical data and the ability to back up and clone business- critical applications into test and development environments to enable faster application development, upgrades, and patch testing. For this study we found it difficult to segregate quantified benefits of business-critical applications vs. from other applications. The total benefits for all applications are quantified in Table 4.  Most of the interviewed customers acknowledged savings in power and cooling costs as a result of server and storage virtualization. However, savings dollars could not be specifically apportioned to the NetApp storage solution because of legacy server use of direct-attached storage. Page 17
  • 19. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or eliminate) eventual expansions of their data centers. Each organization estimated the cost avoidance savings with a wide range of results ($300,000 to $2.3 million). In addition, it was difficult to apportion the savings to NetApp storage virtualization solutions, as there were several other variables associated with the customer’s expansion needs, including: pre-virtualization data center utilization, company growth rates, and its current and future plans to outsource data center expansion to cloud service providers. Readers of this study should assess their own data center capacity and include prorated savings associated with NetApp server virtualization solutions. Risk Risk-adjusted and non-risk-adjusted ROI are both discussed in this study. The Organization’s individual costs and benefits are quoted in non-risk-adjusted (best-case) terms and before risk adjustments are made. The assessment of risk provides a range of possible outcomes based on the risks associated with IT projects in general and specific risks relative to NetApp’s storage solutions for server virtualization projects. In our research, we discovered that implementing the NetApp solutions was a relatively low-risk endeavor if organizations took the time to thoroughly plan the server virtualization and storage transition process. TEI uses risk factors to widen the possible outcomes of the costs and benefits (and resulting savings) associated with a project. As the future cannot be accurately predicted, there is risk inherent in any project. TEI captures risk in the form of risks-to-benefits and risks-to-costs. Measurement of risk is a way of incorporating the levels of confidence and uncertainty regarding the cost and benefit estimates of a given investment. Higher confidence that the cost and benefit estimates will be met implies that the level of risk is lower and the variation between the risk-adjusted and non-risk-adjusted outcomes is minimized. Forrester considered the following general risks in this study:  A lack of organizational discipline in creating processes and procedures to best take advantage of the benefits.  A lack of appropriate training for the storage administrators who will be responsible for optimizing the full benefit potential of storage consolidation and taking advantage of the future simplification of backup and recovery tasks.  Failures to reduce, transfer, or redeploy IT support headcount made redundant by deploying storage solutions for server virtualization.  The possibility that the benefits will not be measured and quantified in the future; as a result, no TEI benefit would be captured and acknowledged.  Internal inertia, conflicting priorities, and turnover, reducing an organization’s ability to achieve the benefits.  Once consolidated, having fewer points of failure in storage environment will put significantly more data at risk. The following risk associated with NetApp storage solutions for server virtualization was considered in this study: Page 18
  • 20. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  The inability of the Organization to find, train, and retain administrators fluent in technologies such as VMware ESX and NetApp’s Data ONTAP 7G operating system, to take full advantage of the benefits outlined in this study. For this study, Forrester applied a 20% risk adjustment — i.e., a reduction of 20% — to all benefits to reflect the risks listed above. We did not risk-adjust costs, as these were primarily fixed quotes from NetApp. Table 5 represents the total costs, benefits, and cost savings (risk-adjusted by 20%) of implementing NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform. Table 5 The Organization — Total Benefits And Cost Savings (Risk-Adjusted By 20%) Present Total benefits and cost savings Year 1 Year 2 Year 3 Total value Reduction in storage hardware and software costs — using data $56,420 $0 $0 $56,420 $51,291 deduplication Reduction in storage hardware and software costs — using thin $5,600 $5,600 $5,600 $16,800 $13,926 provisioning and FlexClone Media and software associated $52,800 $52,800 $52,800 $158,400 $131,306 with centralized backup Labor savings for backup and $88,000 $88,000 $88,000 $264,000 $218,843 recovery storage administration Labor savings using NetApp Virtual $44,000 $44,000 $44,000 $132,000 $109,421 Storage Console Benefits of faster eCommerce application deployment (gross $120,000 $120,000 $120,000 $360,000 $298,422 profits) Total benefits and cost savings $366,820 $310,400 $310,400 $987,620 $823,210 Source: Forrester Research, Inc. The risk-adjusted NPV of benefits is $823,210. If a risk-adjusted NPV and ROI still demonstrates a compelling business case, it raises confidence that the investment is likely to succeed as the risks that threaten the project have been taken into consideration and quantified. The risk-adjusted numbers should be taken as “realistic” expectations, as they Page 19
  • 21. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization represent the expected value considering risk. Assuming normal success at mitigating risk, the risk-adjusted numbers should more closely reflect the expected outcome of the investment. Flexibility Flexibility, as defined by TEI, represents investing in additional capacity or agility that can be turned into benefit for some future additional investment. We believe organizations that invest in NetApp’s storage solutions for server virtualization lay the groundwork to take advantage of migrating to a virtualized disaster recovery environment. For our Organization, virtualization is the future foundation to enhance and simplify disaster recovery and high availability. Over a two year period the Organization will be putting business-critical applications on virtual machines, and with this, disaster recovery becomes a more important issue. The limitations of tape will cause difficulty in a disaster recovery situation because of tape device data transfer speeds, and the physical distance between a primary data center and the Organization’s disaster recovery site. Interviewed customers expressed an interest or the intent to take advantage of the option to use NetApp SnapMirror replication technology along with VMware’s Site Recovery Manager (SRM) to reduce the impact of a site disaster on the business. With SnapMirror technology, a virtual infrastructure can be replicated over the WAN to a remote data center. The future recovery of virtual machines affected by a site disaster can be completed in minutes instead of hours or days. In addition, SRM can leverage NetApp’s FlexClone technology to make immediate zero-cost clones of the DR data, allowing storage administrators to test their disaster recovery policies at any time without interrupting the production environment or disaster recovery replication. Our Organization also plans to leverage NetApp’s data deduplication technology in their disaster recovery plans. Most of the 12 interviewed organizations indicated that their original investment in NetApp’s storage solutions for server virtualization provided them with the flexibility and agility to take advantage of this disaster recovery “option” and the potential savings that a virtualized disaster recovery environment can bring to their organizations. At present, only five of the customers Forrester interviewed were currently taking advantage of VMware’s Site Recovery Manager and SnapMirror technologies; therefore, this study will not attempt to quantify its benefits. However, we encourage the reader to learn more about these technologies to determine the potential quantifiable benefits within their organizations. The value of flexibility is clearly unique to each organization, and the willingness to measure its value varies from organization to organization. For the purpose of this analysis, we have assumed that the Organization sees the future value in being able to reduce future backup storage acquisition costs or achieve longer intervals between storage capacity upgrades using deduplication. The value of the option (when calculated) is based on the Black-Scholes Option Pricing formula. (For additional information regarding the flexibility calculation, please see Appendix A.) Page 20
  • 22. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Financial Summary The financial results calculated in the Costs, Benefits, and Risks sections can be used to determine the risk-adjusted NPV of benefits, ROI, and payback period for the Organization’s investment in NetApp’s storage solutions for server virtualization. Table 6 below shows the summarized risk-adjusted values, applying the risk-adjustment method indicated in the Risk section, which was to apply a 20% risk adjustment — i.e., a reduction of 20% — to all benefits to reflect the risks listed above. No risk adjustments were made to the costs, as these represented fixed quotes from NetApp or internal planning costs. Table 6 The Organization — Cash Flow, ROI, And Payback Period (Risk-Adjusted) Present Year 0 Year 1 Year 2 Year 3 Total Value Costs ($326,780) $0 $0 $0 ($326,780) ($326,780) Benefits $0 $366,820 $310,400 $310,400 $987,620 $823,210 Net benefits ($326,780) $366,820 $310,400 $310,400 $660,841 $496,430 (NPV) ROI (risk- 152% adjusted) Payback period 11 months Source: Forrester Research, Inc. The three-year, risk-adjusted total NPV of $496,430 represents the net cost savings and benefits attributed to using NetApp storage solutions for server virtualization when compared with the costs of the Organization’s legacy server and storage environment (see details above in the Costs, Benefits, Flexibility, and Risks section). In addition, the risk- adjusted ROI was a very favorable 152%. Page 21
  • 23. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Study Conclusions As the data in this study indicates, NetApp’s storage solutions for server virtualization have the potential to provide a very good return on investment. In addition, the very favorable risk-adjusted ROI of 152%, along with an 11 month payback period (breakeven point), raises confidence that the investment is likely to succeed, as the risks that may threaten the project have already been taken into consideration and quantified. In this study, risks have been modeled conservatively in the hopes of showing worst-case expectations. A successful, well-planned implementation will allow quantifiable benefits and cost savings to accrue to the Organization in the following areas totaling $987,620 (risk adjusted):  $56,420 — reduction in storage hardware and software costs — using data deduplication.  $16,800 — reduction in storage hardware and software costs — using thin provisioning and FlexClone.  $158,400 — media and software associated with centralized backup.  $264,000 — labor savings for backup and recovery storage administration.  $132,000 — labor savings using NetApp Virtual Storage Console.  $360,000 — benefits of faster eCommerce application deployment (gross profits). The interviewed customers identified the following additional benefits of using NetApp’s storage solutions for server virtualization, but they were not able to quantify the benefits at the present time:  Each of the recently interviewed customers were proactive in virtualizing business-critical applications such as Oracle, Exchange, SharePoint, SQL, Active Directory, SAP, and financials. Specific benefits cited by the customers include: faster disaster recovery of business-critical data and the ability to back up and clone business- critical applications into test and development environments to enable faster application development, upgrades and patch testing. For this study we found it difficult to segregate quantified benefits of business-critical applications versus from other applications. The total benefits for all applications are quantified in Table 4.  Most of the interviewed customers acknowledged savings in power and cooling costs as a result of server and storage virtualization. However, savings dollars could not be specifically apportioned to the NetApp storage solution because of legacy server use of direct-attached storage.  About two-thirds of the 12 interviewed customers indicated that server and storage virtualization would defer (or eliminate) eventual expansions of their data centers. Each organization estimated the cost avoidance savings with a wide range of results ($300,000 to $2.3 million). In addition, it was difficult to apportion the savings to NetApp storage virtualization solutions, as there were several other variables associated with the customer’s expansion needs including: pre-virtualization data center utilization, company growth rates, and its current and future plans to outsource data center expansion to cloud service providers. Readers of this study should assess their own data center capacity and include prorated savings associated with NetApp server virtualization solutions. Organizations that are likely to achieve similar results have the following characteristics: Page 22
  • 24. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization  Organizations that have the desire to virtualize nearly 100% of their server and storage environments, including business-critical applications.  Organizations that want to extend the agility of business critical applications and be able to provision new applications and new storage very quickly.  Organizations where the costs of pre-virtualization server infrastructure (servers, storage, networks) continue to increase, sacrificing new investment opportunities.  Organizations that are large enough to have distinctly delineated IT administration roles, such as system, storage, and network.  Organizations with an interest in adopting a disk-to-disk backup strategy environment either before or after implementing NetApp’s primary storage solutions.  Organizations with an IT staff with the requisite skills to manage virtual server and storage environments, including knowledge of VMware’s ESX Server and virtualization platform, as well as NetApp’s Data ONTAP operating system. For our Organization, NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform carried a low level of risk, a very positive 152% risk-adjusted ROI, and an 11-month horizon to recoup the investment. We make no assumptions regarding the effects of NetApp’s storage solutions for server virtualization in conjunction with VMware’s ESX Server and virtualization platform at other organizations. This study examines the potential impact attributable to the 12 organizations that participated in our examination and applies the common costs and benefits to a representative composite Organization. The underlying objective of this document is to provide guidance to technology decision-makers seeking to identify areas where value can potentially be created based on using NetApp’s storage solutions for server virtualization. Page 23
  • 25. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Appendix A: Total Economic Impact™ Overview Total Economic Impact is a methodology developed by Forrester Research that enhances an organization’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps organizations demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders. The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility. For the purpose of this analysis, the impact of flexibility was not quantified. Benefits Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product or project. Often product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization. Calculation of benefit estimates involves a clear dialogue with the user organization to understand the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established between the measurement and justification of benefit estimates after the project has been completed. This ensures that benefit estimates tie back directly to the bottom line. Costs Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units may incur costs in the forms of fully burdened labor, subcontractors, or materials. Costs consider all the investments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are created. Risk Risk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two ways: the likelihood that the cost and benefit estimates will meet the original projections and the likelihood that the estimates will be measured and tracked over time. TEI applies a probability density function known as “triangular distribution” to the values entered. At a minimum, three values are calculated to estimate the underlying range around each cost and benefit. Flexibility Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the initial investment already made. For instance, an investment in an enterprise wide upgrade of an office productivity suite can potentially increase standardization (to increase efficiency) and reduce licensing costs. However, an embedded collaboration feature may translate to greater worker productivity if activated. The collaboration can only be used with additional investment in training at some future point in time. However, Page 24
  • 26. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization having the ability to capture that benefit has a present value that can be estimated. The flexibility component of TEI captures that value. Appendix B: Glossary Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Although the Federal Reserve Bank sets a discount rate, organizations often set a discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discount rates between 8% and 15% based on their current environment. Readers are urged to consult their organization to determine the most appropriate discount rate to use in their own environment. Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have higher NPVs. Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total net present value of cash flows. Payback period: The breakeven point for an investment, or the point in time at which net benefits (benefits minus costs) equal initial investment or cost. Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits minus costs) by costs. A Note On Cash Flow Tables The following is a note on the cash flow tables used in this study (see the Example Table below). The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash flows in Years 1 through 3 are discounted using the discount rate shown in Table 2 at the end of the year. Present value (PV) calculations are calculated for each total cost and benefit estimate. Net present value (NPV) calculations are not calculated until the summary tables and are the sum of the initial investment and the discounted cash inflows and outflows in each year. Table [Example] Example Table Ref. Category Calculation Year 0 Year 1 Year 2 Year 3 Total Source: Forrester Research, Inc. Page 25
  • 27. Forrester Consulting The Total Economic Impact Of NetApp’s Storage Solutions For Server Virtualization Appendix C: About The Project Manager Bob Cormier Vice President, Principal Consultant Bob is a vice president and principal consultant for Forrester’s TEI service. He is a leading expert on deriving business value from technology investments, specializing in advising clients on the TEI framework — services that help organizations understand the overall financial value of IT strategies and investments. He serves the following client roles:  Technology vendor marketing and sales enablement professionals. Bob works with these professionals in their efforts to clearly articulate the unique value proposition of their solutions to prospects and customers using Forrester’s TEI methodology. Bob has authored numerous TEI case studies for Forrester’s vendor clients. He has also delivered his acclaimed Justifying Technology Investments (JTI) workshop to more than 800 participants representing 400 organizations. Bob has more than 25 years of experience in the IT and consulting industries. Prior to joining Forrester, he held senior- level positions at two leading eBusiness consulting firms, Zefer and Cambridge Technology Partners. Bob has successfully led company efforts to optimize financial, operational, and resource planning activities, incorporating leading-edge, professional service automation (PSA) applications and enterprise resource planning (ERP) systems. He has also held senior financial management positions at Digital Equipment and Anixter International. During his career, Bob has consulted with global users and vendors of IT and has been a frequent speaker at conferences, events, and seminars. Education Bob earned an M.B.A. from Bentley University and a B.S. in business from the University of New Hampshire. As an adjunct professor, he has taught finance and economics courses for more than 10 years at Southern New Hampshire University and Daniel Webster College. Page 26