However, Scott does suggest that we should look at all the costs, not just the cost of a new server, which we in the industry call Total Cost of Ownership (TCO). Here is an excerpt:
Final point: there is actually a really important secondary point here--what is the TCO of your backup infrastructure. In some ways, TSM is one of the most expensive (number of servers and tape drives, for example), relative to other backup applications. However, I think it would be a really interesting exercise to critically examine the TCO of the various backup applications at different scales to evaluate if there is any genuine cost differentiation between them.
Fortunately, I have a recent TCO/ROI analysis for a large customer in the Eastern United States that compares their existing EMC Legato deployment to a new proposed TSM deployment. The assessment was performed by our IBM Tivoli ROI Analyst team, using a tool developed by Alinean. The process compares the TCO of the currently deployed solution (in this case EMC Legato) with the TCO of the proposed replacement solution (in this case IBM TSM) for 55,000 client nodes at expected growth rates over a three year period, and determines the amount of investment, cost savings and other benefits, and return on investment (ROI).
Here are the results:
"A risk adjusted analysis of the proposed solution's impact was conducted and it was projected that implementing the proposed solutions resulted in $16,174,919 of 3 year cumulative benefits. Of these projected benefits, $8,015,692 are direct benefits and $8,159,227 are indirect benefits.
Top cumulative benefits for the project include:
These benefits can be grouped regarding business impact as:
- Backup Coverage Risk Avoidance - $6,749,796
- Reduction in Maintenance of Competitive Products - $1,576,000
- Reduction in Existing Tivoli Maintenance (Storage and Monitoring) - $1,490,000
- Tape System Purchase Avoidance - $1,481,911
- Increased Availability - Storage Management - $1,409,431
- Normalized 11% growth (additional licenses cost avoidance) - $1,193,000
- IT Operations Labor Savings - Storage Management - $982,919
- Network Bandwidth Savings - $575,196
- Standardization - $366,667
- Future cost avoidance of addtional competitive licenses - $350,000
The proposed project is expected to help the company meet the following goals and drive the following benefits:
- $6,456,025 in IT cost reductions
- $1,559,667 in business operating efficiency improvements
- $8,159,227 in business strategic advantage benefits
To implement the proposed project will require a 3 year cumulative investment of $5,760,094 including:
- Reduce Business Risks $6,749,796
- Consolidate and Standardize IT Infrastructure $4,975,667
- Reduce IT Infrastructure Costs $2,057,107
- Improve IT System Availability / Service Levels $1,409,431
- Improve IT Staff Efficiency / Productivity $982,919
Comparing the costs and benefits of the proposed project using discounted cash flow analysis and factoring in a risk-adjusted discount rate of 9.5%, the proposed business case predicts:
- $0 in initial expenses
- $4,650,000 in capital expenditures
- $1,110,094 in operating expenditures
Note: The project has been risk-adjusted for an overall deployment schedule of 5 months."
- Risk Adjusted Return on Investment (RA ROI) of 172%
- Return on Investment (ROI) of 181%
- Net Present Value (NPV) savings of $8,425,014
- Payback period of 9.0 month(s)
IBM Tivoli Storage Manager uses less bandwidth, fewer disk and tape storage resources than EMC Legato. For even a large deployment of this kind, payback period is only NINE MONTHS. Generally, if you can get a new proposed investment to have less than 24 month payback period you have enough to get both CFO and CIO excited, so this one is a no-brainer.Perhaps this helps explain why TSM enjoys such a larger marketshare than EMC Legato in the backup software marketplace. No doubt Scott might be able to come up with a counter-example, a very small business with fewer than 10 employees where an EMC Legato deployment might be less expensive than a comparable TSM deployment. However, when it comes to scalability, TSM is king. The majority of the Fortune 1000 companies use Tivoli Storage Manager, and IBM uses TSM internally for its own IT, managed storage services, and cloud computing facilities.