Executive Summary

Wikibon has extended its prior analysis of HP's introduction of Intelligent Racks and Gen8 servers to answer the questions:

1. What is the contribution of Intelligent Racks to the potential benefits of the new architecture?
2. Should Intelligent Racks be used for all infrastructure as converged infrastructure (servers, storage, and networking) becomes the norm over the next five years?
3. What is the financial return of replacing racks with Intelligent Racks over a four year period for all equipment (servers, storage, and networking)?

Wikibon found that the Intelligent Rack contributes about 70% of the benefit, for less than 6% additional cost (hardware and implementation cost). This makes the installation of Intelligent Racks as a standard for the data center a “no brainer” decision – it is cost-justified even if only 10% of the equipment in the rack can take full advantage of the environments.

Several vendors, including APC, HP, IBM, SuperNAP, as well as others have Intelligent Racks on the market. The APC rack focuses on power supplies, while the IBM rack focus is cooling. The SuperNAP is high function but focuses on its specific outsourcing environment. Wikibon believes that the HP system is superior in that it allows identification of physical assets in a simple way, in addition to providing the framework for improved asset management, power management, equipment management, equipment utilization, and software management.

Wikibon recommends that HP Intelligent Racks be installed as a standard and that converged infrastructure equipment that can take advantage of the environment be deployed as a standard. All makers of IT equipment (servers, storage and networking) should add the capability of participating with the best-of-breed intelligent HP rack infrastructure.

Methodology

Wikibon uses a Standard Company IT Model as the basis for studying the effect of technology changes within the IT infrastructure on IT budgets. This modeled company has $1 Billion in revenue, has 4,000 employees, and has a revenue per employee of $250,000. The assumption is that IT spend is 3% of revenue ($30 million), with the breakdown shown in Figure 1.

Table 1 – Standard Wikibon IT Budget
Source: Wikibon 2012

In previous research, Wikibon analyzed the potential benefit of Intelligent Racks and HP Gen8 server technology if adopted across the board on all servers. In our new research, Wikibon has focused on the intelligent racks and applying the application of this technology to server, storage, and network units that can take advantage of the improved management capabilities. In addition, a Return on Assets (ROA) analysis shows the benefits of replacing the installed infrastructure over four years. The Wikibon Standard Company model assumes 40 racks of IT equipment are installed, at a cost of approximately $153,000 per rack per year. These are upgraded 10 racks at a time over four years.

The first step in the analysis was to assess the benefit contribution of the Intelligent Racks and the equipment in the racks. Both components are required, but Table 2 shows that the major contribution (~70%) comes from the rack, and about ~30% comes from the equipment.

Table 2 – Allocation of Intelligent Infrastructure Benefits on Wikibon Standard Company Server IT Budget (Assuming Full Implementation)
Source: Wikibon 2012

ROA Analysis for Intelligent Racks

Table 3 shows the benefit of replacing the 40 standard racks currently installed in the Wikibon Standard Company Model with Intelligent Racks at the rate of 10 racks per year. It shows that the annual additional cost is about $85,000 dollars, and the annual benefits are about $300,000. At this replacement rate, the ROA analysis shows that the Net Present Value of the investment would be a reduction of $1.8 million dollars (on a total IT spend of $30 million dollars per year).

The model assumes that the racks would be replaced with converged infrastructure equipment that could take advantage of the Intelligent Racks. Even if only 10% of the equipment could take advantage of the intelligent racks, the implementation would be cost justified.

Table 3 – ROA Analysis of the Benefit of Intelligent (Implementation of Intelligent Racks over Four Years)
Source: Wikibon 2012

Conclusions and Recommendations

Wikibon conclusions and recommendations are as follows:

• Intelligent Racks are a “no brainer” investment and should be adopted as a standard by all data centers. About 70% of the improved asset management benefits come from the Intelligent Rack itself.
• The differences in standard IT infrastructure equipment are likely to be much less important than the potential benefits of compatibility with Intelligent Racks. Compatibility with intelligent servers should be a standard requirement unless an overwhelming business case is presented.
• All data center equipment manufacturers should make their equipment compatible with Intelligent Racks in general. At the moment, the HP Intelligent Rack is best-of-breed and should be used as the de facto standard until and unless other improved standards appear.
• IT management should build software and processes around Intelligent Racks to improve utilization of all IT assets, including servers, storage, networking, power, cooling, space, software licenses, and operational staff.

Action Item: Wikibon recommends that CIOs and CTOs should implement Intelligent Racks as a standard for all rack-based equipment in the data center. The HP Intelligent rack is best of breed at the moment. IT management should demand compatibility with this standard from all IT infrastructure equipment vendors, or demand that a better alternative be provided.

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