Cost benefit analysis of virtualization of servers for a company.

3-3SpreadsheetExampleInNotes.xlsx

Variables

Variables used in the spreadsheets
	value	variable name	comment
current	20	currNumServers	current number of servers (physical)
	300	currServerMaintenance	current server maintenance contract cost/year/server
	1.03	year4SMIncrease	increase in server maintenance cost beginning year 4
	75	currAdminCost	current administrative cost/hour in dollars
	1000	powerCostPerYear	cost of power for 1 server/year – current base rate
	1.02	year3PowerIncrease	increase in power cost per kWH starting year 3
	0	currOutsideServiceCost	current outside services hard cost total
admin	0.25	backupTime	time in hours to back up 1 server/day
	168	adminTime	time in hours to administer 1 server/year
proposed	3	numNewServers	number of new servers to be purchased
	21000	costNewServer	cost of each new server
	4000	costNewSoftware	cost of new virtualization software/server
	0.2	costSoftwareMaintenance	cost of new software maintenance contract (% of cost, $0 year 1)
	600	newServerPowerCost	cost of powering 1 new server/year
	2100	newServerMaintenance	cost of new server maintenance contracts/year
	2	numTraineesYr1	number of employees needing training in year 1
	1	numTraineesAfterYr1	number of employees needing training after first year
	1500	trainingCost	cost to train 1 new employee/year
constants	52	weeksPerYear	number of weeks/year
	24	hoursPerDay	number of hours/day
	8	adminDay	number of hours/administrative day
	2080	adminHoursPerYear	number of hours an administrator works per year (= 8 hrs/day * 5 days/week * 52 weeks/yr)
	168	hoursPerWeek	number of hours in 1 week (7 day week) (= 24 hrs/day * 7 days/week)
	365	daysinYear	number of days in 1 year
	260	adminDaysPerYear	number of administrative days per year (5 days/week * 52 weeks/yr)

Current Cost Structure

Current Yearly Costs
Category	Cost					Notes
	Year 1	Year 2	Year 3	Year 4	Year 5
Hard Costs
Power	20,000.00	20,000.00	20,400.00	20,400.00	20,400.00	20 servers X $1000/year
Server Maintenance	6,000.00	6,000.00	6,000.00	6,180.00	6,180.00	20 servers x $300/year
Outside Services	0.00	0.00	0.00	0.00	0.00	all operations handled by staff
Total Yearly Hard Costs	26,000.00	26,000.00	26,400.00	26,580.00	26,580.00
Total Five Year Hard Costs =	131,560.00
Soft Costs
Machine Administration	252,000.00	252,000.00	252,000.00	252,000.00	252,000.00	assume 1 week/server/year
Backup	136,875.00	136,875.00	136,875.00	136,875.00	136,875.00	assume 15 min/day/server
						assume $75/hr administrative cost
Total Yearly Soft Costs	388,875.00	388,875.00	388,875.00	388,875.00	388,875.00
Total Five Year Soft Costs =	1,944,375.00
Total Yearly Current Costs =	414,875.00	414,875.00	415,275.00	415,455.00	415,455.00
Total Five Year Costs =	2,075,935.00

Virtualized Cost Structure

Virtualized Infrastructure Yearly Costs
Category	Cost					Notes
	Year 1	Year 2	Year 3	Year 4	Year 5
Hard Costs
Machine Purchases	63,000.00					3 servers x $21K/server
Software Purchases	12,000.00					VMWare/server
Software Maintenance	0.00	2,400.00	2,400.00	2,400.00	2,400.00	3 VMWare at 20% maintenance
Power	1,800.00	1,800.00	1,836.00	1,836.00	1,836.00	3 servers x $600/year
Server Maintenance	6,300.00	6,300.00	6,300.00	6,489.00	6,489.00	3 servers x $2100/year
Training	3,000.00	1,500.00	1,500.00	1,500.00	1,500.00	2 employees year 1, 1/year thereafter
Outside Services	0.00	0.00	0.00	0.00	0.00	all operations handled by staff
Total Yearly Hard Costs	86,100.00	12,000.00	12,036.00	12,225.00	12,225.00
Total Five Year Hard Costs =	134,586.00
Soft Costs
Machine Administration	37,800.00	37,800.00	37,800.00	37,800.00	37,800.00
Backup	20,531.25	20,531.25	20,531.25	20,531.25	20,531.25
Total Yearly Soft Costs	58,331.25	58,331.25	58,331.25	58,331.25	58,331.25
Total Five Year Soft Costs =	291,656.25
Total Yearly Proposed Costs =	144,431.25	70,331.25	70,367.25	70,556.25	70,556.25
Total Five Year Costs =	426,242.25

Project Cost Summary

Virtualization Project Cost Summary
	Category	Cost
		Year 1	Year 2	Year 3	Year 4	Year 5
Current Infrastructure Costs
	Total Yearly Hard Costs	26,000.00	26,000.00	26,400.00	26,580.00	26,580.00
	Total Five Year Hard Costs	131,560.00
	Total Yearly Soft Costs	388,875.00	388,875.00	388,875.00	388,875.00	388,875.00
	Total Five Year Soft Costs	1,944,375.00
Virtualized Infrastructure Costs
	Total Yearly Hard Costs	86,100.00	12,000.00	12,036.00	12,225.00	12,225.00
	Total Five Year Hard Costs	134,586.00
	Total Yearly Soft Costs	58,331.25	58,331.25	58,331.25	58,331.25	58,331.25
	Total Five Year Soft Costs	291,656.25
Net Five Year Hard Cost Savings		-3,026.00
Net Five Year Soft Cost Savings		1,652,718.75
	Net Five Year Overall Cost Savings	1,649,692.75

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