Private Cloud Benefits with the Economics of Public Cloud: A win-win situation for CIOs & CFOs

Vikram Kumar YerramCountry Manager – Technology Services Support26th February, 2016

New Style of Business

CxO Choices

HPE Flex Capacity Offering

Q&A

Agenda

Time Value of Money

ANSWER: Compound Interest

20 year old Britney makes a one-time $5,000 contribution to a retirement fund that grows at 8% per annum

If she never touches it until she retires at 65, how much will she have?

$159,000

If she waited until she was 39 to make her one-time $5,000 contribution, how much would it grow to?

$37,000

‘A Dollar today is worth more than a Dollar tomorrow’Compound interest is an example of growth that we all understand

Albert Einstein was once asked what is the most powerful force on Earth… What was his answer?

Taxi-hailing apps like Uber, Ola could eat into auto salesAnand Mahindra has warned the auto

industry against rising competition from taxi-hailing apps such as Uber and Ola, saying it could push some people into giving up on ownership of cars and pose a threat to auto industry volumes.

"The age of access is here. There is going to be increasing number of people who would want access to transportation and not own object of transportation. So what are the opportunities?" 

Time to Value is enemy #1Leading enterprises will be able to alter their digital DNA continuously

Time

Idea

Valu

e

Value

$Va

lue

Time

Continuousvalue

creation

People DataApps

$

Today Tomorrow

Cost OptimisationCost

Cost Optimisation

Your IT is now central to the success of your business, but we are all being asked to cut costs.

Imagine having a total IT solution that enables you to reduce cost, pay for what you consume and measure that cost for your business, for your customers.

Challenge 1:

Reduce Risk Your IT is enabling your business to

change, to stay ahead of it’s competitors. But change brings risk. Risk to the business, risk to procurement, risk to your IT environment.

A solution that gave you access to the latest technologies, always access to enough capacity, and that delivered enterprise-grade support…where the solution simply works?

Confidence

Reduce Risk

Challenge 2:

Time to Value Time moves quickly, and so does your

business. It has to adapt fast, and be agile in the market. Time to value is key.

Imagine being able to scale up your capacity to meet those changes in minutes, not months, but only pay for what you actually consume.

Speed

Time to Market

Challenge 3:

In the Idea Economy, IT is the business partner for value creationIT must now be able to support two operating environments

New Style of Business

TraditionalBusiness

Traditional Apps

Cloud Apps

− Ops Driven− Cost Focused

− Apps Driven− Agility

Focused

Technology Services to help customers today and bridge into the future

Many Choices

Buy & Build

Lease & Use

Consume and Pay-per-UseHow should I pay for them?(‘How to Buy’ = financing decision)

What assets should I acquire?(‘What to Buy’ = investing decision)

A dilemma for IT leaders“I want a public cloud experience,1 with the benefits of on-premises IT”2

Build on-premise

infrastructure

Consume IT from the cloud

Pros: • Rapid Scalability• Pay per use• No up-front capital• Use a service, not manage IT

Cons:• Less control• Not managing Security,

Compliance• Latency issues• Data sovereignty issues

Pros: • Choose your server, storage,

networking, software• Manage your datacenter• Control security, compliance

Cons:• Invest capital• Overprovision to handle

growth• Manage months-long

procurement cycles

Private cloudManaged cloud

Traditional IT Public cloud

1 Ease of start-up, several pricing models, OPEX treatment, flexible usage for Compute, storage, and networking2 Control, security, legacy workloads, lower latency, data location, enterprise-grade SLA from HP Technology Services

HPE Flexible Capacity

There is an alternative: HPE Flexible Capacity

– When large capital outlays and long procurement cycles no longer fit your business; when you want to pay for what you use

– When you need the IT capacity ready for surges in demand

– For your data and workloads that should stay on-premises, under your control

– For workloads that could expand to the public cloud

– When you need better than “best effort” SLAs

Pay only forwhat you use

Business application

Forecasted capacity

Local buffer

Increase capacity

Decrease capacity

No upfront fee. Single monthly invoice.

What makes HPE Flex Capacity the right service for a Customer?

• Clear business need for a client managed / on premise Cloud

• Lengthy procurement process• Rapid growth, but, unpredictable month to month• Need to align IT costs with usage and / or revenues• Customer IT team can provide day-to-day management• Customer has a lot of overcapacity and wants to move it

into FCS (Hybrid Model)

• Customer believes flexibility is cheaper per unit of computing

• Low forecasted growth• Customer wants to retain control of detailed

technology choices• Unclear future IT / Business strategy

How is HPE Flexible Capacity unique? …a public cloud experience with the benefits of on-premises IT

Unlike a Public CloudOn premises, with control over privacy, compliance, latency, and security; choose your technology

Unlike other “utility” offersInclude your whole IT estate- server, storage, networks, software; not tied to one vendor

Unlike a product leaseVariable payments based on actual metered usage; flexible technology refresh; payments vary up or down; easy change order process

Risk mitigation with a pay-for-actual-usage model*How Flexible Capacity works

• Avoid lost profits due to CAPEX purchase over provisioning

• Maintain a safe buffer of capacity: 10 percent to 40 percent depending on need

• Monitor and replenish as needed: “Capacity ahead of demand”

• Pay only for actual capacity used* (purple dotted line) not deployed (black line)

• Facilitate cloud migration

Capacity ahead of demand

Traditional purchases (CAPEX)

Buffer

Compute needed and invoiced

Time

$

Minimum commitment level

Flexible Capacity Savings

Flexible Capacity Savings

* Subject to a minimum commitment

HPE Flexible Capacity optionsFrom Upfront Investment ahead of Revenue to Consuming Infrastructure as a Service: pay only for the servers, storage, networking capacity, software licenses, support, and services you actually need and use each month

Monthly Payment Includes1

– Servers– Storage– Networking – Software– Services– 3rd Party

considerations

Variable usage = variable payment– Financially, operating at 100% utilization– No upfront costs & no budget surge when you

are at capacity

– Business cost aligns with business demands

1 Minimums apply below certain usage levels

– Software defined Storage /– Hyperconverged – Flexible VM metering, monitoring,

billing– Helion OpenStack products– Certain Microsoft Azure svcs

– Servers Per blade or VM

– Storage Per GB

– Network Per Port– Converged Systems for SAP Hana– HPE Software And SaaS– Support Service Provider’s environment– Microsoft, VMWare, Red Hat operating environments– Microsoft Azure Per VM

– HPE Helion OpenStack

New

TIME VALUE OF MONEYCapex Vs Flexible Capacity -> Over-Provisioning –> 0 - 30% lesser cash deployed monthly due to Pay-per-Use in FC (80% minimum commit level)

1 2 3 400.00

50,000,000.00

100,000,000.00

150,000,000.00

200,000,000.00

250,000,000.00

Total An-nual Pur-chase Costs(INR) Total An-nual HP FC Costs(INR) 1 2 3 4

00.0050,000,000.00

100,000,000.00150,000,000.00200,000,000.00250,000,000.00300,000,000.00350,000,000.00

Total Purchase Costs(INR)

Cost of Cash over time: Capex Vs FC -> FC Cheaper by 38-40%

Capex vs FC (Currency: INR) Y1 Y2 Y3 Y4 Cumulative CashCost of Funds deployed 8% 8% 8% 8% 

Cumulative Cash Deployed in Capex 20,08,42,041 23,55,16,908 27,62,56,587 32,30,64,075 32,30,64,075

Cost of Cash Deployed in Capex 1,60,67,363 1,88,41,353 2,21,00,527 2,58,45,126 8,28,54,369Cumulative Cash Deployed in FC Model 4,92,98,375 11,45,13,865 18,64,15,770 26,69,90,430 26,69,90,430

Cost of Cash Deployed in FC Model 3,94,3870 91,61,109 1,49,13,262 2,13,59,234 4,93,77,475

FC Includes a Rolling window with Technology RefreshAssuming ‘useful life’ of datacentre equipment is 4 years:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Tech Refresh

EOL

EOL

EOL

EOL

EOL

• All HW/SW installed in Year 1 is refreshed in Year 5

• For HW/SW installed in year 2, refresh is done in year 6

• For HW/SW installed in year 3, refresh is done in year 7

• For HW/SW installed in year 4, refresh is done in year 8

As Hybrid becomes the fabric of ITHybrid-Ready IT with HPE Flexible Capacity

• HP Flexible Capacity: Pay-as-you-grow capacity

• New metering and payment per virtual machine

• New expansion to HP Helion Public Cloud

• Hybrid IT must be seamless – One pool of capacity

• IT-as-broker – Some workloads can use public cloud, some stay on premises

• Enterprise quality support required for all Hybrid IT

• Increase agility – Ready on demand to match business growth

• Flexibility – Provision for immediate needs in minutes, not hours

• Hybrid Support enables the same enterprise-quality support as in the data center today

Features Problems it solves Customer benefits

Flexible Capacity End to End Process

FlexibleCapacity

Process repeats with invoicing and data

collectionMonthly invoice

sent to customer

Usage report on FC portal

Metering and data collection enabled and data

is gathered

HPE installs, configures systems

and meters

Hardware & Software Shipment

Sign Contract

Requirements and business drivers17

35

26

4

Star

t her

e

What do customers say about Flexible Capacity?

Example: Predictable cost & high-performance Storage infrastructure

Large Multi-National Telecom Equipment Manufacturer with more than 33,000 active patents, 8 Nobel Prizes shared by 14 Bell Labs researchers

From cash flow and budget perspective - they needed a complex and cost-effective solution (paying for what they use) tailored to their technical requirements so they could easily invest in their own IT projects From the infrastructure perspective - they had to de-risk critical business related infrastructure by reducing heterogeneous and legacy platforms and move to new future-state infrastructure. From usage perspective - because the storage was growing dramatically their capacity required an instant upgrade

They required from their future vendor: zero impact of change, guaranteed continuous IT-operations, OPEX model for capacity ramp-up and pay-as-you consume model ensuring business and cash flow stability.

Customer

Value

- Deferred Cash expenditure- Optimization of schedule for future state platforms- Reduction in overall infrastructure spend- Refresh plans executed well in advance of EOSL- Key financial KPIs achieved for both savings and cash protection- Reduction in run-rate costs- Additional storage as a back-up environment for data center in India- Monthly invoices for current customer's use of capacity and storage

Customer Business

Challenges

HPE Flexible Capacity: Agility and confidence

– Zero up-front capital—utility based billing model

– Optimized to usage—don’t overprovision

– Pay per use*, match cash flows to usage

Cash Pay for what you use*

ConfidenceEnterprise-quality support– Improve operational

efficiency

– Build IT stability

– Elastic—provision more capacity in minutes, not weeks

– Unlimited—refreshed as it is used

CapacityTime-to- market

ControlOn premises when you need it– Legacy workloads

– Privacy

– Latency

– Sovereignty

– Security, compliance

* Subject to minimum capacity commitment

Thank youMany customer videos are available on Youtube. Go to Youtube.com and search for “HPE Flexible Capacity”