Intel® Xeon® Processor ROI Estimator Tools

Refreshing the Infrastructure for McKesson Solutions Delivers Unexpected ROI

Upgrading McKesson solutions in combination with refreshing servers based on the Intel® Xeon® processor delivers a greater return on investment (ROI) than upgrading software alone. While many healthcare institutions focus on system upgrades to deliver new functionality, they often overlook the benefits of replacing the underlying server infrastructure. Because of current economic conditions, many healthcare institutions have postponed capital expenditures because it is often difficult to determine the potential ROI. Based on the rapid innovation in the technology sector, however, investments in areas such as server infrastructure can in many cases pay for themselves in a matter of months.

The timing is excellent for healthcare institutions to reap financial benefits from technology upgrades. Replacing server hardware at the same time as software creates an environment that requires fewer servers, less energy, and less space. The implementation is streamlined, since the new infrastructure is more homogeneous and can be brought online with minimum disturbance to existing production systems. Modernizing infrastructure for McKesson solutions delivers a broad spectrum of customer benefits:

• Drive up solution value. Take advantage of engineering collaboration between McKesson and Intel, which has led to optimizations that yield dramatic gains in performance and energy efficiency.
• Refresh servers for performance. Do more with less. The Intel Xeon processor 5500 series delivers up to a 9x performance gain per server over single-core servers, which can enable as much as 9:1 server consolidation.*
• Cut energy costs. Reduce energy consumption and cooling requirements in your data center for lower ongoing operating costs. Current processor technologies can provide up to 90 percent lower operating costs.
• Replace proprietary architectures. Reduce maintenance costs when you deploy McKesson solutions on Intel-based servers instead of RISC proprietary architectures.

To help quantify the financial benefits of new hardware purchases and justify the capital expenditure, Intel provides ROI estimator tools that easily and flexibly generate reports to bolster business cases and quantify project success.
Because many customers are not only upgrading aging Intel Servers, but also considering the financial impact of moving away from costly RISC-based platforms, Intel has developed two separate tools to support the development of a cost analysis. Both of these tools (referred to here collectively as the "ROI estimator tools") allow you to enter data about your existing server environment and evaluate the benefits of replacing aging server technology. You can run a simple analysis, customize your own scenario by changing input assumptions, print reports, and share feedback.

• Intel Xeon Processor ROI Estimator calculates the net cumulative savings from refreshing servers with new machines based on Intel Xeon processors.
• Intel RISC Migration TCO Calculator helps demonstrate the potential cost savings and business value from upgrading RISC server infrastructure to Intel platforms, versus replacing it with new RISC hardware. Contact your Intel or McKesson representative to take advantage of this tool.

Project teams and business analysts now have a simple, objective means of performing cost-benefit analysis associated with replacing servers. The process efficiently generates metrics such as year-over-year total cost of ownership (TCO) and ROI break-even points. Customers report excellent results—for example, Saint Luke's Health System recently used the Intel Xeon Processor ROI Estimator to justify an upgrade project. Director of Technical Services Gary Heston reports, "The tool is a good way to enter some very basic information and get an idea of magnitude and areas where returns on investment can be made."

Supporting Projects with Automated Financial Analysis

To ensure the full benefit from an upgrade to the most current version of McKesson software solutions, project teams need to quantify the potential benefit of upgrading hardware at the same time. IT organizations can't afford to miss a strong ROI opportunity, but they also need to see a data-driven business argument to guide them and justify the cost.

Beginning with simple input data such as the type, age, and number of servers in the existing environment, the ROI estimator tools generate equipment recommendations.

Based on the inputs provided, the ROI estimator tools calculate project equipment costs, migration costs, and operating costs. Robust reporting generates outputs in Microsoft Word or PowerPoint format that provide very detailed financial analysis tailored to corporate finance departments to show long-term cost/benefit outcomes associated with the server upgrade.

In addition to calculating financials such as four-year TCO, break-even point, and cost savings, the reports from the ROI estimator tools reveal the following financial insights:

• Capital expense differentiated from operational expense
• Tax implications of server refresh (e.g., depreciation and amortization)
• Comprehensive checklist of costs and expenses
• Cost of delaying server refresh

The outputs generated by the ROI estimator tools are highly graphical, with summary tables and charts suitable for reporting to upper management. At the same time, they also contain the depth of information that financial analysts need to drill down into a project's overall fiscal impact. Using the ROI estimator tools, project teams can quantify benefits accurately and easily, translating the language of IT into a form that chief financial officers will appreciate.

ROI Estimating Tools Help Customers Define the Opportunity

The ROI tools will help healthcare institutions understand the financial impact of modernizing their server infrastructure. Moreover, upgrading hardware not only saves on TCO but also helps ensure that customers get optimal results from their new McKesson solutions. Intel processor-based servers compare favorably to RISC hardware architectures such as IBM Power* or Sun SPARC* on a cost-per-compute-task basis, whether customers are replacing older servers or comparing the cost of implementing new ones. Server upgrades enable customers to free up their IT budgets to implement new initiatives that will ultimately deliver new services to the larger organization and have a positive effect on the bottom line.

*Source: Eight-month ROI claim estimated based on comparison between 2S single-core Intel® Xeon® processor 3.80 GHz with 2M L2 Cache and 2S Intel Xeon processor X5570-based servers. Calculation includes analysis based on performance, power, cooling, electricity rates, operating system annual license costs, and estimated server costs. This assumes 8kW racks, USD 0.10 per kWh, cooling costs are 2x the server power consumption costs, operating system license cost of USD 900/year per server, per-server cost of USD 6900 based on estimated list prices, and estimated server utilization rates. All dollar figures are approximate. Performance and power comparisons are based on measured SPECjbb2005* benchmark results (Intel Corporation, Feb. 2009). Platform power was measured during the steady state window of the benchmark run and at idle. Performance gain compared to baseline was 9x, while the platform power was 0.8x.

• Baseline platform: Intel® server platform with two 64-bit Intel Xeon processor 3.80 GHz with 2M L2 Cache, 800 FSB, 8x1 GB DDR2-400 memory, 1 hard drive, 1 power supply, Microsoft Windows Server* 2003 Ent. SP1, BEA JRockit* build P27.4.0-windows-x86_64 run with 2 Java* Virtual Machine (JVM) instances.
• New platform: Intel server platform with two quad-core Intel Xeon processors X5570, 2.93 GHz, 8 MB L3 cache, 6.4QPI, 12 GB memory (6x2 GB DDR3-1333), 1 hard drive, 1 power supply, Microsoft Windows Server 2008 Ent. SP1, BEA JRockit build P27.4.0-windows-x86_64 run with 2 JVM instances.