Financing business innovation Data Centre and Virtualisation Architecture

© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 1

I N T E R N A LO N L Y

Financing business innovationData Centre and Virtualisation Architecture[Name][Title]


Total solution financing

Alternative source of

capital

Protection from tech obsolescence equipment lifecycle management

Matchingbenefits with costs

Flexibility to upgrade to more

green technologies

Cash preservation/ minimise upfront investment

Every organisation needs financing...


The ‘new normal’…has become the ‘new reality’…• Ongoing disconnect – ‘do more for less’ while the need for agility and

growth

• Companies using financing to improve working capital and balance sheet positions

• Technology trends driving IT to replace CapEx approach with more flexible OpEx-based models

• De-capitalisation of IT projects is an essential business case enabler


Market realities are driving IT to adopt variable capital management

These trends are driving organisations to look for more flexibility

IT Leasing Cloud Computing Software as a Service

Managed ServicesVirtualisationIT OutsourcingCapacity on Demand

Manifestations of a broader theme:The need to de-capitalise IT


IT de-capitalisation

IT Equipment Stretch lifecycles Improve utilisation Used equipment

IT Software Highly selective

buys One-year payback New service

management tools

IT Services Maintain reliability Improve efficiency Even more

outsourcing

Equipment leasing

Software financing

Cloud economic

sLifecycle analysis

IT financial

mgmt

IT is maturing

Lower IT investment budgets Just-in-time IT spending Different acquisition models


Technology issues

Management costs Energy costs

Time to implementatio

nTime to benefits

Legacy costs

KPIs/ metric alignment


Financial issuesCost of

technology increases over

time

Technology is often used

beyond its true economic life

Cost of asset disposal

Large upfront acquisition

costs

Operating costs outweigh

acquisition costs

Difficult to scale and cost on a per user

basis

Latency of investment and refresh cycles

Benefits timing versus costs

Balance sheet constraints

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Diversification of lending

Why organisations use vendor financing

Purchasing simplification

Vendor accountability

CapEx preservation

Short-term OpEx availability

OpEx predictability

The decision is not only what technology to acquire,how to acquire the right technology is just as critical


Financial flexibilityBusiness and technology alignment Synchronicity of

business and technology change

Technology change New projects/

initiatives Technology

updates/ end of useful life

Financial Architecture All stages of your

technology lifecycle Driving greater alignment

and responsiveness


Capital optimisation

Flexible end-of-lease options

Lower cost of acquisition

Expenses matched with arrival of benefits

Tailoredfinancialsolutions

Attractive migration choices

Optimised lifecycle management

Less financial and operational risk

Maximised shareholdervalue

Financing business innovation


‘Better way of using our working capital’

Obsolescence protected

‘Makes Cisco affordable’

‘Stretched out cost to match revenue coming in’

‘Pay as you go’

De-risked swapping Partner and blades

‘Scale out’ capabilities

‘…and speeds up ROI’

Maximised budget

Financing data centre innovation


DCV Financing Solutions


Greater business flexibilityBenefit Step

FinancingMulti-Term

FinancingPay As

You GrowFlexible Demand

Lower upfront cost of acquisition

Immediate budget creation

Flexible payments

Match payments to business benefit

Accelerated breakeven

Off balance sheet financing

Pay as you grow benefits

Improved asset managementFaster ramp-up through staged capacityAbility to evaluate/ return unused buffer capacityVariable billing on a usage basis above minimum commitment


Step FinancingPay less in the early stages of the Cisco Data Center implementation and ‘step up’ payments over time.Allows better alignment of costs to business benefits.

Time (Months)603015 45

Financing Payments

Committed Payments

Cust

omer

Pay

men

ts t

o Ci

sco


Multi-Term FinancingForgo the upfront purchase of server capacity that is not immediately required, and have the flexibility to refresh blades more frequently over time.Accelerate the time to break-even on the data center investment.

6 36..................................................................60

2412 18 300

Time (Months)

Blades/ Expansion Cards

Chassis & Base Kit

Blades/ Expansion CardsBlades/ Expansion Cards

Committed Payments

Cust

omer

Pay

men

ts t

o Ci

sco


Pay As You GrowReady-to-use, continuous replenishment, on-site inventory with payment deferral, payments financed

6 36..................................................................60

2412 18 300

Time (Months)

Committed Payments

Cust

omer

Pay

men

ts t

o Ci

sco

Base capacity

$

$

$

$ Deferred invoice in arrears

demand

Buffer capacity

$


A shared-risk consumption model for Cisco Unified Computing System with payments based on usage

Time (Duration of Contract)

Cust

omer

’s P

aym

ents

to

Cisc

o

Fixed paymentlocked into

a lease/ loan

Variable payments

billed monthly as used

usage

Baseline capacity

Flexible Demand


Flexible Demand for Cisco Unified Computing System

I N T E R N A L


• Sky Bet primarily offer an online sports betting service • Sky Poker is one of the UK's leading online poker rooms• Sky Vegas is where you can find all the best games all in one

place• Sky Bingo lets you play bingo online and connect with a great

community of bingo playersCustomer Challenge• Sky Bet needed a flexible solution to assist with their seasonal

business• Sky Bet wanted a partner to share the risk of capacity utilisation• Sky Bet needed a flexible technical solution that delivered

consolidation, efficiencies and ease of operational use


Competition• HP incumbent for over 24 months• Procurement resistant to change and driving a pricing discussion

Strategy & Execution• Cisco moved the goal posts to focus the discussion on architecture,

efficiencies and total cost of ownership• Initiated a move to Nexus technology from Catalyst 6K, which set Sky

on the path to a Unified Fabric architecture across their business• Strategic UCS insertion gave the team the opportunity to demonstrate

the benefits across the corporate estate• Sky visited San Jose to meet experts - adopted UCS almost

immediately• Sky's CFO calling for £50m per annum savings allowed Cisco Capital to

be positioned for the very first time into Sky• Flexible Demand was proposed to map against the seasonal nature of

Sky Bet business. Sky pay for additional computing power when they need it, spinning up the UCS devices during peak traffic and switching them off during the quieter periods


Paym

ents

to C

isco

Time

Initial commitment aligned to baseline capacity requirements

Flexible Demand

• 100% equipment deployed day one for maximum capacity• 75% initial base commitment (x blades)• 25% variable capacity (flexible demand) (x blades)• Initial commitment charged quarterly in advance – $ / blade / month• Monthly report to measure active blade usage on UCS• Flexible demand blades charged quarterly in arrears – $ / blade /

month $5m+ UCS revenue over the next 5 years

© 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 24© 2012 Cisco Systems, Inc. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. A listing of Cisco’s trademarks can be found at www.cisco.com/go/trademarks. Third-party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. (1009R)

24

Internal Case StudyGaming

Cisco Capital Flexible Demand provides Cisco with first UCS pay-per-use model

"Breaking ground with new business models is always challenging but Cisco Capital gave us real differentiation and was one of the major factors in successfully displacing HP from the data centre.“

Elliott HandworkerCisco Account Manager

Customer Scenario• HP server infrastructure struggling to cope with demand spikes from large

sporting events and in-play betting markets• Big sales challenges: technical team resistant to change; while

procurement wanted to drive a pricing discussion

Solution• Cisco UCS and Nexus solution acquired using new Flexible Demand model

from Cisco Capital, a first for Cisco worldwide• Enables Sky Bet to rapidly spin up UCS blades when demand for compute

power peaks and turn them down during quieter periods

Cisco Capital Significance • For the customer: True capacity on demand (customer pays 75%

baseline commitment with 25% buffer); costs closely aligned with income; further savings from operational efficiencies

• For the Cisco account team: Displaced HP from the account; opportunity to position Cisco Intelligent Automation for Cloud and sell through to other Sky businesses; global first and replicable pay-per-use modelFind more examples of how our customers are using financing from Cisco Capital

http://wwwin.cisco.com/europe/capital/casestudies/


Let’s start working together• We can create a robust business case

that supports the business and IT strategy

• Projects must be proven to provide faster payback, with less operational risks in order to be considered for approval

• This is further compounded by traditional funding models being unable to satisfy standard key financial metrics such as cost of capital, ROI, PPU

• These factors are driving a stronger three-way partnership between the CEO, CFO and CIO. This team is collectively responsible for combining IT investment with both business strategy and financial decisions

• Cisco Capital is your enabler.

Thank you.

Documents

Financing business innovation Data Centre and Virtualisation Architecture