Identifying and Reducing IT Transition Costs

Mark TellezManager, Business Development Servers

Advanced Micro Devices

9th September, 2003

2

Enterprise Spending Patterns Are Shifting …

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01

IT

Hardware

Profits

With less money to spend, corporations are taking a much more disciplined look at how and how much to spend on IT.

Global Corporate Profits and IT Spending Growth

Source: IDC, “After Iraq: IT Spending 2004-2007” 1Q03

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… As Are Enterprise Priorities

Purchase Criteria:

Financial metrics such as TCO are displacing product performance metrics.

0% 5% 10% 15% 20% 25% 30%

Scalability

Performance

Ability toIntegrate

Total Cost ofOwnership

Reliability

2003

2002

Source: Evans Data; “Luxury models face cost-conscious buyers”; CNET News.com May 13, 2003

Survey of Database Customers

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What Is Going On?

Past Future Focus

Automation Replacement IT Strategy

5

What Is Going On?

Past Future Focus

Automation Replacement

Return Investment ROI

IT Strategy IT Strategy

6

What Is Going On?

Past Future

Automation Replacement

Return Investment

System Transition Cost

ROI

IT Strategy IT Strategy

Focus

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Many Of Today’s Transition Costs Are Unnecessary

Does upgrading to the next generation of technology require you to…

… hire on additional staff or consultants?

… upgrade additional components?

… retrain the user base?

… retool software?

… throw away existing infrastructure?

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Disruption costs are unnecessary transition penalties in the form of costs and/or time to either IT staff or end-users

Unnecessary Transition Costs = Disruption Costs

These excessive transition penalties we call disruption costs demand more attention in today’s IT environment.

Does upgrading to the next generation of technology require you to…

… hire on additional staff or consultants?… upgrade additional components?… retrain the user base?… retool software?… throw away existing infrastructure?

Does upgrading to the next generation of technology require you to…

… hire on additional staff or consultants?

… upgrade additional components?

… retrain the user base?

… retool software?

… throw away existing infrastructure?

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Origins of Disruption Costs

Technology for technology’s sakeRace for fastest and best, ie: Moore’s law

Vendor–centric innovationSecure and control

Lack of competitionAllows inefficiencies to continue

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Understanding the “Migration Penalty”

• Significant investment:

– New Hardware, Software certification, training, services

– New instruction set requires steep learning curve

– Optimization can require intimate compiler knowledge

• Legacy applications must either migrate or perform poorly in emulation mode

• Downtime during migration

• Cost to rewrite and implement new administration policies

• “Y2K revisited” – research shows that the average migration project involves 100,000 lines of code, a four- to six-month time frame, and costs $821,000 for little perceived benefit.

(Aberdeen Group – “Strategically Attacking Software Sclerosis” An Executive White Paper February 2001)

Who pays for all of this? … one way or another YOU DO !!!

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Effects of Disruption Costs

Higher Disruption Costs…

Result in lower…

- Service levels

- Productivity

- IT job satisfaction

- Discretionary budget

-More expensive software

-More expensive hardware

-More expensive services

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Start measuring “disruption costs”

Implications for IT decision-makers

Ask for guarantees

Engage consultants for customization, not base level integration

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Implications for IT vendors

Future success in the IT industry will go to those companies that focus on lowering disruption costs.

Start with customer needs

1.

Drive innovation within standards2.

Collaborate with partnersOS, SW, motherboard manufacturers, system builders, OEMS, etc.

3.

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x86 32-bit – Content Delivery Servers

Proprietary UNIX 64-bit Large Business-Critical

Databases

Mainframe

x86 32-bit –Messaging Server

Proprietary UNIX 64-bit Server – Compute Farm

x86 32-bit File/Print Serversx86-64

32-bit File/Print ServersHandle more users

x86-64 64-bit Transaction

ServersReduce wait time

Mainframe

x86-64 64-bit Databases

ServersDeliver data faster

x86-6432-bit Content Delivery

Servers Reduce wait time

x86-6432-bit Messaging

ServerHandle more users

x86-64 64-bit Compute Farm Calculate data faster

Example: x86-based 64-bit Architecture

AMD64 has the potential to provide a single platform for the complex needs of the data center – reducing the costs by as much as 25 %. (Giga Information Group– Total Economic Impact Study, 2003

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X86 based 64bit technology: A Low Disruption Cost Future

One Enterprise, One Platform

By lowering disruption costs with an x86-based 64-bit architecture, we envision a day when a single processor platform will efficiently fulfill the needs of an enterprise IT architecture.

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x86-based 64-bit technology in action

88 Systems

6 Systems

256 Systems490 Systems 35 Systems

1058 Systems20 Systems

20 Systems

256 Systems

1400 Systems

10,136 Systems

24 Systems

152 Systems

20 Systems

1250 Systems

>500 Systems

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Trademark Attribution