Identifying and Reducing IT Transition Costs

1. Identifying and Reducing IT Transition Costs Mark Tellez Manager, Business Development Servers Advanced Micro Devices 9th September, 2003

2. Enterprise Spending Patterns Are Shifting … Global Corporate Profits and IT Spending Growth With less money to spend, corporations are taking a much more disciplined look at how and how much to spend on IT. Source: IDC, “After Iraq: IT Spending 2004-2007” 1Q03

3. Survey of Database Customers Reliability Total Cost of Ownership Ability to 2003 Integrate 2002 Performance Scalability 0% 5% 10% 15% 20% 25% 30% Source: Evans Data; “Luxury models face cost-conscious buyers”; CNET News.com May 13, 2003 … As Are Enterprise Priorities Purchase Criteria: Financial metrics such as TCO are displacing product performance metrics.

4. What Is Going On? Past Future Focus IT Strategy Automation Replacement

5. What Is Going On? Past Future Focus IT Strategy IT Strategy Automation Replacement ROI Return Investment

6. What Is Going On? Past Future Focus IT Strategy IT Strategy Automation Replacement ROI Return Investment Cost System Transition

7. 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? Many Of Today’s Transition Costs Are Unnecessary

8. 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… 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? Disruption costs are unnecessary transition penalties in the form of costs and/or time to either IT staff or end-users … hire on additional staff or consultants? … upgrade additional components? … retrain the user base? … retool software? … throw away existing infrastructure?

9. Technology for technology’s sake Race for fastest and best, ie: Moore’s law Vendor–centric innovation Secure and control Lack of competition Allows inefficiencies to continue Origins of Disruption Costs

10. 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 !!!

11. 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

12. Implications for IT decision-makers Start measuring “disruption costs” Ask for guarantees Engage consultants forcustomization, notbase levelintegration

13. Start with customer needs 1. Drive innovation within standards 2. Collaborate with partners OS, SW, motherboard manufacturers, system builders, OEMS, etc. 3. Implications for IT vendors Future success in the IT industry will go to those companies that focus on lowering disruption costs.

14. x86-64 32-bit Messaging Server Handle more users x86-64 32-bit Content Delivery Servers Reduce wait time x86 32-bit – Messaging Server x86 32-bit – Content Delivery Servers Proprietary UNIX 64-bit Server – Compute Farm x86-64 64-bit Compute Farm Calculate data faster x86-64 64-bit Transaction Servers Reduce wait time Mainframe Mainframe Proprietary UNIX 64-bit Large Business-Critical Databases x86-64 64-bit Databases Servers Deliver data faster x86 32-bit File/Print Servers x86-64 32-bitFile/Print Servers Handle more users 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 as25 %. (Giga Information Group– Total Economic Impact Study, 2003

15. X86 based 64bit technology: A Low Disruption Cost Future 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. One Enterprise, One Platform

16. 1400 Systems 6 Systems 20 Systems 20 Systems 20 Systems 24 Systems 490 Systems 1058 Systems 152 Systems 256 Systems 256 Systems 35 Systems 88 Systems 10,136 Systems x86-based 64-bit technology in action >500 Systems 1250 Systems

18. Trademark Attribution AMD, the AMD Arrow logo, AMD Opteron, and combinations thereof are trademarks of Advanced Micro Devices, Inc. Other product and company names used in this presentation are for identification purposes only and may be trademarks of their respective companies.