IDC ExpertROI® SPOTLIGHT
IDC ExpertROI® SPOTLIGHT
Digital Planet Speeds Time-to-Revenue With
Automated Cloud Solution
Nick Sundby Randy Perry
February 2012
Sponsored by HP
Executive Summary
Digital Planet, a leading Irish managed services provider, is addressing the
emerging cloud market opportunity, bringing enhanced reliability (up to 99.999%),
new service offerings, and greater agility to a market in transition. Leveraging HP's
cloud platform, it has been able to optimize its business offering, increasing
revenue while reducing costs and achieving a 96% ROI over the 10 months of
operation.
This document sets out IDC's assessment of the business value and
return on investment achieved by Digital Planet with its deployment of
HP's cloud infrastructure platform.
Business Value Highlights
Organization: Digital Planet
Location: Dublin, Ireland
Implementation
As a leading managed services provider, Digital Planet is focused on
providing enterprise-class infrastructure solutions to its clients in Ireland.
Formed in 2009 as an independent subsidiary of the HiberniaEvros
Technology group, Digital Planet offers an end-to-end infrastructure-asa-service (IaaS) and computing on demand solution suite on public and
private cloud platforms.
Brian Larkin, Digital Planet's co-founder and operations director, has a
clear vision for the business: "There's a strong desire among many
companies in Ireland to transform the way that IT serves their business.
They want flexible, secure, and reliable services, so that they can turn on
new IT infrastructure as easily as a tap. Digital Planet is all about
leveraging a cloud-based delivery model in order to meet that need."
Challenge: To augment in-house IT
operations by providing enterprise-class
infrastructure as a service, allowing
customers to deploy new platforms and
applications rapidly and with high levels
of performance and availability.
Solution: HP Cloud platform
Cumulative benefits:
•
€25.5 million for five-year period
•
ROI of 96%
•
Payback in 26 months
Specific benefits: After a little under
one year with the new platform in place
Digital Planet has already reaped the
following financial benefits:
•
Generated €1 million in new
business by leveraging the
template-based architecture
•
Reduced cost of operations by
46%
•
Eliminated older platform, saving
€96,000 annually
Larkin sees an increasing number of companies that want elements of
their IT infrastructure to be delivered as a service, to speed up
deployment and minimize the need for capital investments. "Applications
such as email, customer relationship management, and billing systems
are business-critical but can be hosted by an outside specialist with
ease, with the advantage of a pay-per-use utility pricing model. We see a potential
target market of some 3,000 companies in Ireland and larger opportunities in the
U.K. and U.S. markets."
Page 1
HP (continued)
From its inception, Digital Planet had a vision to provide enterprise-class levels of
service that would convince enterprise clients to migrate their business-critical
applications away from established in-house infrastructure and onto a managed
service platform. Securing the confidence of high-profile companies and
government departments would require a clear commitment to the application
delivery, together with management and support of the highest quality.
By 2010, as demand for enterprise cloud services grew rapidly, it became clear
that new investment would be needed. After a six-month process of reviewing
various options, the company engaged with the HP account team to consider what
was required for Digital Planet to deliver on its vision. After careful analysis and
evaluation, Digital Planet invested €720,000 in an HP integrated cloud platform. It
was the first deployment of its type in Ireland and HP engineers worked closely
with Digital Planet during September and October 2010 to bring the platform to
readiness.
"Right from the start we had to offer a powerful and reliable solution to customers,"
said Larkin. "In-house development was a possibility, as we have the expertise,
but HP was able to offer a pre-integrated solution that we could use as the
foundation for the business. Taking this approach allowed us to achieve 5x9s
availability and to deploy new environments more quickly."
The impact of the HP platform on Digital Planet's business has been significant.
The sales win rate has risen from 40% to 75%, as prospective enterprise
customers quickly realize that the company is highly differentiated from other
hosting providers that don't commit to minimum service level agreements. "For our
customers, an enterprise-class platform backed by tier 1 vendor support is the
normal expectation," said Larkin. "Our role is to mitigate risk for the customer, not
increase it. Our customers see that we are backed by the HP brand, and that our
platform is comparable or possibly superior to their in-house infrastructure."
Digital Planet can offer end-to-end service level commitments that include the
application delivery itself, and not just the availability of server and storage
resources. New environments can be deployed very quickly using configuration
templates in a couple of hours rather than the two or three days previously
required. Customers can easily modify or manage their hosted environments using
the client console, saving many hours of support time.
Application availability and resilience is a critical requirement for most of Digital
Planet's customers, and despite the highly dynamic nature of the environment, the
company has been able to meet its contractual commitment to provide a 4-nines
level of application uptime while the platform actually achieves 5-nines uptime.
To deliver infrastructure services at this level, profitably across a broad range of
customer types requires an IT platform of the utmost efficiency and flexibility. IDC
believes that Digital Planet's pioneering initiative to deploy the HP cloud solution
will be a key part of its future growth and ongoing success in the enterprise IaaS
business.
February 2012
Page 2
HP (continued)
Challenges in Building the Business
With its heritage in HiberniaEvros, Digital Planet is not a newcomer to providing
enterprise IT infrastructure. However, the company faced a set of clear challenges
in building a successful business.
Building the Infrastructure Platform
In the summer of 2010, Digital Planet was convinced that it would have to integrate
its own hosting platform. It set about the architecting process, choosing best-ofbreed HP server and storage components, and working with local software
developers to build the management suite that would deliver the flexibility and
resilience it was looking for.
"We knew that building our own platform would be a challenge, but we considered
that it would give us a clear edge in the enterprise hosting market," said Larkin.
"However, as we were about to order the hardware and make a start, we became
aware of the HP CloudSystem, and found that it went far beyond what we could
have developed ourselves." Larkin took the purchase order and changed it in favor
of the new HP platform.
This was HP's first CloudSystem site in Ireland, and the company took care to
ensure the smooth deployment of the system by bringing in experienced engineers
to train Digital Planet. "The 3PAR storage only required one half-day training, as
so much of its operation and management is automated and intuitive," Larkin said.
"One of the key challenges facing Digital Planet was to ensure that the
environment was efficient to manage and maintain. With the HP 3PAR Storage
Solution we had an enterprise-class storage platform that required very low touch
from an engineering perspective."
Proving Capability and Credibility to Prospective Customers
A multiplicity of hosting companies competes in the Irish market, many of them
selling compute and storage resources from the Web with minimal human contact.
While this may be acceptable for non-critical applications or test and development
environments, enterprise customers typically require contract-driven service levels
that are built on confidence in the provider's commitment and capability. "This is
actually still a relationship business," Larkin said. "Clients want to look you in the
eye and see that you are personally committed to their business. The Digital
Planet model is a consultative-led model. Each customer has its current
environment audited by the Digital Planet consultants and specific solutions are
designed to suit individual customer needs."
Confidence is also engendered by the hosting platform, particularly as some
hosting companies have built their infrastructure at low cost, sometimes using
white-box components that may not be appropriate for an enterprise solution. The
HP CloudSystem platform has been a key factor in persuading enterprise clients to
commit their business to Digital Planet, since it compares favorably to the client's
in-house IT, not to mention other hosting companies. The result can be quantified
in a substantial improvement in sales closing ratio for Digital Planet, a factor that
has been included in the ROI analysis.
Allowing Customers to Monitor and Manage Their Environment With Minimal
Support Overhead
Digital Planet's clients need a service management portal through which they can
monitor or configure their environment day to day or choose new infrastructure
solutions from a service catalog. Clients appreciate the ability to make minor
changes, such as deploying an additional virtual server, and take full advantage.
The challenge for Digital Planet is to support minor requests without the need for
an expensive support resource. The HP CloudSystem has helped to meet this
February 2012
Page 3
HP (continued)
challenge, since low-level change requests and resource deployments are handled
on an automated basis. A client that would normally require two to three days to
procure and commission a new server can deploy the equivalent resource from
Digital Planet in a few minutes, without its manual intervention.
Manage the Company Cash Flow to Fund Expansion
Cash-flow management is a challenge for any company in a difficult economic
climate, and particularly so for an infrastructure provider that must maintain service
levels while responding to rapid and unpredictable changes in demand from its
customers. Digital Planet is able to use HP's embedded capacity-planning
functions to conduct a regular "what if" analysis on its clients. For example, users'
resource requirements can be projected forward based on their historical usage
patterns. This provides early warning of resource constraint and allows Digital
Planet to closely align its resource and support infrastructure to customer
requirements, and to keep within planned levels of utilization.
Technology Benefits of the HP Solution
The key driver of business value in this deployment has been the close alignment
between Digital Planet's commercial vision, its key performance indicators, and the
solution that has been architected and supported by HP. However, there are
specific characteristics of the solution that should be highlighted for their
contribution to the overall success of the project.
HP Cloud Map Templates and Speed of Deployment
HP has worked for years with Microsoft, SAP, VMware, Oracle, and other major
ISVs to develop proven and best-practice architectures for common business
solutions. For example, a customer requiring a 50-user Microsoft Exchange server
can be given approved and certified solution architecture with a corresponding bill
of materials.
HP has taken 25 of these tested and approved architectures and defined them in
terms of virtual rather than physical resources, and embedded a sizer so that the
solution can be scaled to the appropriate size for the customer. These virtual
solution templates, or Cloud Maps, can be used as a baseline architecture to
provision new infrastructure on a CloudSystem platform. This means that for the
user requiring the 50-user Exchange server, Digital Planet can take the
appropriate Cloud Map template, localize a few key parameters such as IP
addresses, and deploy a fully approved virtualized solution very rapidly.
The capability to design new virtual infrastructure based on Cloud Map templates
has had a profound effect on the way Digital Planet markets, deploys, and
supports its infrastructure services.
The benefits include dramatically shortened deployment of virtual infrastructure.
For example, a common configuration of two Web servers, two application servers,
and a database server would normally require three to five days to design,
configure, test, and deploy. By basing the design on an approved template, the
task takes less than two hours. Simpler solutions can be deployed in minutes. This
has driven significant business value in terms of improved customer service,
solution performance, and competitive edge for Digital Planet and its clients, as
well as reduced support overhead, reduced deployment costs, and higher sales
win rate. Joe Brady, Digital Planet's CTO, regards this capability as a fundamental
enabler of the company's success.
February 2012
Page 4
HP (continued)
Self-Management and Optimization Functions
Self-optimization is a critical requirement for a hosting company, not only to reduce
operational overhead but also to sustain the performance levels within the planned
parameters. The HP platform achieves this in a number of ways. For example, the
storage system (3PAR) contains three internal tiers of storage and automatically
positions data for the most efficient balance of performance and cost for the
prevailing level of demand. This has made the storage management overhead
almost negligible and is one of the reasons that 3PAR is so widely used in highend hosting environments.
Platform Reliability and Availability
Digital Planet is focused on meeting (and surpassing) the availability requirements
of its enterprise customers, each of which expects service levels to exceed SLA
commitments. The HP CloudSystem platform has delivered 99.999% uptime
availability, comfortably in excess of the 99.99% that Digital Planet is contractually
required to deliver. Prior to the CloudSystem platform, Digital Planet used a selfintegrated solution that delivered 99.99% availability. The stability of the new
solution delivers business value through improved customer service, reduced
management cost, and enhanced brand reputation for Digital Planet.
Minimal Time Spent on Integration Issues
The CloudSystem platform comprises pre-integrated and approved HP server,
storage, and management components. In Digital Planet's view, this significantly
reduces the time spent dealing with integration issues.
High Level of Storage Utilization
Due to its granular thin provisioning, multitenancy support, and automated tiering,
Digital Planet has been able to achieve 88% utilization of storage resources,
significantly higher than the 30%–60% level usually seen by IDC. While 12% spare
storage capacity appears rather tight, the intelligent data management and
embedded capacity planning functions ensure capacity is added in a timely
manner as it is required rather than having to over-purchase far in advance of
requirements. This translates into business value due to the more efficient financial
asset utilization, and environmental cost savings such as power, cooling, and floor
space.
Benefits Achieved From the HP Investment
Digital Planet's strategy in deploying HP's cloud solution is to get a jump on the
competition by being the first to offer flexible scalable services on a highly reliable
platform. After a little under one year with the platform in place Digital Planet has
already reaped the following financial benefits:
•
Generated €1 million in net new business by leveraging the template-based
provisioning, high availability, HP brand value, and client management
capability
•
Reduced cost of operations by 46%
•
Eliminated older platform and saved €96,000 annually
February 2012
Page 5
HP (continued)
FIGURE 1
Annual Benefits
Note: All raw data is provided by Digital Planet.
Source: Digital Planet, IDC, 2012
New Business
Digital Planet is successfully leveraging the capabilities provided by the HP
solution, which is leading to business growth. One advantage is the template
architecture, which provides the following advantages:
•
•
•
Since the template is for a proven deployment, Digital Planet can provide
a reference which is very helpful in mitigating the perceived risk of a cloud
solution.
The HP platform is allowing it to productize what used to be a services
model which appeals to customers as a more coherent and predictable
pricing/cost model.
Templates enable Digital Planet to deploy new services in a tenth of the
time of conventional providers.
As a result of being able to articulate these new benefits to its prospective
customers, Digital Planet increased its win rate from 40% to 75%.
Larkin estimates that an additional 10% in new business is the result of Digital
Planet being able to achieve 99.999% availability. Combined with the new
capabilities this will generate €9.4 million in net new business over the next five
years that can reasonably be attributed to the new platform.
February 2012
Page 6
HP (continued)
FIGURE 2
New Business
Note: All raw data is provided by Digital Planet.
Source: Digital Planet, IDC, 2012
Operations Staff Productivity Increase
Digital Planet found that having the template architecture enabled its consulting
engineers to develop template configurations that are proven and reduce the time
to deploy new services by 92% and can deploy in eight hours rather than the usual
need for 10–15 days. Not all customers benefit from the templated architecture, so
that overall Digital Planet was able to reduce its operations by 46%.
FIGURE 3
Time to Develop Configuration (Days)
Note: All raw data is provided by Digital Planet.
Source: Digital Planet, IDC, 2012
February 2012
Page 7
HP (continued)
Elimination of Legacy System
Digital Planet was able to replace its old platform and save the €96,000 annually in
operations expenses.
Quantifying the HP Investment
Digital Planet invested €1.23 million initially in the HP solution, including €720,000
on hardware and software, €250,000 for lease and environmental, €48,000 for the
IT staff to install, and €70,910 for training. Annual costs include an incremental
€1,800 per customer as customers are added and €80,000 for IT staff training to
maintain the platform.
Return on Investment
Digital Planet realized five-year discounted benefits of €16.1 million based on an
investment of €7.9 million. Using a discounted cash-flow method, IDC estimates
that the HP solution has generated an ROI of 96% over five years.
Five Year ROI Analysis
Benefit (discounted)
Investment (discounted)
NPV
ROI
Payback
Discount rate
€
€
€
16,186,018
8,273,750
7,912,268
96%
25.6 months
12%
Digital Planet was able to pay back its initial investment in 26 months.
FIGURE 4
New Business
Note: All raw data is provided by Digital Planet.
Source: Digital Planet, IDC, 2012
February 2012
Page 8
HP (continued)
ROI Methodology
IDC conducted several interviews with Larkin and Brady to quantify the benefits
and investment associated with its use of HP's cloud solution and created an
ROI analysis from the results.
IDC calculates the ROI and payback period in a three-step process:
1.
2.
3.
Measure the benefits from cost reduction, increased IT staff and user
productivity, and net new revenue since deployment.
Quantify the total investment.
Project the investment and benefit over five years and calculate the ROI
and payback period. The ROI is the five-year net present value (NPV) of
the benefit divided by the discounted investment. To account for the time
value of money, IDC bases the ROI and payback period calculations
using a 12% cost of capital.
Conclusion
For some, the term "cloud computing" was becoming a little tainted by the years
of marketing rhetoric and conjecture, which was long on concept but short on
hard financial rigor. We hope therefore that it is refreshing for readers to
encounter a company that has trusted in the new IT model and has in turn been
able to win the trust of its demanding enterprise customers. We have been able
to show a clear and impressive return on investment for the 10 months that the
solution has been in place.
As always, success brings responsibility and Digital Planet must ensure that
system availability, performance, and flexibility are maintained during any period
of rapid expansion. We understand that enhanced integration, management,
and automation functions are in the HP CloudSystem roadmap to support the
future evolution and expansion of the Digital Planet platform.
Cloud computing is still young and Digital Planet is very aware that customer
demands will evolve quickly as the concept matures. The strategic value of the
HP solution is that it is sufficiently adaptive, efficient, and automated to allow it to
offer new service and infrastructure solutions in the future that may currently be
far from view. This has helped drive the popularity of the CloudSystem solution
as a basis for private and public cloud deployments across Europe, with over
300 installations in EMEA at the time of writing.
"We're here not to compete with in-house IT, but to augment it," said Larkin. "We
want to be viewed as a genuine trusted partner of our clients, where they can
switch on new resources quickly and easily. By operating more effectively, they
gain a competitive edge with their own customers. The cloud has been like a
tidal wave driving us forward. New customers sometimes want to start with fairly
minor applications, but quickly scale them up as they see the reliability and
flexibility of what we do. Next year our challenge will really be about managing
rapid growth while maintaining service quality. HP will work with us to scale and
enhance the platform through improved automation and integration. The
strategic value of the partnership is fundamental to the business."
Based on this and other examples, IDC is confident in recommending the
evaluation of this solution as the basis for a self-optimizing, catalog-driven,
highly available infrastructure platform.
February 2012
Page 9
HP (continued)
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February 2012
Page 10
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