A Forrester Total Economic
Impact™ Study
Project Director:
Dean Davison
Commissioned By
SanDisk®
January 2014
The Total Economic
Impact Of FlashSoftTM
Software From SanDisk®
Table Of Contents
Executive Summary .................................................................................... 3
Disclosures .................................................................................................. 4
TEI Framework And Methodology ............................................................ 5
Analysis ........................................................................................................ 6
Financial Summary ................................................................................... 11
FlashSoft Software: Overview ................................................................. 12
Appendix A: Total Economic Impact™ Overview ................................. 13
Appendix B: Glossary ............................................................................... 14
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3
Executive Summary
In January 2014, SanDisk® commissioned Forrester
Consulting to conduct a Total Economic Impact™ (TEI)
study and examine the potential value that enterprises may
TM
realize by deploying FlashSoft software. The purpose of
this study is to provide readers with a framework for
evaluating the potential financial impact of FlashSoft
software on their organizations.
FlashSoft software benefited customers by:
Caching “hot data” on SSDs improved the IO
density from 0.7 to 9.7 IOPS/GB for highperformance storage.
To better understand the benefits, costs, and risks
associated with using FlashSoft software, Forrester
interviewed customers with extensive hands-on experience
using FlashSoft software in virtualized and physical (bare
metal) installations.
Reducing the cost of high-performance storage
from $8.50 per IOPS to $1.05 per IOPS lowers the
total cost of storage by $485,065.
Postponing a storage system upgrade by 16
months frees up working capital, providing a
financial benefit of $22,499.
FlashSoft software monitors data usage and caches “hot
data” on solid state drives (SSDs). In enterprise
environments, a relatively small subset of data — about
20% — is responsible for approximately 80% of input-output
operations per second (IOPS). By intelligently caching
active data, the organizations that Forrester interviewed
experience a significant boost in storage performance and
improved IO density (IOPS/GB).
During Forrester’s interviews, companies benefited from
FlashSoft software by:
FLASHSOFT SOFTWARE REMOVES BOTTLENECK
IOPS THAT DRIVE UP STORAGE COSTS
›
Our interviews with four existing customers and subsequent
financial analysis found that a composite organization based
on these companies realized $393,374 in benefits based on
an investment of $132,440 over three years.
›
›
Offloading IOPS requests from storage spindles to
server cache. Using SSD cache effectively shifts IOPS
away from the storage system for server-side
processing.
Releasing underutilized storage capacity. By
releasing the unused capacity on drives set up for short
stroking, one company released enough capacity to
meet its storage needs for more than 18 months.
Protecting investment in the current storage
system. FlashSoft software extended the life of the
current storage system for 16 months.
Most significantly, among the companies that Forrester
interviewed, the average cost for high-performance storage
dropped from $8.50 per IOPS to $1.05 per IOPS.
Overall, the composite organization realized a risk-adjusted
ROI of 197% by using FlashSoft software with a payback
period of six months.
TABLE 1
Composite Company Three-Year Impact
ROI
Payback period
Total benefits
(present value)
Total costs
(present value)
Net present value
197%
6 months
$393,374
($132,440)
$260,935
Source: Forrester Research, Inc.
4
›
Costs. The composite organization experienced the
following costs:
• Licensing and implementing FlashSoft software
for a cost of $115,600. Licensing FlashSoft
software along with architecting, testing, and
implementing cost $85,000 in Year 2 and additional
$15,300 for the subsequent two years.
• Purchasing a total of 2 TBs of SSD drives at a
cost of $30,720. This cost equipped four servers
with 256 GB capacity each — or 512 GB raw flash
per server — for a total of 2 TBs of SSD drives. The
SSDs are mirrored to protect writes in the event of a
(SSD) media failure.
›
Benefits. The composite organization realized the
following benefits:
• Reducing the cost of high-performance storage
for a savings of $485,065. Introducing caching of
hot data increased the IO density from 0.7 to 9.7
IOPS/GB for high-performance storage.
• Postponing a storage system upgrade for 16
months for savings of more than $22,499. The
composite company delayed upgrading its storage
system for 16 months.
Disclosures
The reader should be aware of the following:
›
›
›
›
The study is commissioned by SanDisk and delivered by Forrester Consulting.
Forrester makes no assumptions as to the potential return on investment (ROI) that other organizations will receive.
Forrester strongly advises that readers use their own estimates within the framework provided in the report to determine
the appropriateness of an investment in FlashSoft software from SanDisk.
SanDisk reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its
findings and does not accept changes to the study that contradict Forrester's findings or obscure the meaning of the
study.
The customer names for the interviews were provided by SanDisk.
5
TEI Framework And Methodology
Forrester employed four fundamental elements of TEI in
modeling FlashSoft software:
INTRODUCTION
From the information provided in the interviews, Forrester
constructed a Total Economic Impact™ (TEI) framework for
those organizations considering implementing FlashSoft
software from SanDisk.
›
Costs.
›
Benefits to the entire organization.
›
Flexibility.
The objective of the framework is to identify the cost,
benefit, flexibility, and risk factors that affect the investment
decision.
›
Risk.
APPROACH AND METHODOLOGY
Forrester took a multistep approach to evaluate the impact
that FlashSoft software can have on an organization (see
Figure 1). Specifically, Forrester:
›
›
›
›
Interviewed SanDisk executives and Forrester analysts
to gather data relative to FlashSoft software and the
marketplace for enterprise flash.
Interviewed four organizations currently using FlashSoft
software to obtain data with respect to costs, benefits,
and related risks.
Designed a composite company based on
characteristics of the interviewed organizations.
Constructed a financial model representative of the data
obtained from the interviews, with the model then
applied to the composite organization.
Given that enterprises are using increasingly sophisticated
methods to estimate the expected ROI from investments,
Forrester’s TEI methodology provides a complete picture of
the total economic impact.
Please see Appendix A for additional information on the TEI
methodology.
FRAMEWORK ASSUMPTIONS
The discount rate used in the present value (PV) and net
present value (NPV) calculations is 10%, and the time
horizon used for the financial modeling is three years.
Organizations typically use discount rates between 8% and
16% based on their current environment.
Readers are urged to consult with their respective
company’s finance department to determine the most
appropriate discount rate to use within their own
organizations.
FIGURE 1
TEI Approach
TEI Approach
Perform due
diligence
Source: Forrester Research, Inc.
Condu ct
customer
interviews
Perform due
diligence
Design
composite
organization
Condu ct
customer
interviews
Construct financial
model using
TEI framework
Construct financial
model using
TEI framework
Write case
study
Write case
study
6
Analysis
COMPOSITE ORGANIZATION
INTERVIEW HIGHLIGHTS
For this study, Forrester conducted a total of four interviews
with representatives from the following companies:
Situation
›
The composite company was facing challenges that led it to
evaluate FlashSoft software, including:
›
›
›
Financial services company: Large financial services
company headquartered in North America with
business units for commercial and consumer markets.
Transportation provider: Global provider of air traffic
and freight transportation around the globe.
Commercial utilities management firm: Manager of
commercial utilities and specialized disposal services
for companies across North America.
Regional cloud infrastructure vendor: Provider of
cloud infrastructure, including servers, storage, and
network, within the Asia Pacific region.
Based on the interviews, Forrester constructed a composite
company that illustrates the areas financially affected. The
composite organization that Forrester synthesized from
interviews has the following characteristics:
›
›
›
›
›
›
Workload requirements (IOPS) are 143,750 in Year 1
and increase 15% annually. Typical growth requires a
wholesales storage system upgrade every three to four
years.
›
›
Though its existing storage system has abundant
capacity, the organization found that its application
performance workload was exceeding the current IOPS
performance capabilities of its system.
The composite organization measured its IO density at
0.7 IOPS/GB, meaning that the organization needed
more than 200 TBs of usable storage for its 143,750
IOPS workload.
By configuring 30% of drives for short stroking —
making 70% of each drive unusable — the composite
organization had more than 80 TBs of installed, but
unusable, capacity.
Solution
The composite organization selected FlashSoft software for
an initial proof of concept (POC) because it:
›
Monitors data usage and prioritizes data to cache.
›
Caches data blocks rather than entire files or folders.
The ratio for IOPS averages 70% reads to 30% writes.
›
Thirty percent of drives are configured for short stroking.
A drive that is configured for short stroking uses 30% of
its total capacity. Eliminating short stroking releases the
remaining 70% capacity on each drive.
Results
SAN storage is managed in a RAID10 configuration,
incurring a 20% capacity penalty for RAID, in addition to
the 100% cost of mirroring.
A wholesale (i.e., rip and replace) upgrade to a new
high-performance system was not economically feasible
since the existing system was still relatively new (had
time left for depreciation and still had existing warranty).
Provides a hybrid automated solution for leveraging
existing or future investments in enterprise flash.
Forrester’s interviews revealed that the composite company:
›
›
›
Eliminated short-stroking configured drives, freeing
more than 80 TBs of capacity.
Improved the IO density from 0.7 to 9.7 — an increase
of more than 13 times.
Shifted the cost for high-performance storage from
$8.50 to $1.05 per IOPS, providing a savings of
$485,065 over three years.
7
BENEFITS
The quantified benefits that the composite organization
experienced from using FlashSoft software are:
›
›
As a result, the cost for high-performance storage drops
from $8.50 to $1.05 per IOPS, providing a savings over
three years of $485,065 (see Table 2).
Reducing the cost for high-performance storage.
Postponed Capital Investment To Upgrade Storage System
Postponing a costly unplanned storage system
upgrade.
The composite organization was able to postpone a
planned upgrade to the storage system by 16 months,
giving it access to working capital (see Table 3).
Reduced Cost Of High-Performance Storage
›
Forrester’s price of $0.66/GB includes a base price for
the storage system of $0.30/GB, an additional 80%
($0.24/GB) for implementation, and 40% ($0.12/GB) for
testing and configuration.
›
The value of working capital over 16 months —
measured by the return on assets of 12% — is $22,499.
After implementing FlashSoft software, the composite
company is now able to:
›
Reduce the number of drives that are configured for
short stroking, releasing more than 80 TBs of capacity.
›
Increase IO density from 0.7 to 9.7 by caching
frequently accessed information on SSDs.
TABLE 2
Reduced Cost For High-Performance Storage
Ref.
Metric
A1
Company IOPS workload
A2
Additional IOPS needed
A3
Reduced cost per IOPS
At
Total reduced cost
Calculation
Year 1
Year 2
Year 3
143,750
165,313
190,109
15% growth
18,750
21,563
24,797
$8.50-$1.05
$7.45
$7.45
$7.45
$139,688
$160,641
$184,737
Total
$485,065
TABLE 3
Postponed Capital Investment To Upgrade Storage System
Ref.
B1
B2
B3
Bt
Metric
Installed storage (GBs)
Months postponed in each
fiscal year
Avoided upgrade cost
during each fiscal year
Total value of postponing
storage system upgrade
Source: Forrester Research, Inc.
Calculation
15% growth
Year 1
Year 2
205,357
236,161
16 months
12 months
4 months
B1*B2*$0.66/
GB
$135,536
$51,955
B3*12%
$16,264
$6,235
Year 3
Total
$22,499
8
›
Total Benefits
As shown in Table 4, the composite organization realizes
$507,564 in benefits by using FlashSoft software. The
company’s direct savings come from avoiding capital
expenditures for a storage system and using existing
released capacity instead of purchasing additional drives.
›
Unquantified Benefits
Additional benefits that some companies might experience
but that are outside of the findings of Forrester’s model are
the abilities to:
›
›
›
Reduce staffing of storage administrators. Most
companies hire, on average, one storage administrator
per 200 TBs of storage. Using FlashSoft software could
give companies a short reprieve in hiring storage
admins while avoiding the purchase of additional drives.
Increase productivity of employees. The objective of
improving application performance is to enhance the
productivity of employees using the application. The
composite organization expects to see a marked
improvement in productivity but had not measured
productivity at the time of this study.
Increase revenue from revenue-generating
applications. The composite organization has some
applications that directly support its online customer
experience. Although it had not measured the impact at
the time of this study, the composite organization
expects an increase in revenue that ultimately stems
from improved application performance by using
FlashSoft.
Avoid investment in expensive storage
technologies. Companies that are evaluating
expensive alternatives, such as all-flash arrays or tier
one storage systems, will have bigger windows of
opportunity without having to make decisions in crisis
mode.
Avoid investment in upgrading facilities. FlashSoft
can boost performance without adding disk systems,
which will increase the overall power and rack space
consumption of the storage environment.
TABLE 4
Total Benefits
Ref.
At
Bt
Metric
Reduced cost of highperformance storage
Total value of postponing
storage system upgrade
Total benefits
Source: Forrester Research, Inc.
Year 1
Year 2
$139,688
$160,641
$16,264
$6,235
$155,952
$166,875
Year 3
Total
Present
value
$184,737
$184,737
$507,564
$418,483
9
COSTS
Forrester quantifies the cost to the composite company of
using FlashSoft Software. The costs shown in Table 5 are:
›
›
Licensing and implementing FlashSoft software.
The composite organization incurred indirect costs for
the staff time to evaluate alternative technologies,
architect a solution, and run a pilot using FlashSoft
software. In total, the organization incurred fees of
$85,000 in Year 1 followed annual costs of $15,300.
Purchasing SSDs. The composite organization
purchased 2 TBs of SSDs at $15/GB for a total cost of
$30,720.
FLEXIBILITY
Flexibility, as defined by TEI, represents an investment in
additional capacity or capability that could be turned into
business benefit for some future additional investment. This
provides an organization with the ability to engage in future
initiatives that would otherwise be impossible.
FlashSoft software creates flexibility for the composite
organization in several ways. Specifically, it enables the
composite organization to:
›
›
Experiment with storage configurations. Storage
teams experiment with new ideas such as ratcheting up
the IO density for databases in low-cost ways that are
controlled on an application-by-application basis.
Commit to service levels for storage response
times. In database storage configurations, FlashSoft
software makes it much easier (and lower-risk) to
ensure that response times are met.
TABLE 5
Total Costs
Ref.
Metric
D1
FlashSoft software license
D2
FlashSoft software
maintenance
D3
2 TBs of SSDs
$30,720
Dt
Total cost of enterprise
flash environment
$15,300
Source: Forrester Research, Inc.
Year 1
Year 2
Year 3
Total
Present
value
$85,000
$15,300
$15,300
$15,300
$15,300
$115,600
$101,412
10
RISK
Quantitatively capturing investment and impact risk by
directly adjusting the financial estimates results in more
meaningful and accurate estimates and a more accurate
projection of the ROI.
In general, risks affect costs by raising the original
estimates, and they affect benefits by reducing the original
estimates. The risk-adjusted numbers should be taken as
realistic expectations since they represent the expected
values considering risk. Table 8 shows the values used to
adjust for risk and uncertainty in the cost and benefit
estimates.
The TEI model uses a triangular distribution method to
calculate risk-adjusted values. To construct the distribution,
it is necessary to first estimate the low, most likely, and high
values that could occur within the current environment. The
risk-adjusted value is the mean of the distribution of those
points.
Readers are urged to apply their own risk ranges based on
their own degree of confidence in the cost and benefit
estimates.
TABLE 6
Cost And Benefit Risk Adjustments
Risk score
Low
Most
likely
High
Mean
FlashSoft software license fees
Low
98%
100%
105%
101%
Enterprise flash drives
Low
98%
100%
105%
101%
Risk score
Low
Most
likely
High
Mean
Reduced cost of high-performance storage
Medium
80%
100%
103%
94%
Total value of postponing storage system upgrade
Medium
80%
100%
103%
94%
Costs
Benefits
Source: Forrester Research, Inc.
11
Financial Summary
The financial results calculated in the Costs and Benefits
sections can be used to determine the NPV and payback
period for the organization’s investment in FlashSoft
software. These are shown in Table 7 below.
Table 8 below shows the risk-adjusted NPV and payback
period values. These values are determined by applying the
risk-adjustment values from Table 6 in the Risk section to
the cost and benefits numbers in Tables 4 and 5.
TABLE 7
Cash Flow: Non-Risk-Adjusted
Initial
Costs
Year 2
Year 3
Total
Present
value
($30,720)
($85,000)
($15,300)
($15,300)
($146,320)
($132,132)
$0
$155,952
$166,875
$184,737
$507,564
$418,483
($30,720)
$70,952
$151,575
$169,437
$361,244
$286,351
Benefits
Net benefits
Year 1
TABLE 8
Cash Flow: Risk-Adjusted
Initial
Costs
Benefits
Net benefits
Source: Forrester Research, Inc.
Year 1
Year 2
Year 3
Total
Present
value
($31,027)
($85,000)
($15,300)
($15,300)
($146,627)
($132,440)
$0
$146,595
$156,863
$173,653
$477,110
$393,374
($31,027)
$61,595
$141,563
$158,353
$330,483
$260,935
12
FlashSoft Software: Overview
FlashSoft software from SanDisk is engineered to be a costeffective solution for using enterprise flash storage that
improves the performance of standalone applications,
virtualized infrastructure, and physical storage.
The software enables companies to create a solid-state
storage cache in servers, enabling server-side flash to
complement the storage systems. As a result, FlashSoft
delivers the benefits of flash storage with minimal disruption
to existing server and storage infrastructure.
Organizations typically deploy FlashSoft software when
performance workloads are constrained by storage I/O
latency. Typical applications are:
›
Transactional database applications.
›
Analytics and business intelligence workloads.
›
Information access and records systems.
›
Virtualized server and desktop environments.
FlashSoft software is available for Windows Server, Linux,
and VMware vSphere environments. The software works
with SATA, SAS, or PCIe solid-state devices from any
vendor.
13
Appendix A: Total Economic Impact™ Overview
Total Economic Impact is a methodology developed by
Forrester Research that enhances a company’s technology
decision-making processes and assists vendors in
communicating the value proposition of their products and
services to clients.
In addition, the cost category within TEI captures any
incremental costs over the existing environment for ongoing
costs associated with the solution. All costs must be tied to
the benefits that are created.
The TEI methodology helps companies demonstrate, justify,
and realize the tangible value of IT initiatives to both senior
management and other key business stakeholders. The TEI
methodology consists of four components to evaluate
investment value: benefits, costs, risks, and flexibility.
RISK
BENEFITS
Benefits represent the value delivered to the user
organization — IT and/or business units — by the proposed
product or project. Often product or project justification
exercises focus just on IT cost and cost reduction, leaving
little room to analyze the effect of the technology on the
entire organization.
The TEI methodology and the resulting financial model
place equal weight on the measure of benefits and the
measure of costs, allowing for a full examination of the
effect of the technology on the entire organization.
Calculation of benefit estimates involves a clear dialogue
with the user organization to understand the specific value
that is created.
In addition, Forrester also requires that there be a clear line
of accountability established between the measurement and
justification of benefit estimates after the project has been
completed. This ensures that benefit estimates tie back
directly to the bottom line.
COSTS
Costs represent the investment necessary to capture the
value, or benefits, of the proposed project. IT or the
business units may incur costs in the form of fully burdened
labor, subcontractors, or materials. Costs consider all of the
investments and expenses necessary to deliver the
proposed value.
Risk measures the uncertainty of benefit and cost estimates
contained within the investment.
Uncertainty is measured in two ways: 1) the likelihood that
the cost and benefit estimates will meet the original
projections, and 2) the likelihood that the estimates will be
measured and tracked over time.
TEI applies a probability density function known as
“triangular distribution” to the values entered. At a minimum,
three values are calculated to estimate the underlying range
around each cost and benefit.
FLEXIBILITY
Within the TEI methodology, direct benefits represent one
part of the investment value. While direct benefits can
typically be the primary way to justify a project, Forrester
believes that organizations should be able to measure the
strategic value of an investment.
Flexibility represents the value that can be obtained for
some future additional investment building on top of the
initial investment already made.
For instance, an investment in an enterprisewide upgrade of
an office productivity suite can potentially increase
standardization (to increase efficiency) and reduce licensing
costs. However, an embedded collaboration feature may
translate to greater worker productivity if activated.
The collaboration can only be used with additional
investment in training at some future point in time. However,
having the ability to capture that benefit has a PV that can
be estimated. The flexibility component of TEI captures that
value.
14
Appendix B: Glossary
TERMS USED BY FORRESTER
Discount rate: The interest rate used in cash flow analysis
to take into account the time value of money. Although the
Federal Reserve Bank sets a discount rate, companies
often set a discount rate based on their business and
investment environment. Forrester assumes a yearly
discount rate of 10% for this analysis. Organizations
typically use discount rates between 8% and 16% based on
their current environment. Readers are urged to consult
their respective organization to determine the most
appropriate discount rate to use in their own environment.
Net present value (NPV): The present or current value of
(discounted) future net cash flows given an interest rate (the
discount rate). A positive project NPV normally indicates
that the investment should be made, unless other projects
have higher NPVs.
Present value (PV): The present or current value of
(discounted) cost and benefit estimates given at an interest
rate (the discount rate). The PV of costs and benefits feed
into the total NPV of cash flows.
Payback period: The breakeven point for an investment.
This is the point in time at which net benefits (benefits minus
costs) equal initial investment or cost.
Return on investment (ROI): A measure of a project’s
expected return in percentage terms. ROI is calculated by
dividing net benefits (benefits minus costs) by costs.
Return on assets (ROA): Often referred to as working
capital, ROA is the value to a company of not spending
capital within a particular period of time. When a company
delays a cost by one year, it is able to use the capital for
other purposes, providing a benefit that is equivalent to the
company’s average ROA.
A NOTE ON CASH FLOW TABLES
The following is a note on the cash flow tables used in this
study. The initial investment column contains costs incurred
at “time 0” or at the beginning of Year 1. Those costs are
not discounted. All other cash flows in Years 1 through 3 are
discounted using the discount rate (shown in the
Framework Assumptions section) at the end of the year. PV
calculations are calculated for each total cost and benefit
estimate. NPV calculations are not calculated until the
summary tables and are the sum of the initial investment
and the discounted cash flows in each year.