Staying Committed To Server Refresh Reduces Cost

Staying Committed to Server Refresh Reduces Cost

IT Brief
Intel IT is moving ahead with server refresh during 2009, after current economic conditions forced us to re-evaluate our strategy.

In consultation with Intel business groups, we had considered deferring server refresh this year due to capital spending constraints. However, our analysis shows this would increase and data center capacity costs by USD 19 million, as shown in Figure 1.

We therefore are continuing to execute our four-year refresh strategy during 2009, using servers based on the Intel® Xeon® processor 5500 series. Our testing shows that we can achieve a 10:1 consolidation ratio on average by replacing four-year-old servers based on single-core processors.

Intel IT’s Server Refresh Strategy
In 2008, Intel IT established a four-year server refresh cadence as a core business strategy to deliver cost efficiencies within our infrastructure. By replacing aging servers on a regularly scheduled cadence, Intel realizes operational cost savings, avoids data center construction costs, and gains space for additional servers to accommodate growth in design engineering requirements. This strategy delivered USD 45 million in savings to Intel in 2008.

Global Economic Conditions Lead to Re-evaluation
The recent economic situation caused us to question our server refresh strategy due to capital spending constraints. We decided to move ahead with server refresh after re-evaluating the total cost of ownership (TCO) impact in consultation with our business group stakeholders. We analyze the benefits and costs of server refresh using a comprehensive TCO model similar to a model we co-developed with Alinean, Inc., which can be accessed at Our analysis indicates that deferring 2009 server refresh would increase operating and capital costs by an estimated USD 19 million and require us to add approximately 1.3 megawatts (MW) of new data center capacity across eight strategic locations

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