Examples of RoI for Environmental Monitoring at SMB.
Recently a professional social media group called Data Center Engineering posed an interesting exchange that led to a discussion about RoI (Return on Investment) for DCIM including Environmental Monitoring devices. Philip Peterson, CEO of AdInfa, a data center energy management software supplier of tools that are primarily used for asset management but have been used for environmental and power monitoring among other things asked the question, “BMS vs DCIM: where do you draw the line?”
The topic of BSM (Building Services Management) vs DCIM (Data Center Infrastructure Management) prompted a lively exchange. The member who posed the question added in a later post, “This brings up another point, too - how is an RoI calculated for such a system typically and what is deemed as an acceptable payback period?”
A member presented the following in response. “Some ROIs that 'should' be common for a DCIM software package include: Reduced time to find equipment in the DC, Reduced time to fault find failures in the DC, Reduced time to perform MAC work in the DC, especially remote/unmanned sites.”
DCIM and BSM packages are generally expensive and require a host of staff resources. Their The RoI of BSM can generally be measured but the RoI of DCIM is not well understood and in many cases not easily measured. This is because DCIM is not well defined, there is no “standard” DCIM package, customers can pick from a large menu of available features, options, services, support and other choices, and given that each customer likely has a unique configuration, the number of permutations is very large. And how does one quantify the “Reduced time to find equipment in the DC”? Man-minutes or hours of a technician’s time, team of techs, team of techs plus manager in cases where the equipment is difficult to locate and finding it is critical? And if the latter, the value of the time to write a report outlining why the equipment was difficult to find, a task force to look at current and propose revised procedures, and a team to implement and train everyone so the problem doesn’t happen again is very likely.
Are there lessons here for SMBs (Small and Mid-Sized Businesses) to help understand the RoI of Environmental Monitoring devices? Maybe, and it could in large part depend on the company’s usage of their IT assets to drive business. Let’s take some easy example: SMBs with 100% online revenue generation and annual revenues from $1 to $5 million. The following chart presents the potential lost business for a 24 hour outage. In this example a company with $5 million annual revenue will lose $14,000 per day of sales revenue.
Simple Linear Model of Daily Revenue vs. SMB Annual Revenue
Continuing with the $5 million annual revenue example, let’s assume the outage was due to a temperature excursion because the AC system failed and took down the company’s servers. The company hosts its own e-commerce system so no business could be transacted during the outage. Most of the equipment recovered but a server and a disc drive had to be replaced costing approximately $2,000. IT consultants who maintain the servers put in 16 hours to configure and install the devices, adding another $1,600 to the cost, for a total of $3,600 in equipment related cost.
From the graph, the company generates an average of $14,000 per day in revenue. For this discussion, assume the company’s products are not unique but rather they are a good competitor in a field of good competitors. For this model let’s assume 50% of the customers wait for the ecommerce system to return, the others choose competitive suppliers. The result is a loss of $7,000 in revenue with an overhang of an additional $7,000 of lost revenue since in the company’s experience many customers return within six months for additional purchases. Therefore total revenue loss related to this incident is $14,000. Add to that equipment related costs of $3,600 and you have a total impact of $17,000.
Assume the temperature excursion could have been picked up by a simple temperature monitoring device, Temperature@lert’s WiFi Edition for example, at a cost of $300. Assuming a six month financial impact period, the RoI is 3.2 days. Adding Temperature@lert’s Sensor Cloud service for $10 per month, which allows customers to receive alerts when the device has not checked in due to an electrical power, communications or network error, increases the RoI to nine days for the first year of operation.
The difficulty with this model is we cannot predict that the AC system will fail and a failure will take down an e-commerce system. However, companies cannot predict whether or not an employee or customer will be injured at their facility or by their products or services, yet they buy insurance against such possibilities. And that insurance is significantly more costly than a one-time cost of $300 for temperature monitoring services..
Many Temperature@lert customers come to us after an event has occurred. Many live in urban areas with known power supply and AC challenges due to their being in older buildings with HVAC systems that are not designed for the additional cooling load of a server room, especially if it is in an unventilated storage closet. And while being able to monitor temperature excursions and send out alerts does not guarantee the AC outage will not cause problems, in many cases it provides enough time for someone to respond and head off the incident.
SMB Server Rooms: These types of installations are very common and while inexpensive leave businesses exposed to overheating problems. (Links to Sources: Left ; Right)
One additional comment regarding RoI: In industry conferences, IT equipment OEMs and customers such as large telecoms have noted that temperature excursions may not cause immediate failure of electronics, but rather higher than average intermittent performance issues or failures are seen over the next several months. These later issues are additional RoI inputs, especially for SMBs that, unlike large Data Centers or Telecoms do not change out their servers or other devices on two or three years cycles. Often the IT infrastructure at many SMBs is five-plus years old with some legacy systems approaching ten years, meaning they have been stressed several times during their service life which makes them even more prone to intermittent issues or failure.
DCIM systems may be difficult to specify, justify the cost or calculate the RoI. They often require extensive installation, maintenance and training resources and continuous analysis of the data to make them useful, meaning staff resources will need to have time dedicated to these tasks. Simple, low-cost environmental monitoring devices can are easy to install and setup, and perform the simple task of letting their users know when there is a problem coming or one that has occurred. Small and MidSized Businesses will be well served by these devices.