IT Management

Bill Reeder has been with IBM 14 years and is responsible for Linux and information technology optimization for System z worldwide. A frequent lecturer at IBM Top Gun classes, as well as many other IBM and customer events, he has been working with mainframe Linux customers for 10 years. He’s co-author of the IBM Redbook Server Consolidation with Linux for zSeries, which has helped many customers understand their options when running Linux on the mainframe. Bill is also the author of the whitepaper “Determining Which Solutions are the Best Fit for Linux on

System z Workloads, which has helped customers decide where to host various types of applications.

Mainframe Executive recently talked with Bill and asked him to discuss Total Cost of Ownership

(TCO) vs. Total Cost of Acquisition (TCA).

ME: When did you first hear the term Total Cost of Ownership?

Bill Reeder: I first heard the term at IBM, about 1997-1998, when we started doing server consolidation analysis for customers. We would examine and analyze customer’s hardware and software portfolios to determine how best to optimize workloads and lower their information technology costs. Over time, that initial effort created many business opportunities in IBM, including services practices around information technology optimization as well as efforts by other services software and hardware sellers. Today, differentiating TCO from TCA is key to helping customers reduce their overall information technology spending.

ME: What comprises TCO?

Reeder: When one looks at TCO objectively, it needs to include not only TCA, but also the rest of the IT infrastructure used to support the solution. Typically, an incomplete TCO analysis is

limited to hardware and software. In my experience, most customers will have roughly 30 percent of their total number of servers being used to manage and control the rest of the server farm, but this point is often overlooked or ignored. For every 1,000 servers on the farm, 300 of them are likely dedicated to functions such as security, software and operating system provisioning, energy management, backup, firewall, domain servers, and other network monitoring and control tasks.  

Also missing from most TCO analysis is networking gear such as routers, switches, and cabling.

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