Ibm-1064-The Total Economic Impact to IBM WebSphere Application Server

7/30/2019 Ibm-1064-The Total Economic Impact to IBM WebSphere Application Server

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A Forrester Total Economic Impact Study Prepared For IBM

The Total Economic Impact To IBM WebSphereApplication Server Migrating From An Open SourceEnvironment

Federal Client Analysis

Project Director: Jon Erickson

June 2012


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Forrester Consulting

The Total Economic Impact Of IBM WebSphere Application Server

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TABLE OF CONTENTS

Executive Summary ................................................................................................................................................................................. 2WebSphere Application Server Provides Improved Capabilities And Operational Efficiency........................................... 2Factors Affecting Benefits And Costs ............................................................................................................................................. 3Disclosures ........................................................................................................................................................................................... 4

TEI Framework And Methodology ...................................................................................................................................................... 5Analysis ...................................................................................................................................................................................................... 7

Interview Highlights .......................................................................................................................................................................... 7Costs ...................................................................................................................................................................................................... 8Benefits ............................................................................................................................................................................................... 10Flexibility............................................................................................................................................................................................ 15Risk ...................................................................................................................................................................................................... 15

Financial Summary ................................................................................................................................................................................ 18IBM WebSphere Application Server: Overview .............................................................................................................................. 19Appendix A: Total Economic Impact Overview ........................................................................................................................... 20Appendix B: Glossary ............................................................................................................................................................................ 21

2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources.

Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total

Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional

information, go to www.forrester.com.

About Forrester Consulting

Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in

scope from a short strategy session to custom projects, Forresters Consulting services connect you directly with research analysts who apply

expert insight to your specific business challenges. For more information, visit www.forrester.com/consulting.


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Executive Summary

In April, 2012, IBM commissioned Forrester Consulting to examine the total economic impact and potential return on

investment (ROI) enterprises may realize by deploying WebSphere Application Server. The purpose of this study is to

provide readers with a framework to evaluate the potential financial impact of the WebSphere Application Server on

their organization within a production environment. Readers may use this analysis as a basis to calculate their ownimpact of investment in WebSphere Application Server across a variety of client industries.

WebSphere Application Server Provides Improved Capabilities AndOperational EfficiencyOur interviews were with an existing federal client who migrated a portion of their existing development, test, and

production environment away from open source to WebSphere Application Server. Subsequent financial analysis

found that a representative organization based in part on the agency we interviewed experienced the risk-adjusted ROI,

costs, and benefits shown in Table 1.

Table 1

Composite Organization Three-Year Risk-Adjusted ROI1

ROI Payback period Total benefits(PV)

Total costs(PV)

Net presentvalue

44% Within 24 months $3,878,455 ($2,686,977) $1,191,477

Source: Forrester Research, Inc.

Benefits. The representative analysis illustrates the following WebSphere benefits that represent thoseexperienced by the interviewed organization:

o Reduction in support costs.o IT operational savings from reduced support incidents.o End user operational savings due to higher application availability.o Cross platform IT development team savings.

Costs. The representative organization experienced the following WebSphere costs:o License and maintenance fees.o Training.o Implementation labor.o Administration and support labor.


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Figure 1

Incremental Cost And Benefit As a Result Of WebSphere Implementation

Licence

32%

Annual

maintenance

28%

Implementation

6%

Training

4%

Internalsupport

30%

IncrementalCost

Reductionin

supportcosts

(Legacyserver

environment)

13%

IToperational

savings

reducedsupport

incidents

19%

Enduser

operational

savings

application

availability

60%

Crossplatform

ITdevelopment

teamsavings

8%

IncrementalBenefit


Factors Affecting Benefits And CostsTable 1 illustrates the risk-adjusted financial results that were achieved by the representative organization. The risk-

adjusted values take into account any potential uncertainty or variance that exists in estimating the costs and benefits,

which produces more conservative estimates. The following factors may affect the financial results that an organization

may experience:

Legacy open source environment. The level of operational and capital cost savings will depend on theorganizations legacy environment and the alternatives compared with investing in WebSphere Application

Server. The interviewed organization still used open source in their development, test, and production

environments, however was seeing a steady migration across their development, test, and production

environments to WebSphere Application Server.

Pace of migration. The ability to recognize benefit from the migration to WebSphere Application Serverdepends in large part of the size of the application environment. How quickly the applications are migrated willultimately determine the speed to realize benefits.

Developer preference with open source. Organizations moving from an embedded open source platform willneed to ensure the developers can embrace the functionality in the WebSphere Application Server platform.

Without adequate training and effective change management, organizations can face reduced anticipated benefits

from the migration.


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DisclosuresThe reader should be aware of the following:

The study is commissioned by IBM and delivered by the Forrester Consulting group. Forrester makes no assumptions as to the potential return on investment that other organizations will receive.

Forrester strongly advises that readers should use their own estimates using the framework provided in the report

to determine the appropriateness of an investment in IBM WebSphere Application Server.

IBM reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and itsfindings and does not accept changes to the study that contradict Forresters findings or obscure the meaning of

the study.

The customer name for the interviews was provided by IBM.


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TEI Framework And Methodology

IntroductionFrom the information provided in the interviews, Forrester has constructed a Total Economic Impact framework for

those organizations considering implementing IBM WebSphere Application Server. The objective of the framework isto identify the cost, benefit, flexibility, and risk factors that affect the investment decision for an organization deploying

WebSphere Application Server within their production environment.

Approach And MethodologyForrester took a multistep approach to evaluate the impact that IBM WebSphere Application Server can have on an

organization (see Figure 2). Specifically, we:

Interviewed IBM marketing/sales/consultants personnel and Forrester analysts to gather data relative toWebSphere Application Server and the application server marketplace.

Interviewed an organization that migrated portions of their development, test, and production environments toIBM WebSphere Application Server from an open source application server to obtain data on the costs, benefits,

and risks of the investment.

Constructed a financial model representative of the interviews using the TEI methodology. The financial model ispopulated with the cost and benefit data obtained from the interviews as applied to the representative

organization.

Figure 2

TEI Approach


Forrester employed four fundamental elements of TEI in modeling IBM/WebSphere Application Servers service:

1. Costs.2. Benefits to the entire organization.3. Flexibility.4. Risk.

Construct financial

model using TEIframework

Write case

study

Perform due

diligence

Conduct

customerinterviews


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Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forresters

TEI methodology serves the purpose of providing a complete picture of the total economic impact of purchase and

migration decisions. Please see Appendix A for additional information on the TEI methodology.


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Analysis

Interview HighlightsThe interviews uncovered a number of characteristics about this public-sector agency and its strategy to improve

service and efficiency within a highly secure environment using IBM WebSphere Application Server:

The organization is a US federal agency. The agency employs roughly 200 developers within the IT environmentsupporting applications used directly by agency employees as well as indirectly by employees within other federal

agencies. Within the agency, 10,000 users and 20,000 users across different agencies leverage agency supported

applications.

In addition to WebSphere Application Server, the agency has adopted components from the broader WebSpherefamily including WebSphere Application Server Network Deployment, WebSphere MQ, WebSphere Message

Broker, and WebSphere eXtreme Scale elastic caching solution.

Prior to 2008, the agency was using primarily open source application servers as a platform to create and supportthe applications within their production and test environments. In 2008, the organization saw significant growth

of the number of applications within its application environment, prompting the agency to consider a standard

development platform for new and existing applications. At the time, the organization noted the difficulty to

respond quickly to support incidents on the open source platform, causing unnecessary impact to the IT and end

user environment. In addition, the agency found the clustering features of its open source application to be

inadequate the clustering features aggravated the impact of support incident across the application landscape.

As a result, the agency decided to move to the WebSphere Application Server environment, migrating its existing

production applications away from the existing open source environment.

The organization selected WebSphere Application Server for three critical reasons.o First, as the development environment grew from demand both inside and outside the agency, there was

need to adopt clustering and high availability across applications, reducing the number and impact of

support incidents. IBM provided improved quality of service and faster response times to queries or support

requests, which lead to reduced user downtime.

o Second, the organization was able to move to a common platform across the agency from different opensource application servers, which allowed them to improve cost efficiencies to their contract as their support

requirements grew.

o Third, the organization saw the ability to increase automation within their application development andchange request process, reducing the overall administration burden to IT.

The agency noted the investment in WebSphere Application Server and associated WebSphere applications was asignificant undertaking for the IT organization. One of the largest implementation risks for the agency was the

potential for slow adoption of the new development platform by developers. Even though WebSphere

Application Server is a Java application server just like the prior open-source product, the developers had to

master WebSphere Application Servers development conventions and features. To mitigate this risk, the

organization hired IBM Global Business Services to develop a core implementation road map for the application

server platform. In addition, the agency invested significantly in developer training on the new platform.


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Migration to WebSphere Application Server was relatively smooth due in part to the open standards inherent inthe product. The organization migrated applications over time based on core business requirements and IT

resources available to support and develop on the new platform.

The agency selected WebSphere Application Server in part for its security capabilities, which were stronger thanthose of the prior application server. The organization felt it had very robust security controls and procedureswhich the WebSphere Application Server platform integrated into their existing capabilities, providing a level of

security that met the needs of the organization.

Framework AssumptionsTable 2 provides the model assumptions that Forrester used in this analysis.

Table 2

Model Assumptions

Ref. Metric Calculation Value

A1 Hours per week 40

A2 Weeks per year 52

A3 Hours per year (M-F, 9-5) 2,080

A4 Hours per year (24x7) 8,736

A6 Hourly salary $60


The discount rate used in the PV and NPV calculations is 10% and time horizon used for the financial modeling is 3

years. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are

urged to consult with their respective companys finance department to determine the most appropriate discount rate

to use within their own organizations.

CostsCosts around IBM WebSphere Application Server for the interviewed organization include cost of software, hardware,

maintenance, implementation, and ongoing platform support. The actual cost of the solution will vary depending on

the size of the development staff, the number and size of applications as well as the overall level of support. Based on thediscussions with the interviewed customer, the cost of platform hardware is incorporated into the cost of

implementation. The organization was able to repurpose existing hardware for the migration to WebSphere

Application Server. The cost of repurposing was part of the overall implementation cost. Organizations investing from

a greenfield environment may need to incorporate the cost of hardware into their analysis.


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License And Annual MaintenanceThe cost of licensing represents a portion of the overall investment cost of the solution. License costs are priced based

on typical discount according to the number of development licenses and client nodes the organization will deploy.

Maintenance costs are calculated 20% of total license cost. Based on interviews with the representative organization, the

total three-year license and maintenance cost equates to $1,456,000. This would have been enough to cover the cost of

the production and testing environment.

Training CostThe cost to train the individual developers on the new IBM WebSphere Application Server platform was another cost

cited by the interviewed organization. Prior to implementing IBM WebSphere Application Server, the majority of the

developers had been trained on the legacy open source development platform, and the organization had made an

investment to retrain the developers on the IBM WebSphere Application Server platform. For the purpose of this

analysis, we assume that each of the developers will participate in training. The cost per developer includes the formal

cost of training, the lost productivity from participating in the training session, as well as the indirect cost of informal

training. Table 3 illustrates the total training cost of $150,080.

Implementation CostThe cost to implement includes the cost of internal resources to plan and deploy as well as an external third party to aid

in planning and implementation of the WebSphere Application Server platform. The organization indicated that it

invested roughly $198,000 in internal and external efforts for the implementation.

Cost Of Support And AdministrationIn addition to initial implementation costs, the organization also needed to devote staff for the ongoing support of the

WebSphere Application Server platform. Ongoing support costs include the IT and business labor necessary to support

and manage the application environment. For the purpose of this analysis, the organization allocates on average per

year $1,180,800 for ongoing support.

Total CostsTable 3 illustrates the total incremental costs for the WebSphere Application Server platform.


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Table 3

Total Incremental Cost

Initial cost Year 1 Year 2 Year 3 Total

License andmaintenance

$1,040,000 $ 208,000 $ 208,000 $1,456,000

Implementation $198,000 $198,000

Training $128,000 $19,200 $2,880 $150,080

Internal support $393,600 $393,600 $393,600 $1,180,800

Total incremental cost $ 1,238,000 $ 521,600 $ 620,800 $ 604,480 $2,984,880


BenefitsThe second component of this analysis looks at the potential benefits associated with an organization migrating a

portion of their application development, test, and production environment to IBM WebSphere Application Server.

Improved Application Support

One of the key areas of benefit mentioned by the interviewed organization was the ability to have greater control in thespeed to respond to support incidents within the application environment. Prior to the investment in WebSphere

Application Server, the organization lacked the ability to quickly diagnose and recover from an application incident,

leaving the organization with few external choices to help diagnose and recover from an issue. While the open source

environment was heavily used by developers, incident resolution was typically left to costly developer resources. This in

turn resulted in developers focusing on reactive issues instead of more innovative, proactive projects. With WebSphere

Application Server, the organization had a clear path to a vendor to resolve existing incidents as well as to make them

better prepared to avoid both major and minor incidents. In addition, automation features and the ability of clustering

pools of application servers made it easier to diagnose, leading to faster resolution.

To calculate this benefit, Forrester assumes in the pre-investment environment that the organization had to respond to

a combination of major and minor incidents across its application environment. Each of these incidents was classifiedby projected length of incident and impact to users. In the pre-WebSphere Application Server environment, the

organization spent a significant amount of time diagnosing and resolving both major and minor incidents. With the

investment in WebSphere Application Server, the organization was able to reduce the overall number of incidents while

reducing average time to respond to existing incidents by as much as 45%. Table 4 illustrates the benefit from reduced

major and minor incidents.


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Table 4

Reduction In Number And Duration Of Major Incidents

Ref. Description Calculation Value majorincidents

Value minorincidents

A1 Number of incidents 30 80

A2 Length of time(hours) 40 20

A3 Resource requirement 20 5

A4 Cost per resource $60 $60

A5 Reduction in number of incidents 60% 50%

A6 Reduction in time to recover 45% 45%

A7 Total incident cost A1*A2*A3*A4 $1,440,000 $480,000

A8 Total savings from reduction inincidents

A6*A7 $864,000 $240,000

A9 Total savings from improved timeto restore

A1*(1-A5)*A2*A3*A4*A6

$259,200 $108,000

A10 Total annual savings A8+A9 $1,123,200 $348,000


Reduction In Support Costs (Legacy Server Environment)By moving to an enterprise license model, the organization was able to realize savings in two ways. First, it enabled the

organization to purchase high levels of platform support without having to pay a cost premium in the open sourceenvironment. The organization noted in the previous open source environment the cost of the support contract

ultimately varied based on the level of response time, with an incremental cost required for reducing the stated SLA.

The variability was based in part on the level of support required for each application.

Second, as the organization scaled their application development environment, it was faced with the option of either

purchasing additional premium open source support or consolidating support through the WebSphere Enterprise

license. The organization saw the opportunity to realize additional cost savings as the number of applications and the

need for mission-critical support grew as compared with purchasing individual support contracts for each application.


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This allowed the organization to cover all applications under a common IBM support agreement, leveraging cost

savings across applications.

To calculate the impact of support savings, the model assumes in the open source environment the organization was

paying the cost of premium support based on the number of CPUs and the number of development FTEs equating to

$14,000 per CPU and $14,000 per average seat. Organizations may have a different pricing model (price by core),depending on the time of purchase. The model assumes at the point of migration, the representative organization had

32 CPUs running the selected mission-critical applications and 100 FTEs supporting the development. For the

representative organization, moving to an enterprise license resulted in an estimated 30% cost savings to support the

mission-critical applications. In addition, assuming the rate of growth for both staffing and hardware increases yearly

by 10%, its possible to calculate the future cost savings within the environment. Table 5 illustrates the calculation used.

Table 5

Reduction In Annual Support

Ref. Description Calculation Year 1 Year 2 Year 3 Total

B1 Estimated growth (yearly) 10% 10%

B2 Number of CPUs (pricingmodel at time of purchase)

B1*B2 32 35 39

B3 Development FTE B1*B3 100 110 121

B4 Cost per license (Averagecost) $14,000 $14,000 $14,000

B5 Estimated reduction inlicense cost

10% 10% 10%

B6 Total annual savings ((B2*B5)+(B3*B5))*B4

$184,800 $203,280 $223,608 $611,688


End User Operational Savings Application AvailabilityThe other impact of improved automation and maintaining high levels of performance is the impact on the end users of

the application. The migration to WebSphere also provided the organization the ability to take advantage of a

virtualized application platform, allowing for fewer servers for the same application portfolio. This makes possible new

configurations, such as dynamic virtualization between pools of application servers allowing the organization to

maintain high levels of availability. In addition, through clustering, the organization can take down a part of the cluster


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without having to take down the whole application for all users or invest in additional external high availability

software.

To calculate the impact of performance, the model assumes the average number of users accessing the application at

any given time equates to 15,000 users. In the previous open source environment, if the organization needed to take

down the application to perform unplanned maintenance related to performance, the average amount of time theapplication would be down was 120 minutes. Assuming the organization was able to avoid the loss of availability, an

end user would regain on average 30% of their time that was lost when the application was unavailable. WebSpheres

ability to have cluster deployments allows administrators to go to each individual server reconfiguring changes, which

would reduce the time to recover from downtime. In addition, the failover capability found within WebSphere

Application Server can allow open transactions to failover instantly, reducing the time to recover the file and avoiding

the task within the open source environment of manually moving the file over. Using a fully loaded user blended cost

per hour of $120, this would equate to a total savings of $1,080,000 per year. Table 6 illustrates the calculation used.

Table 6

End User Operational Savings

Ref. Description Calculation Value

C1 Average number of clients accessing application 15,000

C2 Cost per user $120

C3Time to bring down application alternative environment(hours) 2.0

C4 Productivity time saved 30%

C5 End user operational savings application availability C1*C2*C3*C4 $1,080,000


Cross Platform IT Development Team SavingsThe final area of impact noted by the interviewed organization was reduced development within the application

development environment specifically to improve the speed of certain functions around installation, configuration and

deployment of applications. Prior to the investment, the organization had limited virtualization within their

environment due in part to multiple open source platforms, Standardization on a single platform allowed the

organization to increase their levels of automation and allowed for reduced time and effort to install a new application

and move into production.


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To calculate this benefit, the model assumes the organization requires on average 200 hours to test and move

applications from a test environment into production across all applications. Assuming 40 new application changes

across all 1500 applications over the course of a year, through faster integration, the organization will be able to

improve the overall cost by 30%.This is driven by the ability to script different administrative actions and automate the

scripts, allowing for administrators to spend less time on manual tasks and reducing potential errors. WebSphere

Application Server provides the capability of providing 100% of functionality while in the previous environment the useof scripts was limited. Table 7 illustrates the calculation used.

Table 7

Cross Platform IT Development Team Savings

Ref. Description Calculation Value

D1 Time to set up a new application (hours) 200

D2 Number of new application changes 40

D3 Hourly cost $60

D4 Estimated savings (percentage) 30%

D5 Cross platform IT development team savings D1*D2*D3*D4 $144,000


Total BenefitsTable 8 illustrates the total three-year benefits as a result of the migration to the IBM WebSphere Application Server

platform.


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Table 8

Total Incremental Benefit

Year 1 Year 2 Year 3 Total

Reduction in support costs (legacy serverenvironment)

$184,800 $203,280 $223,608 $611,688

IT operational savings reduced supportincidents

$261,000 $348,000 $348,000 $957,000

End user operational savings applicationavailability

$810,000 $1,080,000 $1,080,000 $2,970,000

Cross platform IT development team savings $108,000 $144,000 $144,000 $396,000

Total incremental benefit $1,363,800 $1,775,280 $1,795,608 $4,934,688


FlexibilityFlexibility, 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 right or the ability to

engage in future initiatives, but not the obligation to do so. There are multiple scenarios in which a customer might

choose to implement WebSphere Application Server and later realize additional uses and business opportunities.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix

B).

Forrester believes that organizations purchasing IBM WebSphere Application Server can take advantage of these

flexibility options; however, quantification (using the financial industry standard Black-Scholes or the binomial option

pricing models) of the additional value associated with these options for this customer would require scenario

development and forward-looking analysis that is not included at this time.

One potential area of flexibility benefit identified by the interviewed organization was around the ability to standardize

on a core application server platform. As a result, standardization makes it easier to train and roll out new capabilities

across the development environment, reducing the time to deploy future capabilities. As the organization expands andgrows, having a standardized WebSphere Application Server lets the organization maintain a highly secure

environment while being able to control the use and accessibility of the platform, minimizing potential future security

exposure and liability and liability.

RiskForrester defines two types of risk associated with this analysis: implementation risk and impact risk. Implementation

risk is the risk that a proposed investment in WebSphere Application Server may deviate from the original or expected


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requirements, resulting in higher costs than anticipated. Impact risk refers to the risk that the business or technology

needs of the organization may not be met by the investment in WebSphere Application Server, resulting in lower

overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit

estimates.

Quantitatively capturing investment and impact risk by directly adjusting the financial estimates results in moremeaningful 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.

The following implementation risks that affect costs are identified as part of this analysis:

Installation and testing could demand more time than originally anticipated. Acquisition costs could be higher than originally anticipated for infrastructure and software.

The following impact risks that affect benefits are identified as part of the analysis:

The level of savings might be lower than originally anticipated due to unforeseen changes within the environmentsuch as a reduction in the growth of users and applications as well as slower adoption to the WebSphere

Application Server platform.

Table 9 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.


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Table 9

Cost And Benefit Risk Adjustments

Costs Initial Year 1 Year 2 Year 3 Total

License and maintenance $1,040,000 $218,400 $218,400 $1,476,800

Implementation $604,800 $604,800 $1,209,600

Training $207,900 $207,900

Internal support $153,600 $23,040 $3,456 $180,096

Benefits Initial Year 1 Year 2 Year 3 Total

Reduction in support costs (legacy serverenvironment)

$184,800 $203,280 $223,608 $611,688 $504,000

IT operational savings reduced support incidents $247,950 $330,600 $330,600 $909,150 $747,017

End user operational savings applicationavailability

$769,500 $1,026,000 $1,026,000 $2,821,500 $2,318,328

Cross platform IT development team savings $102,600 $136,800 $136,800 $376,200 $309,110



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Financial Summary

The financial results calculated in the Costs and Benefits sections can be used to determine the ROI, NPV, and payback

period for the organizations investment in WebSphere Application Server. These are shown in Table 10 below.

Table 10

Cash Flow Non-Risk-Adjusted

Cash flow original estimates

Initial Year 1 Year 2 Year 3 Total Present value

Costs $1,238,000 $521,600 $620,800 $604,480 $2,984,880 $2,679,394

Benefits $1,363,800 $1,775,280 $1,795,608 $4,934,688 $4,056,059

Net benefits ($1,238,000) $842,200 $1,154,480 $1,191,128 $1,949,808 $1,376,665

ROI 51%

Payback period Within 24 months


Table 11 below shows the risk-adjusted ROI, NPV, and payback period values. These values are determined by applying

the risk-adjustment values from Table 9 in the Risk section.

Table 11

Cash Flow Risk-Adjusted

Cash flow risk-adjusted estimates

Initial Year 1 Year 2 Year 3 Total Present value

Costs $ 207,900 $ 1,606,880 $654,720 $635,136 $3,104,636 $2,686,978

Benefits $ 1,304,850 $1,696,680 $1,717,008 $4,718,538 $3,878,456

Net benefits $(207,900) $(302,030) $1,041,960 $1,081,872 $1,613,902 $1,191,478

ROI 44%

Payback period Within 24 months



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IBM WebSphere Application Server: Overview

IBM recognizes that companies need an application infrastructure that drives efficiencies, is secure and is just as dynamic as todays

business climate. The IBM WebSphere Application Server Family was designed from the ground up to enable company IT

operations and development to increase business agility and optimize costs by:

Creating more innovative applications that improve customer satisfaction with access to real-time communicationtechnologies and a comprehensive set of open standards-based programming models.

Achieving cost savings through the highly effective performance that WAS offers by running the same number ofworkloads on fewer servers and by leveraging advanced clustering for higher availability and scalability.

Reducing development costs with no-charge developers licenses. Reducing administration costs by providing mature and user-friendly centralized admin and management tools. Flexibility of deployment configurations WebSphere Application Server can go from single server to moderately

sized configurations to dynamic web applications requiring web tier clustering and failover across multiple application

server instances.

Fast and small WebSphere Application Server includes the new Liberty profile -- a simplified and lightweight runtime for web applications boasting fast start time, a small footprint and low resource usage, along with simplified

configuration and dynamic configuration updates that increase developer productivity The Liberty profile is 50MB

small and is so resource-efficient that it can run on a Raspberry Pi credit-card-sized computer."

The latest WebSphere Application Server V8.5 release brings new Intelligent Management capabilities into the mainstream

application server runtime and helps drive down total cost of ownership while improving overall qualities of service. These

enhanced resiliency capabilities were available separately through WebSphere Virtual Enterprise. They are now included within

WebSphere Application Server Network Deployment V8.5.

Application Edition Management enables interruption-free application rollout. Applications can be upgradedwithout incurring outages to your end users.

Application Health Management monitors the status of your application servers and is able to sense and respond toproblem areas before end users suffer an outage. Health Management proactively deals with application and application

infrastructure issues before they become acute problems by monitoring health conditions of your infrastructure and

executing associated corrective actions automatically.

Intelligent Routing improves business results by ensuring priority is given to business-critical applications.Requests are prioritized and routed based upon administrator-defined rules. This new routing manages in-bound

transaction (workload) requests in real time and routes work to the application server that can do it best to streamline

processing through the system for higher priority requests.

Dynamic Clustering can proactively provision and start or stop new instances of application server Java VirtualMachines (JVMs) based on workload demands. Provides the ability to meet Service Level Agreements when multiple

applications compete for resources. Allows workloads to be classified, prioritized and intelligently routed. Resource

adjustments are made if needed to consistently achieve predefined SLAs.

Enhanced memory leak detection and protection monitors application activity and performs diagnostic actions whenan application or an individual module stops. This helps to increase application server availability and reduce potential

downtime.

With WebSphere Application Server, IBM also offers a number of other advanced capabilities, including, but not limited to: batch

processing (included free), automatic collection of problem data via the IBM Support Assistant Data Collector (free separate

download), enhanced administrative audit (included free), a lightweight set of developer tools for Eclipse (free separate download),

the Rational Application Developer (RAD) a complete environment for enterprise development which may be purchased

separately and a Migration Toolkit (free separate download)


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Appendix A: Total Economic Impact Overview

Total Economic Impact is a methodology developed by Forrester Research that enhances a companys technology

decision-making processes and assists vendors in communicating the value proposition of their products and services

to clients. 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.

BenefitsBenefits 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 beencompleted. This ensures that benefit estimates tie back directly to the bottom line.

CostsCosts 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 the

investments and expenses necessary to deliver the proposed value. 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.

RiskRisk 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 minimum, three values are calculated to estimate the underlying

range around each cost and benefit.

FlexibilityWithin 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 enterprisewideupgrade 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 present value that can be estimated. The flexibility component of TEI

captures that value.


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Appendix B: Glossary

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 respectiveorganization 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 net present value of cash flows.

Payback period: The breakeven point for an investment. The point in time at which net benefits (benefits minus costs)

equal initial investment or cost.

Return on investment (ROI): A measure of a projects expected return in percentage terms. ROI is calculated by

dividing net benefits (benefits minus costs) by costs.

A Note On Cash Flow TablesThe following is a note on the cash flow tables used in this study (see the example table below). 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 Framework Assumptions section) at the

end of the year. Present value (PV) calculations are calculated for each total cost and benefit estimate. Net present value

(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.

Table [Example]

Example Table

Ref. Category Calculation Initial cost Year 1 Year 2 Year 3 Total


1 Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost and

benefit estimates. For more information on Risk, please see page 16.

Ibm-1064-The Total Economic Impact to IBM WebSphere Application Server

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