Time to Put an End the TCO versus TCA Debate

For more years than anyone cares to admit, the IT industry has been caught up in a largely artificial debate about the total cost of ownership (TCO) for IT infrastructure versus the total cost of acquisition (TCA).

Michael Dell on stage announcing Dell Technologies family of brands

TCO has been a way to shift the discussion of the large up-front cost of IT infrastructure to a more real metric – the value over the life of said IT resource, versus the cost of acquisition. It’s a way to move the discussion off the material upfront investment that IT traditionally represents.

It’s a real point – but there’s another way to make the debate moot – take the large up-front cost of IT off the table entirely. That’s what we’re doing this week at Dell EMC World.

We’ve already been aggressively moving down that path with a set of unrivaled, pre-integrated converged and hyper-converged systems, which eliminate all the integration and lifecycle costs that have been foisted on internal IT organizations for years. That’s what VxBlock, VxRack, VxRail, and XC Series have always been about. Instead of requiring an internal IT organization to stitch together compute, storage and networking on their own to create a functional system and then carry the zero-value burden of maintaining the stack for its full lifecycle, we invested in developing the intellectual property necessary to create truly turnkey systems and appliances to drive the transition to software-defined data centers.

BUT – they always had a material “step in” cost that needed to be absorbed. We’re making that step smaller, more flexible, and, in one case, eliminating it completely.

How?

  • We’re lowering the entry point for HCI Appliances, which are simple and plug-in to existing networks:
    • Announcing new single processor options for VxRail Appliances priced as low as $25,000 USD street price for a three-node cluster as part of our expansive VxRail 4.5 updates
    • A new XC Series appliance–the XC430 Xpress–that’s a robust entry offering with full features and optimized for the smallest environments up to four nodes
    • Revamped and new Ready Nodes across ScaleIO, VMware vSAN and Microsoft Storage Spaces Direct for customers who want to build-their own stacks – with more flexibility (but of course less turnkey outcomes)
  • We’re making the entry point more flexible for HCI Rack Scale-Systems, which transform the network/SDN:
    • VxRack SDDC now offers six additional PowerEdge R630-based server nodes to both increase high performance as well as expand entry level options in cores, memory and CPUs
    • Expanded VxRack FLEX configurations to support Dell EMC PowerEdge R930, enabling the most data-demanding applications such as OLTP, in-memory databases, OLAP, CRM and ERP to be run on a pre-integrated system

In the coming months, we’ll also be adding support for the Dell EMC PowerEdge 14th generation server portfolio across the Dell EMC HCI and Ready Nodes portfolio.

But here comes the mind-blowing part as it relates to the cost of acquisition – we’re introducing a new option which eliminates that step-in acquisition cost entirely. We are really, really pushing the envelope here.

We’re launching Dell Financial Services Cloud Flex for HCI, which fundamentally changes how customers can acquire HCI on-premises with a cloud-like consumption mode. DFS Cloud Flex for HCI offers a flexible, risk-free payment solution that eliminates initial capital costs and spreads payments over time with no obligation after the first year.

We challenged ourselves to put our money where our mouth is—one of the biggest benefits of HCI is that you can start small, grow as you need—which means “overbuying” IT is a thing of the past. Also, with HCI, expansion takes minutes, is non-disruptive, and there is no “big migration event”. Why not take these technological advantages and turn them into a financial advantage?

If our VxRail and XC Series offers are as good as we think they are, the benefit to the customer is massive.  Uniquely, as the only private IT giant, Dell EMC can partner with our customers in the long term. If we’re doing a good job, customers will consume our HCI more, and, if it means they buy less up front, so be it.

Cloud Flex for HCI means customers pay per month, require no lease terms, and can return at any time – after the first 12 months without any penalty for returning some or all of the equipment. It’s a complete OPEX model—no CAPEX anywhere to be seen. Heck, we’ve even built in committed price declines over time, just like some of the most aggressive public cloud models.

We’re starting Cloud Flex for HCI with Dell EMC VxRail and XC Series engineered systems – but if this as successful as I suspect (if I was a customer, I would be all over this!), we will expand it to all our HCI offers, including our HCI Rack-Scale systems.

And remember, HCI isn’t an end in itself. Customers use HCI commonly as the foundation for IaaS and PaaS models—the on-premise half of Hybrid Cloud models.

It’s why our VMware-based IaaS—the Enterprise Hybrid Cloud—is now available on VxRail and VxRack. It’s also why our Pivotal and VMware-based developer-ready infrastructure platform—the Native Hybrid Cloud—is available on VxRail and now VxRack.

We’re not stopping with our deeply integrated Dell Technologies family stacks – customers want choice when it comes to Hybrid Cloud, and we have critical technology partners in our open ecosystem.

Dell EMC also is expanding our long-standing partnership with Microsoft to deliver a new hybrid cloud platform, the Dell EMC Cloud for Microsoft Azure Stack.

Based on an instance of the same cloud operating system software stack Microsoft employs in its public cloud, Microsoft Azure Stack gives customers that have standardized on virtual machines from Microsoft the ability to seamless deploy applications either in their local data center or on the Azure cloud.

Similar to Azure Stack federating with Azure – our VMware powered Enterprise Hybrid Cloud is available in conjunction with any number of our cloud service provider partners, including Virtustream and soon Amazon Web Services (AWS). The moral of the story? Cloud is an operating model, not a place.

It’s not just us who think that Hybrid Cloud models – with simple turnkey on-premises offers paired with off-premises stacks – is the answer. A new IDC study commissioned by Dell EMC – with 1000 enterprises sampled –shows that many IT organizations already operate in hybrid cloud environments. The study shows that 79.7 percent of large organizations have a hybrid cloud strategy in place, and that 51.4 percent already employ both public and private clouds.

Dell EMC has a singular focus on injecting as much technical agility and financial flexibility into the hybrid cloud computing equation as possible. That’s only made possible by being the largest provider of IT infrastructure in the industry. Dell EMC uniquely has the financial wherewithal to not only invest billions of dollars in research and development, but also make those innovations accessible via the most flexible financial terms bar none.

DFS Cloud Flex for HCI is only the latest in a series of dividends for Dell EMC customers that would not have been economically feasible without merging the two companies. But best of all, the cost of entry to start becoming eligible for those dividends is now effectively zero.

We’re very excited about all of the different ways we’re innovating to help accelerate outcomes for our customers and partners. Thanks as always for your support and collaboration on this journey to IT at the speed of business.

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