Automotive Industry IT Requirements

Total Cost of Ownership

Objective:

The objective of this analysis report is to study and analyse the present IT needs of the company and compare the economic benefits obtained when the company shifts to cloud solution as compared to the traditional On Premise IT configuration setup. The company chosen for this analysis is XYZ from the automotive industry.

Company Description:

XYZ is a global automobile manufacturing company and is a sub division of the Indian company ABCD. The company is known for its luxurious automobiles, buses, motorcycles and trucks. The headquarters of the company is in Dublin, Ireland. The company first gained its reputation back in 1990 and traces its origin to the founders of the company AB and CD. XYZ was first financed by PQR in the initial days. The first automobile launched by XYZ was regarded as the first CNG powered automobile. The slogan for XYZ is “Just the best”. Since 1998 XYZ is the top growing brand with the growth rate of 20%. Son of AB joined XYZ in 2001 after completing his MBA from a very reputed university in the UK and has been bringing a unique approach to branding and creativity in design ever since, which in turn has helped XYZ in achieving great heights in the respective industry.

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A Chinese automobile entrepreneur, DEF who worked with a Chinese automobile company created the trademark for XYZ in 1991 and the first automobile by XYZ was named after him which had a power of 30 hp. The first XYZ brand name luxurious vehicle was produced during 1992 with the merger of AB and CD. Throughout the 1990’s XYZ produced a car named XYZ 123 which was supposedly the best luxurious car in those days and was used by the Queen of the UK. XYZ 123 was known for its exquisite design and bullet proof windshield. Other similar models were sold to private buyers only at auctions in the initial days. By 1995, the automotive division of XYZ was in financial difficulties because of the internal conflicts among the board of XYZ. It was during this period a shareholder meeting was held to decide whether to find an alternative to the issues or to go into liquidation. It was then decided to carry on, by trying to get funds from the current economy booming cars and it exploited so successfully that it also got the rights to manufacture the German car ‘The FGH’. After few modifications to the motorcycle engine XYZ started manufacturing mini cars as well. The success of these mini cars was sufficient to get XYZ back on its feet.

Today, XYZ is a leading automobile company which also deals with cars in Formula 1. XYZ produces supercars under the XYZ supercar subdivision and motorcycles under the XYZ moto sub-division. The company has got over 20 showrooms in Europe with over 5000 employees. The purpose of the company is to deliver luxurious engineering to its customers. Thus, they make the customers feel better than they ever thought they can be. Customers are the heart of XYZ’s business and they have made it a point to provide exceptional customer care. Today, about 40% of the shareholder of XYZ is the Gerrard family of UK while the rest is in public float. By 1996, XYZ acquired the JKL company of Italy. JKL was briefly batched with the brand of XYZ until it was completely absorbed in a year’s time. The reason XYZ purchased JKL was that it was interested in the development of JKL in the overhead camshaft in automobile applications. The factory thus obtained from JKL was outmoded and XYZ’s immediate gain was, a stock of highly qualified engineers and other personnel. JKL continued manufacturing their existing cars for a short period of time with the front and rear axles of XYZ till was closely incorporated into XYZ. In 1994, XZY acquired a large stake in the European based industrial design studio ‘The Classic Designs’, which they fully acquired by 1995. Also, by 1997 XYZ acquired the RALF group and owned it for some 3 years and then sold it when it was incurring huge loss in the automotive industry.

After serving on the design team of XYZ for 7 years Mr. Lampard announced his departure from XYZ. He was replaced by Mr. Cole. Mr. Cole was known for his radical design contribution such as the ‘XYZ 456’ and ‘XYZ 789’. In 2001 production rights of the ‘Mourinho Motorcycles’ was purchased by XYZ for 20 million euros.

The company brings great value to their customers in a lot of ways like including promotions throughout the year, expert car care and maintenance advice and 4 points per ‚¬100 with their famous ADVANTAGE CARD. The customer can also subscribe to for extra benefits such as more treat for over 40 schemes by XYZ.

On Premise IT

As the company is evolving as a big brand day by day in the European automotive market, they need to have a proper IT setup too. As of now, the company has an on premise IT setup with its main office in Dublin 1, Ireland. Being an automotive company, there are not much departments in XYZ that need the servers or software. The servers are required only for running SQL databases to store all the company data related to the customers, inventory, employees, sales and purchases. Tape storage system is used for the backup purpose. To have the replicated copies of the data, XYZ makes use of RAID 10. Currently, XYZ is using a 25 Mbps bandwidth connection to connect all the servers and to ease out the networking. It includes hubs, switches and bridges for providing seamless networking.

The hardware and the software configurations and other aspects related to the on premise IT setup of XYZ are as mentioned below:

On Premise Hardware:

1. Intel® Xeon® Processor: The company chose the Intel® Xeon® Processor to run and support the business applications and also to reduce the response time of the servers.
2. Dell PowerEdge R910: Dell PowerEdge is a tower server having Intel E 7510 chipset. This chipset is popularly known for its key features like reliability, data protection and to improve the business productivity. It contains 16 GB ram with SATA connected to 8 TB storage.

On Premise Software:

1. Microsoft SQL server: XYZ is currently using SQL server for maintaining its database and keeping all the records of the customers, employees, sales and purchase, inventory management etc.
2. Kaspersky Antivirus
3. Operating System: Windows 10 is running on the front-end computers of the company while Ubuntu 16.04.01 server edition is used for servers.

Storage:

Currently, the company has 8 TB storage for storing its data. For backups, the company makes use of tape storage backup system.

IT support Team:

Currently XYZ has a small team dedicated to IT support. This team is in charge of configuring, administering and handling the IT systems present in the company. Also, the support team is responsible for managing the centralized server as well as to ensure that the complete data of XYZ is being properly managed and secured.

As XYZ is expanding its business gradually, the current IT setup of the company is not enabling them to scale up. To scale up, they must increase their current on premise setup by adding more number of servers and increasing the storage space to incorporate the large amount of data onto the systems. With the increasing number of customers, there is a need for XYZ to have proper databases as well as additional software’s like ERP, CRM, Security Suite, LogMeln etc. Thus, the company is looking forward to opening new offices within Dublin. Also, there is a need for the company to increase the storage from 8 TB to 500 TB for data storage and backup purposes. Hence, the company also wants to eliminate the tape storage system, as it seems to be a costly option. The company thus, needs to take steps towards the IT sector and keep increasing it with the growth of business, so that it becomes easy to manage the daily and continuous needs of the company and the employees as well.

Thus, this case study is to provide XYZ with the best economical solution for them to setup their new IT office in Dublin by making sure to cover all their needs and eliminating all the problems the company is currently facing and also, reducing the expenses as much as possible.

On Premise Cost Analysis:

Total Server Hardware Cost:‚¬45,530

Server Hardware maintenance: ‚¬34,148

Cost for 5 years(@ 15 %/year)

Total Server hardware + maintenance: ‚¬79,678

Total Peak Power consumed in kW: ‚¬4.5 kW

Rack Infrastructure Cost:

Assuming 1 rack can accommodate 42 units; XYZ would require 1 rack.

1. Rack Chassis with PDU cost *‚¬4000 per rack:‚¬3590
2. PDU’s, dual 280V per rack cost *‚¬620 each, 2 per rack for higher availability: ‚¬1240
3. Top of Rack Switch (48 port 10/100/1G, 2 per Rack for higher availability, ‚¬6000 each): ‚¬12000
4. Development Cost of Rack and Server* ‚¬350 per server: ‚¬2800
5. Total Rack Infrastructure Cost: ‚¬19630
6. Total Cost ( Racks + Hardware): ‚¬ 99,308

Software Costs for Server:

Being an automotive company XYZ uses Microsoft Dynamics GP software as their ERP software, Microsoft Dynamics CRM as their customer relationship management software and Microsoft SQL as their database software solution.

Microsoft SQL Server:‚¬3717

Microsoft SQL Server Licence, ‚¬2000 per core: ‚¬16000 for 8 core processors

Kaspersky Antivirus: ‚¬725 per user = ‚¬18,125 per user

Total Server Software cost: ‚¬37,842

Total Server Hardware & Software Installation, maintenance and updating cost: ‚¬22,500

TOTAL SERVER COSTS (HARDWARE + SOFTWARE) FOR 5 YEARS: ‚¬159,400

On Premise Facilities Cost:

Total Power Consumed by Servers:4.5 kW

Metered Cost per kWh:‚¬0.19

Estimated Power cost/month:‚¬589

Total monthly facilities cost:‚¬2173

Total facilities cost for 5 years:‚¬130,380

Storage Cost:

SAN type storage: 500TB

XYZ currently is in need of about the raw capacity requirement of 500 TB memory HDD. Also, XYZ currently makes use of RAID 10 with SQL servers for backup.

Storage Backup Cost:

Number of Racks required to host storage: 1 (Single rack can be used to 1000TB)

Operating Rack Monthly Cost: ‚¬1320

Total data center space, power, cooling costs for 5 years: ‚¬79,200

Hence, total storage costs for 5 years would be:-

Total Storage Cost = Raw Capacity cost + Backup Cost + Overhead Cost + Final Cost

= ‚¬991,232 + ‚¬415,008 + ‚¬79,200

Total Storage Cost = ‚¬2,476,672

Bandwidth Costs:

Total Bandwidth Cost: ‚¬4500

IT Labour Cost:

Total IT salary cost: ‚¬1,590,000