D2 3 Computing e-Infrastructure cost calculations and business _models_vam1-final

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e-‐FISCAL: www.efiscal.eu EC Contract Number: 283449 IaaS-‐ Infrastructure as a Service Logical processor or logical CPU 13 or logical core or CPU core NGI -‐ National Grid Initiatives Operating Expenses (OPEX) PRACE (Partnership for Advance Computing in Europe) Total Cost of Ownership implementation first appearing in February 2002 on its Xeon server processors and in November 2002 on its Pentium 4 desktop CPUs. Later, Intel included this technology in Itanium, Atom, and Core 'i' Series CPUs, among others. Intel's proprietary HT Technology is used to improve parallelization of computations (doing multiple tasks at once) performed on PC microprocessors. For each processor core that is physically present (physical core), the operating system addresses two virtual or logical cores, and shares the workload between them when possible. The main function of hyper-‐threading is to decrease the number of dependent instructions on the pipeline. One of cloud computing models; in this most basic cloud service model, cloud providers offer physical or more often as virtual computing cores (virtual machines), storage, network access and other infrastructure resources. IaaS providers supply these resources on demand from their large pools installed in data centres. A processor (CPU) that handles one thread of execution (instruction stream). A logical processor can be a (physical) core or a hyper-‐thread. There can be one or more logical processors per (physical) core (more than one if hyper-‐threading is enabled) and one or more cores per processor socket. NGIs are the entities responsible of procuring and operating the national grid infrastructure (in terms of computers and storage devices) and corresponding services to the research and academic communities. Operating expenses refer to expenses incurred in the ordinary course of business, such as salaries, administration and selling expenses, energy expenses, overhead, etc. These expenses are considered costs when they incur. PRACE is a unique persistent pan-‐European Research Infrastructure for HPC implementing 15 petaflop supercomputing systems in Europe. PRACE manages extreme computing power and a selected set of highly specialized services. TCO is a methodology used in order to assess the cost of a specific project over its useful life. All expected costs over the project’s lifetime are summed up and then divided by the anticipated useful life of the project to come up with a yearly cost. TCO is commonly used as a basis for calculating the costs of e-‐Infrastructures 13 http://msdn.microsoft.com/en-‐us/library/dd722831%28v=bts.10%29.aspx e-‐FISCAL : Financial Study for Sustainable Computing e-‐Infrastructures Deliverable D2.3 – Computing e-‐Infrastructures cost estimation and analysis – Pricing and Business models 20
e-‐FISCAL: www.efiscal.eu EC Contract Number: 283449 2. State of the Art The state of the art review was initiated as the first step within the project and continued throughout the lifetime of the project. It included review of publications in several domains, such as costing models for e-‐Infrastructures, cloud computing, business models and Green IT. However, costing models for e-‐Infrastructures and cloud computing did have the most direct link with the core research question, hence publications in those domains have been reviewed most extensively. The state of the art review was conducted through usual desk research methods and by attempting to contact authors of the papers found in order to see if they had additional suggestions. This engagement with the authors produced additional references. The desk research was aimed at finding relevant project reports, conference papers, academic papers (accessed through university subscriptions), Internet articles, professional reports, etc. The relevant documents reviewed are published in the state of the art repository (http://www.efiscal.eu/state-‐of-the-‐art). At the end of the project the e-‐FISCAL repository counts 50 references. 2.1 Costing models The review of the state of the art revealed several categories of studies relevant to our project under the lens of costing models which are explained below. 2.1.1 Cost categories A first category of papers deals with the typical cost categories that should be included when analysing the cost of computing e-‐Infrastructures. The review of the state-‐of-‐art-‐literature revealed that there is a rather common break down of HTC/HPC costs into the following categories: 1) computing and storage hardware costs including interconnection costs, 2) auxiliary equipment costs (cooling, UPS, power generator), 3) software costs, 4) personnel costs, 5) site operating costs (including electricity and premises costs) and 6) connection costs. This cost breakdown is stated in Opitz et al (2008) and has been repetitively adopted in several other studies. Kashef and Altmann (2012) review several papers and propose a similar categorization as that of Opitz et al. (2008). These cost categories fall within two main cost distinctions: Capital Expenditures (CAPEX) and operating expenses (OPEX). Capital Expenditures are incurred in order to create future benefits e.g. assets acquired have a useful life beyond one year. The cost is accounted for during the periods the assets are economically used through depreciation. Operating expenses refer to expenses incurred in the ordinary course of business, such as salaries, administration and selling expenses, energy expenses, overhead, etc. These expenses are considered costs when they incur. 360 Intersect in the HPC Budget Allocation Map -‐Willard et al (2013)-‐ have also very similar categorization although naming may vary slightly. 2.1.2 Costing methodologies A second category of papers dealt with the costing methodology to be applied in order to calculate yearly costs. There are several cost accounting methodologies in order to perform a costing exercise e.g. activity based costing, life cycle costing 14 , total cost of ownership (TCO) 15 , full cost accounting (FCA) 16 , etc. Generally speaking, selection 14 Life Cycle costing is a tool to calculate the economic costs caused by a product or a service during its entire life cycle, from purchase of raw material and components, cost of production and investments to usage, maintenance and waste management. EU had commissioned the development of elaborated guidance on the application of life cycle costing and on e-‐FISCAL : Financial Study for Sustainable Computing e-‐Infrastructures Deliverable D2.3 – Computing e-‐Infrastructures cost estimation and analysis – Pricing and Business models 21
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