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Big savings in operating expenses (OpEx) garner lots of attention for (SDDC). No wonder; improved VM density, lower licensing costs and up to 3x efficiency in administrator productivity are hard to ignore. But sizable time and efficiency gains are not the whole savings story.

Implementing a SDDC also can dramatically slash data center capital expenses (CapEx). How much? By nearly 50 percent and millions of dollars for a 2,500-VM installation, according to a detailed recent study by The Taneja Group. The freed funds can be invested in new, business-advancing efforts such as cloud-based, IT self-service portals.

Authors of the report, “For Lowest Cost and Greatest Agility, Choose Software Defined Data Center Architectures Over Traditional Hardware Dependent Designs”, performed a comparative cost study of three environments.

The first environment deployed the latest VMware software, running on industry standard and white label hardware components. The second environment ran a “more typical” VMware installation, on mostly feature rich, hardware components, described as a Hardware-Dependent Data Center (HDDC). To calculate CapEx savings, analysts began with new (green-field) data centers. A third scenario calculated CapEx savings for upgrading an existing data center.

The results were dramatic.  Compared to a best-in class HDDC, the SDDC using low-cost white-label hardware yielded cost savings up to 49 percent. Simply adopting VMware Virtual SAN and NSX in current virtualized environments, they found, can lower CapEx by 32 percent.

Overall, costs for a HHDC totaled $10.6 million, compared to $7.2 million for the SDDC and $5.1 million for the SDDC with white-label software. The biggest CapEx savings came in networking           (HDDC: $4.3 million, SDDC $1.3 million, SDDC with white-label $515,000). This is largely due, analysts said, by moving security and network functions to a software layer that can run on top of any physical network equipment.

Viewed another way, cost per VM plunged from $4,255 for an HDDC to $2,179 for SDDC with white-label.

For businesses updating an existing data center to SDDC, the data center transformation refreshed only a portion of infrastructure hardware. One scenario upgraded via new HDDC technology. The other used a state-of-the-art SDDC. Again, results were eye-catching.

For the SDDC, CapEx fell 42 percent. Savings rose to 58 percent for an SDDC on white-label hardware.

Each scenario also offered the promise of ongoing CapEx savings, including the swap-in of less expensive hardware over time, and continuing movement of complex embedded hardware features into virtualized software.

But there are other big benefits beyond the hard CapEx savings of moving to the SDDC.

Realizing significant CapEx savings lets organizations invest in IT-as-a-Service or self-service, for example. Increased productivity lets IT and the business focus on innovation and high value-add activities such as “speed of business” delivery. And reallocation of CapEx yields softer, but important benefits including greater satisfaction from business partners and reduced appeal of “shadow IT.”

“It is time to embrace a Software-Defined Data Center as the focus of a data center transformation,” the Taneja analysts conclude. “Based on the combined advances made over the past few years in the areas of network virtualization and scale out storage virtualization, the cost savings and improved agility are just too large to ignore.”

And that is how shifting funds from CapEx via a SDDC is a smart move for organizations preferring to invest less in the past and more in the future.

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