B2BM Project Group 6 Section B Cerebra computers has been one the players which operate in both hardware

and software space. The project is about a new Infrastructure as a service (IaaS) which Cerebra plans to offer. This primarily involves providing web data storage service to small and mid-size enterprises. Cost Structure for New Product Design To provide Infrastructure as a service, the company needs to invest in setting up a large scale data center. A data center of 500 servers will be the starting point for this service offering. Additional capacity may be built in based on the response to the service and with time. The costs involved are upfront capital investment for servers, networking equipment like routers, load balancers etc. and supporting infrastructure like generators, UPS etc. Besides this capital investment, continuing the service over the years will incur some marketing expenditure like partner events and maintenance expenses like power consumption, technical support staff etc. The detailed cost breakdown is present in the table below. The project will involve financial outlay of ~10 crores in the first year and later based on capacity additions. These costs are exclusive of migrations costs for any company as that will be determined by the longevity and scale of migration on a case-by-case basis and could also be taken up the Cerebra IaaS partners identified by the marketing efforts. First Year Costs Unit Costs (in lakhs of Rs.) Total Quantity Cost (in lakhs of Rs.) Overall Total Cost (in crore of Rs.)

Major Costs

Explanation

Technology Setup Costs: Capital Investment Server Costs (Hardware + Server OS Costs) Networking Equipment (Switches, Routers and Load balancers) Additional Infrastructure Costs (Generators, Transformers, UPS) Marketing Costs Recruiting Partners for Deployment, Hosting events for Partners (4 events each with a budget of 4Lakh) ----------16 0.16 1.5 lakh/server being the server hardware and OS costs. Initially, the set up involves 500 servers Approximately 1500 equipment needed with an average cost of Rs.5000 Approximately 5 units needed with each unit averagely costing 5 lakhs

1.50

500

750

7.5

0.05

1500

75

0.75

25

0.25

Distribution Costs

B2BM Project Group 6 Section B Approximately 50k per month spend for the 2 executives (~1Lakh) for 12 months. Buying Business Advertisement space, Trade promotions for repeat and bulk accounts

Selling, General & Administrative (SG&A) Expense

1 ------

12 ------

12

0.12

Promotional Costs Maintenance Costs (for an Year)

0.05

Power Costs

Administrative costs Total Investment for the first year Year-On-Year Costs Marketing Costs

At an average of 180W/hour/server consumption with Rs 4.5/KWH being the price. The calculation is 180*24*365*500*4.5/1000 Involve 25k per month with 20 resources (~5Lakhs). The cost is being accounted for the entire year.

------

-----35.47 0.3547

12

60

0.6 9.7847

Distribution Costs Selling, General & Administrative (SG&A) Expense

Promotional Costs Maintenance Costs (for an Year)

Recruiting Partners for Deployment, Hosting events for Partners (4 events each with a budget of 4Lakh) Approximately 50k per month spend for the 2 executives (~1Lakh) for 12 months. Buying Business Advertisement space, Trade promotions for repeat and bulk accounts

------

-----16 0.16

1 ------

12 ------

12

0.12

0.05

Power Costs

Administrative costs Total Investment for the first year

At an average of 180W/hour/server consumption with Rs 4.5/KWH being the price. The calculation is 180*24*365*500*4.5/1000 Involve 25k per month with 20 resources (~5Lakhs). The cost is being accounted for the entire year.

------

-----35.47 0.3547

12

60

0.6 1.2847