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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting: 29 July 2013

 

Report of the Leader

 

ICT Server Room Rationalisation – Capital Bid Update

 

Purpose of the Report

1.         To inform Cabinet of the anticipated costs, benefits and payback period of the current capital scheme to amalgamate the server rooms in the Civic Offices and to obtain Cabinet approval to proceed with the project.

Recommendations

1.         That a tender is advertised for the construction of the new server room.

2.         That delegated authority is given to the Managing Director in consultation with the Leader to award the contract to the most economically advantageous bidder.

Reasons for the Recommendations

1&2. To generate revenue savings, enable the Council to meet its Carbon reduction targets and allow the award of the contract without further delay.

Background

2.         The server room facilities in the Civic Offices have evolved over the last 20 years to the current position of having three separate locations in the basement, all of which now have power supply and air conditioning issues. The Civic Offices has never had a purpose-built computer room or data centre. The current provision has evolved over time to meet the changing needs of the Council.

3.         Over the last 20 years the space required to host the Council's servers and storage has increased, despite the use of emerging technology such as virtual servers requiring a reduced amount of space. The volume of data held electronically by the Council has grown dramatically over recent years and now stands at around 100 terabytes with a predicted 30% increase year on year. Further development of cloud computing will impact on the Council’s need for physical storage and this has been considered when appraising the required volume of physical storage. There will always be applications that will be physically hosted (such as social services data) for information security reasons.

4.         The server rooms currently use, on average, 42% of the total electricity consumed by the Civic Offices.

5.         The current provision of server storage is inefficient in its use of space and uses more power and less efficient methods of cooling than is possible with the use of more modern cooling solutions with associated costs, financially and in terms of carbon emissions.

Relevant Issues and Options

6.         To ensure that future requirements for data storage are met economically and sustainably, a project to identify options for improvement was instigated. This project resulted in a proposal to upgrade the multiple server rooms into a single location. The project will make savings in revenue budgets and is included in the Capital Programme for the current financial year.

7.         The single location will provide a modern, energy efficient and easy to manage server room with a capacity of 40 racks of servers and storage, which is estimated to meet the current and forecast needs of the Council.

8.         The construction of the new computer room on the lower ground floor of the Civic Offices will include a new dedicated uninterruptible power supply (UPS) with modern air-conditioning, power management plus fire suppression and have walls and floor surfaces specifically designed to reduce the amount of dust in the environment. This purpose built facility will be easier to manage, reduce the demand on staff resources and provide the level of availability now demanded by a Council providing services on a 24/7 basis.

9.         The scheme will involve the construction of a new computer room through the removal of internal walls to create a single room out of six smaller rooms and corridor space. This space is currently occupied by Legal and Environmental Health Services who will move to suitable alternative locations within the Civic Offices, potentially in to the rooms being vacated by ICT as part of these proposals.

10.      In accordance with the Council’s Project Management methodology a business case has been written which identified a number of options that could address the issues outlined above. In order to complete this work, including a financial appraisal of each option, this project did not spend the capital funding within the previous financial year and the project will therefore be spread over two financial years.

11.      The options considered for the project were:

·               Do Nothing.

·               Outsource to an off-site facility.

·               Provide a new in-house facility.

12.      Doing nothing was not considered to be an option as this would involve the ad hoc management of failing equipment and would not provide an opportunity to address the need for savings. Continuing to use the existing server room infrastructure increases the risk of an incident affecting the availability of crucial computer systems, makes budgeting for the service difficult and does not address the need to reduce carbon emissions in a managed and co-ordinated way. As a minimum option, costs to replace the power distribution board in one of the existing rooms, estimated at £25,000 would be incurred.

13.      A range of options were identified that could provide an off-site facility for 20 server racks as set out below. 20 racks were considered the minimum requirement to meet the Council’s immediate and medium term needs. For each external option, it is considered that the savings in staff time spent attending to issues with the existing facility would be negligible when compared with the time taken to manage an off-site arrangement. In addition, there would be down time whilst physical hardware is relocated to the off-site facility with each of these options.

14.      BT has a new data centre in Newport. Annual hosting costs of £186,000 would be incurred in addition to an estimated £80,000 annual network costs plus the cost of electricity. Initial set up costs of this option are £21,000.

15.      The Welsh Government data centre at Blaenavon was also considered. For this facility, annual hosting costs of £84,000 would be incurred in addition to an estimated £80,000 annual network costs plus the cost of electricity.

16.      Discussions with Caerphilly Council concluded that although they were willing to host individual systems at a very cost effective rate they do not have the capacity to host the 20 racks this Council requires within their new data centre. However, there may be an opportunity in the future for this Council to host shared systems such as SWIFT when hardware is upgraded.

17.      Discussions took place with Cardiff Council, who informed the Council that they were unable to provide a hosting arrangement at this time but would be willing to consider collaborative working opportunities in the future.

18.      A further option has been suggested by Welsh Government as they are in the process of acquiring additional data centre capacity at the same site in Newport that is being proposed by BT, but that site is not likely to be available for at least a year and no costs are yet available.

19.      With all off-site solutions there would also be a requirement to host some systems locally.

20.      Constructing a new in-house facility as described in this report was estimated at costing up to £450,000. This cost includes the replacement of air conditioning units, installing updated power supplies, replacing the ageing battery back-up solution, building works to the Civic Offices and project management. In addition, a local facility will allow for more effective management of downtime due to transferring hardware from old to new facilities and it is anticipated that this can be achieved outside of business hours, minimising disruption.

21.      Accordingly, a budget of £450,000 for this project was included in the Council’s Capital Programme for 2012/13 and has been transferred to the current financial year. However, initial estimates from suppliers of the cost of the proposed scheme have indicated that the cost may be considerably lower. Based on these estimates, for the purposes of an investment appraisal, it has been assumed that the total cost of the server room development will be a maximum of £310,000. The actual costs will only be identified following a competitive tendering process. Should the tender process result in costs forecast in excess of £310,000 a further report will be provided to Cabinet.

22.      Based on the options appraised, the use of BT Newport would result in total five year costs of £1,351,000 covering initial setup and annually recurring hosting and network costs for 20 racks of storage. The use of SRS Blaenavon would result in five year costs of £820,000 for the same level of provision. The option of developing a server room at the Civic Offices would cost a total of £310,000 over five years based on initial estimates and would accommodate 40 racks of storage.

23.      Based on the above, it was determined that an in-house facility was the most economic and effective option to meet the Council’s needs.

Resource Implications (Financial and Employment)

24.      As stated above, the financial appraisal of this project is based on initial estimates received of £310,000.

25.      The business case has identified cashable savings of approximately £35,150 per annum at today’s prices as outlined below:

·               Power consumption £17,000

·               Maintenance £15,000

·               Carbon Tax Reduction £3,150

26.      Two measures of the financial viability of the scheme have been used: payback and net present value.

27.      The payback period is for the scheme is 8 years and 9 months. After 8 years and 9 months the savings achieved will accrue without further expense to the Council for as long as the server room is in use. These savings are expressed at today’s prices and as such do not account for the potential rise in electricity prices. Should prices continue to rise savings will accrue faster and reduce the pay-back period. It is estimated that there will be a receipt of approximately £1,000 in addition to these savings as a result of selling surplus equipment from the existing facility in the first year of the project.

28.      The net present value indicates that the benefits accruing to the Council outweigh the costs incurred over a 10 year period. Based on the savings identified above and assuming general inflation at the Bank of England target rate of 2%, energy inflation of 7% (which is the average rate increase experienced by the Council in the past five years) and using the Treasury Discount Rate (nominal 6%) the net present value of the investment over 10 years is £3,200 as follows:

 

Initial Investment Outflow (£)

Cash Inflows

Years 1-10 (£)

Capital Investment

 (310,000)

      1,000

Power Consumption Saving

        -

  234,880

Maintenance Saving

        -

  164,246

Carbon Tax Saving

        -

    34,492

Net Cash Inflow/(Outflow)

 (310,000)

  434,618

Present Value of Future Cash Inflows/ (Outflows)

 (310,000)

  313,200

Net Present Value

    3,200

 

 

29.      The scheme additionally provides the Council with a facility that will help to mitigate future cost rises of energy and penalties associated with missing carbon emissions targets.

30.      The creation of the new server room will also provide enhanced controls against ICT risks such as system outages and will also enhance the physical control of Council assets. Additionally, the new server room will contribute to the Council’s efforts in terms of information security in the safeguarding of data.

31.      Another benefit of having a modern server room is that it places the Council in a strong position regarding potential future opportunities to generate income by hosting systems for other public sector organisations. This is particularly the case as collaborative working becomes more widespread.

Sustainability and Climate Change Implications

32.      This project will help the Council to meet its Carbon Reduction Targets for the coming years by saving approximately 15% of the total CO2 output of the Civic Offices, which represents 1% of the total CO2 required savings for the whole Council. This is equivalent to 100 tonnes of CO2 or 185,000 KWh per annum. A reduction in Carbon Tax of £3,150 per annum at today’s prices has been estimated as a result.

Legal Implications (to Include Human Rights Implications)

33.      The Council will advertise a tender and let a contract for the supply of goods and services to allow the construction and development of the new server room.

Crime and Disorder Implications

34.      There are no crime and disorder implications that will arise as a result of this report.

Equal Opportunities Implications (to include Welsh Language issues)

35.      There are no equal opportunities implications that will arise as a result of this report.

Corporate/Service Objectives

36.      To exercise robust financial management and explore all opportunities to improve efficiency and service quality including collaborative working.

37.      To meet and respect the needs of customers, colleagues and future generations.

38.      To deliver OneVale, the Council’s transformational change programme and to put information and communications technology (ICT) to its most effective use in order to support service delivery.

39.      To deliver cost-effective support and service desk function to monitor performance, meet customer needs and communicate effectively

Policy Framework and Budget

40.      This is a matter for decision by cabinet.

Consultation (including Ward Member Consultation)

41.      This project has been previously consulted on and approved as part of establishing the Capital Programme.

Relevant Scrutiny Committee

42.      Corporate Resources Scrutiny Committee

Background Papers

Capital Bid Document and associated business case.

 

Contact Officer

David Vining - Head of Strategic ICT

 

Officers Consulted

Jane Wade - Operational Manager (Property)

David Powell - Energy Manager

Patrick Carroll - Facilities Manager

 

Responsible Officer:

Sian Davies - Managing Director

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