You can configure Server Hardware cost driver and resource utilization parameters to calculate the accurate cost and improve the efficiency of your environment.

Cost Insight analyzes the resources and the performance of your virtual environment. Based on the values you define, Cost Insight can identify reclamation opportunities and can provide recommendations to reduce wastage of resources and cost.

Configuring Depreciation Preferences

To compute the amortized cost of the Server Hardware cost driver, you can configure the depreciation method and the depreciation period. Cost Insight supports two yearly depreciation methods and you can set the depreciation period from two to seven years.

Note:

Cost Insight calculates the yearly depreciation values and then divides the value by 12 to arrive at the monthly depreciation.

Method

Calculation

Straight line

Yearly straight line depreciation = [(original cost - accumulated depreciation) / number of remaining depreciation years]

Max of Double or Straight

Yearly max of Double or Straight = Maximum (yearly depreciation of double declining balance method, yearly depreciation of straight line method)

Yearly depreciation of double declining method= [(original cost - accumulated depreciation) * depreciation rate].

Depreciation rate = 2 / number of depreciation years.

Note:

Double declining depreciation for the last year = original cost - accumulated depreciation

Example for Straight Line Depreciation Method

Year

Original Cost

Accumulated Depreciation

Straight Line Depreciation Cost

Year 1

10000

0

[(10000-0)/5] =	2000

Year 2

10000

2000

[(10000-2000)/4] = 2000

Year 3

10000

4000

[(10000-2000)/3] = 2000

Year 4

10000

6000

[(10000-2000)/2] = 2000

Year 5

10000

8000

[(10000-2000)/1] = 2000

Example for Max of Double and Straight Line Depreciation Method

Year

Original Cost

Depreciation Rate

Accumulated Depreciation

Straight Line Depreciation Cost

Year 1

10000

0.4

0

Maximum([(10000-0)*0.4],[(10000-0)/5])
= Maximum(4000, 2000) = 4000

which is 333.33 per month.

Year 2

10000

0.4

4000

Maximum([(10000-4000)*0.4],[(10000-4000)/4])
= Maximum (2400, 1500) = 2400

which is 200 per month.

Year 3

10000

0.4

6400

Maximum([(10000-6400)*0.4],[(10000-6400)/3])
= Maximum (1440, 1200) = 1440

which is 120 per month.

Year 4

10000

0.4

7840

Maximum([(10000-7840)*0.4],[(10000-7840)/2])
= Maximum (864, 1080) = 1080

which is 90 per month.

Year 5

10000

0.4

8920

Maximum([(10000-8920)*0.4],[(10000-8920)/1])
= Maximum (432, 1080) = 1080

which is 90 per month.