November 2006 A
High Productivity Computing Systems and the Path Towards Usable Petascale Computing
Suzy Tichenor, Council on Competitiveness
Albert Reuther, MIT Lincoln Laboratory

Barriers to HPC Use in the Private Sector

Council on Competitiveness research has identified three principal barriers inhibiting more widespread use of HPC. Educational and training hurdles (shortage of computational scientists) and technical obstacles (e.g., legacy codes need updating, new code development lags, growing performance gap between fast processors and other system technologies) are largely external to any one organization, although all of them affect the cost and ease of HPC use by the private sector. Within corporations, however, business strategies and decision-making processes can be a more significant obstacle to acquiring or accessing HPC tools.

In the boardrooms of many American companies, HPC isn’t seen as an innovation edge, but rather as a cost of doing business—an enormous "hole in the pocket." And when investment options are being considered, it is often easier to get management approval for one that will minimize or reduce costs in the short term versus an investment that has the potential to generate revenue over the longer term. HPC often is seen as the latter. As a result, management often favors "cheaper" systems and will not invest in more productive systems and the requisite training for personnel. For example, a $10 million investment in a high-end HPC machine to enable entry to a market six months early could result in $500 million of additional revenue in some industries, whereas a $1 million system with higher latencies and lower bandwidth might not be able to complete the solutions. Yet management often selects the less expensive approach.

The Council’s research also found that organizations are often more limited by their budgets than by the computers available in the market. The impact of this can be severe. While some companies can run their existing problems on cheaper machines with faster turnaround, they are often unable to run new problems that lead to the breakthroughs required to maintain global competitiveness.

Not surprisingly, the other key barrier mentioned by businesses was the difficulty in determining the ROI from their current or proposed HPC systems.

Making the Business Case for HPC

One reason that many senior executives view HPC as a cost rather than a value investment is due to the difficulty in determining the ROI to the organization of the system. Traditionally, HPC systems have been valued by the usage of the system, i.e., the aggregate percentage of time that each of the processors of the HPC system is busy. The rationale behind this valuation is that a large sum of money was spent to purchase and maintain the system, and the justification for spending such sums is that the demand for computing on the system keeps the system busy close to 100 percent of the time.

Such a valuation method encourages the HPC system owners to use a resource management queuing system that schedules a non-stop stream of smaller computational simulations by many users to keep the HPC system busy. While this encourages utilization, it may not actually accommodate the most important problems facing the organization. Thus, this valuation methodology may not capture the true value that the use of an HPC system would provide to the organization, and it may not optimize users’ needs in that it does not measure whether the problems most pressing for an organization’s long-term competitive edge are being addressed. Without considering these issues, the actual out-of-pocket cost for an HPC system may appear unaffordable, leading an organization to forego needed hardware purchases, upgrades, or certainly “greenfield” investments in HPC systems.

An alternative to relying on system utilization as a measure of system valuation is to capture the ROI by starting with a benefit-cost ratio (BCR) calculation. The BCR is expressed as the profit or cost savings divided by the sum of the investment over a given time period. In this article we shall simplify the discussion by assuming that all of the evaluations are conducted for a one-year time period. When we assume a one-year time period, the BCR is related to the one-year internal rate of return (IRR) with the following formula: BCR = 1 + IRR, or IRR = BCR – 1. Also, a net present value (NPV) analysis can be constructed using the benefits and costs identified in this article 4. Naturally, all of these analyses rely on the collection of accurate data.

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Reference this article
Tichenor, S., Reuther, A. "Making the Business Case for High Performance Computing: A Benefit-Cost Analysis Methodology," CTWatch Quarterly, Volume 2, Number 4A, November 2006 A. http://www.ctwatch.org/quarterly/articles/2006/11/making-the-business-case-for-high-performance-computing-a-benefit-cost-analysis-methodology/

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