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1 ( b ) In addition to its data centre in Texas, BitTech currently has 1 , 0 0 0 servers located in Singapore. These
b In addition to its data centre in Texas, BitTech currently has servers located in Singapore. These are deployed for cloud services. With the advent of AI technologies such as Google Bard, OpenAI chatGPT and Microsoft coPilot, BitTech is thinking about pivoting from cloud services to AI services. It is evaluating whether it should pivot servers to the new AI services. These servers have a remaining shelflife of years. At the end of this period, all these servers will be writtenoff with zero book value. Presently in Singapore, monthly sales per server are $ Operating costs per server are $ a month. It expects sales of cloud services to decline by each year. Costs per server for cloud services are expected to increase by a gradual per year. On the other hand, monthly sales per server for AI services are estimated to be $ However, operating costs per server are higher at $ per month. Sales of AI services are expected to increase by a hefty each year. The costs of operating such servers will also increase by per year.
For all its projects, BitTech uses a minimum ROI target of
i Create an appropriate NPVbased model to analyse whether BitTech should pivot to AI services for of its existing cloud servers. State any two assumptions used by your model. marks
ii Using your model, examine whether BitTech should pivot to AI services. Explain why. marks
Note to expert: Please answer b provide the models in excel table form. Not in written words.Question
BitTech Pte Ltd BitTech with headquarters in Singapore, operates a computer server farm in
Texas, USA. It has some servers mining Bitcoin cryptocurrency. However, with Bitcoin
values fluctuating wildly, intense competition and increasing operating costs, the company has
decided to pivot its business to cloud services and to relocate its servers to Asia.
Table below shows technical data over the last months in countries that BitTech is
evaluating for the suitability of migrating its servers.
Table Technical Data for Server Operation in Countries
The table above shows the electrical voltages that the power supply companies in the various
countries can provide. Availability indicates how many hours in a month where there is no
power outage. BitTech works on the basis of days a year over months. Some fluctuations
in voltage values and availability days are normal. The table shows measured values over a
month period.
The servers are sensitive electrical equipment and require stable power from the data centre
that houses the servers. To operate reliably, the data centres used by BitTech must be rated at
with a tolerance of
As an example, consider a data centre that is rated at with a tolerance of This
means that it can only operate the servers if the power supplied varies between and
with a longterm average of
BitTech also noted that the electricity rates in Indonesia, Malaysia, Singapore and Vietnam are
$$$ and $ per respectively. These rates are expected to remain
relatively unchanged for the foreseeable future.
BitTech prides itself of its ability to provide services at a guaranteed availability of at least
For added assurances, it also requires the power suppliers to match this level of
availability.
In the industry, the Percentage Availability metric is defined as System Available Hours Total
Calendar Hours expressed as a percentage. Thus, if a system is available for service for
hours in a month, the Percentage Availability would be computed as per month.
Hint: hours hours days months
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