Virtualization Business Case

2007

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The Problem of Virtualization

• 44% of organizations cannot determine if virtualization goals were achieved

• 16.2% of IT projects succeed

• IT history of ‘shanty towns’ among early adopters

• Understand where you’re going

• Understand your metrics

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Drivers for Cost Reduction

Hardware and Related Physical Infrastructure:• Cost of real estate (limited floor space)• Cost of power• Cost of cooling (3x)• Over-provisioning

Software: • Licensing• Patch management• Migrations and upgrades

Management: • 50-70% of TCO • Speed of provisioning (weeks)• DR environment• Fewer staff• Consolidated training needs

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Using VMware virtual

infrastructure, we can offer

the same levels of service

and more flexibility for up

to 40 percent lower server

and operating costs.

Many firms attribute their

adoption of virtualization to

server consolidation, but an

equivalent number are

using the technology to

make their server

environments more

flexible and agile.Rob Jones, Director of Technology, ALSTOMRob Jones, Director of Technology, ALSTOM

Virtualization Can Help…

1. “Pragmatic Approaches To Server Virtualization,” Forrester, June 2006

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State of Infrastructure Today

Server Sprawl

36M physical x86 servers by 20111— a 10x increase in 15 years1

$140B in excess server capacity - a 3-year supply2

Power & Cooling

50c for every $1 spent on servers2

$29 bn in power and cooling industry wide2

Operating Cost

$8 in maintenance for every $1 spent on new infrastructure2

20-30 : 1 server-to-admin ratio3

Space Crunch

$1,000 / sqft2

$2,400 / server2

$40,000 / rack2

1. IDC, U.S. and Worldwide Server Installed Base 2007–2011 Forecast, Doc #207044, May 2007 2. IDC, Virtualization And Multicore Innovations Disrupt The Worldwide Server Market, Doc #206035, March 20073. Source: VMware

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Key Task Traditional ApproachVirtual Infrastructure

Approach

Moving an application to a new server

• 4 - 6 hours for migration• Service interrupted for

duration of maintenance window

• Requires days/weeks of change management preparation

• 2 - 5 minutes for live migration using VMotion™ and DRS™ (no service interruption)

Hardware maintenance

• Requires 1 - 3 hour maintenance window

• Requires days/weeks of change management preparation

• Zero downtime hardware upgrades with VMotion™ and DRS™

Traditional Process vs. Virtual Infrastructure

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Maximizing Return - Metrics

Hardware and Related Physical Infrastructure:• BTU per CPU/second• KW per CPU/second• Cost per square foot

Software: • Cost of non-compliance • Cost of downtime

Management: • Migration – labor hours• Provisioning – labor hours• Headcount per CPU/second• Operations cost per CPU/second • Cost of training / training days

Centralization• Number of managed environments

• Data centers• Closets• MDF/IDF

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Maximizing Return - Metrics

24.002.002.45

INTERNAL RATE OF RETURN (IRR): 49.20%ADJUSTED IRR: 19.66%BENEFIT TO COST RATIO: 2.45 NET PRESENT VALUE (NPV): $145,355

PAYBACK (BREAKEVEN) MONTH (DCF):

PROFITABILITY INDEX:

PAYBACK (BREAKEVEN) YEAR:

“Always relate to workload”

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Maximizing Return - Tools

Platespin PowerRecon

VMWARE Capacity Planner

Eracent EnterpriseAM

IBM Consolidation Discovery and Analysis Tool (CDAT)

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Assessment Methodology

Inventory / Discover:• Physical assets• Intellectual assets• Infrastructure assets• Current cost baseline• Business / mission objectives

Monitor: • Measure key indicators of performance• Behaviors as important as averages, peaks• Use data to narrow options

Model: • ‘What if’ scenarios for both performance and cost• Identify constraints

• Resource allocation• Workload prioritization• Security limitations

Evaluate: • Identify optimal choices• Develop architecture• Develop implementation strategy

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Risks to Successful Implementation

Backups:• Impact on shared disk infrastructure• Complexities of restoring data• Data consistency

Workload Planning: • Accurately measuring current workloads, peaks• Aggressive oversubscription 50-500% versus 10:1 – 50:1• Higher randomization of I/O on disk subsystems• Ongoing monitoring

Security: • Classified systems• Isolation of data access and processing

Human Factors: • Organizational conflict• Ability to downsize• Retraining

Manage• Ensure that management applications can support virtual machines• Ensure that apps measure and trend important performance data

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Benefits of Consolidation

• Fewer Servers to Manage

• Less Power required

• Less Space needed

• Less Cabling required

3-Year Cost Savings / Workload

Server Hardware $5,816

Power Costs $759

Cooling Costs $949

Data Center Real Estate

$431

Network Infrastructure

$296

TOTAL $8,251

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Applicationmaintenance

15%

Applicationinnovation45%

Infrastructureinnovation10%

Infrastructuremaintenance

30%

Applicationmaintenance

30%

Applicationinnovation

23%

Infrastructureinnovation

5%

Infrastructuremaintenance

42%

BEFORE AFTER

Source: Fortune 100 Company

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