IT managers inside SMBs realize that virtualization will help them find the budget reductions that executives demand. Creating a business case that lays out those savings and cost-justifies an investment in virtualization can be a challenge. This paper offers a guide for presenting the relatively high costs of expanding physical environments and the savings components of virtualization.
Creating a BusinessCase for Virtualizationin the SMB Data Center
IT managers inside SMBs realize that virtualization willhelp them find the budget reductions that executivesdemand. Creating a business case that lays out thosesavings and cost-justifies an investment in virtualizationcan be a challenge. This paper offers a guide forpresenting the relatively high costs of expanding physicalenvironments and the savings components ofvirtualization.
Not only is the number of servers inside the data center reduced, expensesassociated with space, power consumption, management, and disaster recovery arelowered. Choosing a vendor that can help conOgure a virtual environment that’stuned to the budget and ongoing performance and capacity needs is essential to re-alizing returns on a virtualization investment. Dell products and services are tai-lored to SMB virtualization deployments and Forrester, an outside research Orm,has conOrmed their ability to deliver ROI.
The Challenge to Reduce Expenses
IT managers in SMBs are confronted with a Catch-22: reduce IT expenses whilesupporting business growth. Unless the IT department has been spending freely onunnecessary technology, it’s difficult to Ond rational ways to reduce expenses. Whenthere’s a mandate to support business growth, the task becomes nearly impossible.
On the other hand, data centers are expensive places where costs grow exponentiallyas SMBs add customers, employees, partnerships, products, services and all the datathat goes along with them. When the data center houses a physical infrastructuremade up of single purpose servers, the expansion needed to support businessgrowth is Onancially unsustainable.
Data center expenses only begin with cost of server and storage equipment.e full cost includes:
� Floor Space – Data center space is needed for servers and other equipmentand for cooling and air circulation buffer zones. Data cooling equipment alsotakes up space. Should the addition of servers necessitate expanding the datacenter into new space, there could be costs for outOtting rooms with requiredsecurity, lighting, power access, and cooling.
� Power Consumption – A typical server costs $200/month to power and cool.at’s $2,400 per year. Utility costs never decrease.
� Management Overhead – Every server in the data center requires attention.Components have to be replaced and memory and drive space has to beupgraded. e applications and data on each server have to be protected,updated, upgraded, and patched. Access policies and authorization have to beconOgured. IT hiring is oen directed by the number of servers and otherassets that must be managed.
� Disaster Recovery Provisions – Many SMBs avoid long periods of downtimedue to server outage by keeping redundant, backup servers on hand. When aproduction server fails, a backup unit is pulled out of a storage closet andquickly conOgured to act as a stand-in. Not only does the storage closet Oll upas more production servers require more redundancy, disaster recovery thatrequires the movement and conOguration of equipment is time-consumingand expensive.
Many of these expenses can be reduced or eliminated by moving from a physicaldata center infrastructure to a virtual server environment. Virtualization allowsserver consolidation; one physical server can operate multiple operating systems orapplications. So, instead of a growing Peet of single purpose servers, the SMB has asmaller group of multi-purpose servers that can scale with business expansion.
By limiting the number of servers required to support a growing business,virtualization offers signiOcant cost reduction beneOts that are outlined in sectionsbelow. A solid business case will position virtualization as a must-make investmentand help managers in and outside of IT understand what return on investmentshould be expected and tracked.
Creating a Business Case Part 1 –Think Through Current Costs
Selling an investment in virtualization to non-technical executives has to begin witha clear picture of current data center costs. e picture begins with an explanation ofhow desired business growth will translate into undesired data center expense andthen itemizes cost components.
1. Point to the inevitability of continued data growth.
IDC advises IT managers to plan for 60% year to year growth in databases.Non-IT Executives might need to be reminded of the relationship between newemployees, customers, partners, products, and Onancial transactions, and dataexpansion. A review of actual, recent data expansion along with a data expansionforecast that parallels business plans will help them understand the company’sposition and related challenges. Costs calculated in the next sections will helpthem understand how projected data expansion will lead to increased data centerexpenses.
2. Determine the amount of unused capacity in the data center.
Single-purpose servers that run on single core processors typically use only afraction – maybe 5 – 10% - of available CPU capacity. at means that 90 – 95%of owned or leased capacity is sitting idle.
To develop a rough calculation of the unused capacity in the current physicalenvironment, multiply the general 90% across single-purpose servers in the datacenter. Be sure to point out that the addition of more physical servers will add tothe current investment in unused capacity.
3. Estimate the current and ongoing cost of square footage andpower consumption.
Forecast the number of new or backup servers that will be added in the nextyear in order to calculate an increase in data center space requirements andcosts. at number can be extended out of a number of years to show how spacecosts relate to company growth. e same can be done for power and coolingcosts using the general $2,400/server/year estimate or a value that is morespeciOc to your own utility bill.
4. Estimate the current cost of data center management.
It is understandable that IT management tasks lists get longer when the datacenter gets larger. Executives might need some detail around management tasks– break/Ox, update and patch management, security and virus protection,authorization and authentication, data backup and restoration, etc. Usingcurrent metrics, show how much time is spent per server on those routinemanagement tasks and then, using a pro-rated, fully loaded IT salary, show howthe forecasted increase in servers will impact data center management costs.
5. Estimate the cost of maintaining uptime.
Disaster recovery is a very expensive proposition in physical serverenvironments. Any idle servers that will be needed as backups contributeto unused capacity.
Lost productivity from hours or days without access to operating systems,applications, and data is hard to price but certainly everyone can imagine theloss of revenue over a certain period of time (inability to call on customers,
process orders, send invoices, stay on development or manufacturing schedules,etc.). Historical data that can be used to calculate the cost of disaster recovery(e.g. It took 3 man days to bring four servers back online and restore data aerwater leaked on them which cost X) or server downtime (e.g. it typically takes4 hours to restore a server that has suffered system failure). Lacking historicaldata, use reasonable time estimates. Real data or estimates should be applied tothe number of times the company can expect to suffer a disaster or systemfailure in a year.
6. Estimate the growth of storage expansion.
While the addition of storage and server capacity is not a one to onerelationship, increases in data do lead to additional storage expense. Usingdata expansion forecasts, estimate the cost of additional storage units thatwill be needed.
Chances are, increases in storage costs will be more related to the time-consuming task of managing storage. Determine how much time IT staffspends creating, mapping, and reorganizing storage volumes and multiplythat by a pro-rated, fully-loaded, IT salary.
Creating a Business Case Part 2 –Express the Cost-Benefits of Virtualization
Once there is understanding about costs associated with physical serverenvironments and agreement that continued expansion of that data center strategyis unsustainable, it’s possible to layout the cost-beneOts of virtualization. You’ll workthough the cost areas discussed above in order to show the savings realized throughvirtual servers and storage.
1. Explain how virtualization reduces the number of servers in the data centerand eliminates unused capacity.
Multi-core processors allow virtual servers to run multiple (rather than one)operating system or application. at allows server consolidation at rates ashigh as 15:1 though a more typical rate might be 10:1. CPU utilization ratesincrease from 5 – 10% to 80%; the company is not investing in unused capacity.e idle 20% is available for disaster recovery purposes which will be outlinedlater in the business case.
Or course, a smaller server population sets up a cost saving ripple effect throughthe data center. Use a consolidation rate estimate to calculate the new number ofservers once virtualization has been implemented. at number is central to thecost-saving calculations below.
2. Calculate the related reduction in data center space requirements.
An IDC Data Center Trends Survey indicates that virtualization defers datacenter space costs by $1,000/square foot. With fewer servers, IT can either movedata centers to a smaller area or defer expansion for years. Using the IDCnumber or actual square footage costs, calculate the savings from reducing thesize of the data center or present the deferred costs of data center expansion.
3. Calculate the related reduction in power and cooling costs.
Use your own per server power and cooling costs or the industry-standard$2,400/server/year and your projected decrease in the number of servers tocalculate utility bill reductions.
4. Estimate the reduction in IT management overhead.
A reduction in the number of servers leads to a reduction in the number ofserver management tasks. ere are simply fewer machines that requireattention – Oxing, maintaining, patching, upgrading, updating, monitoring,securing, etc. Reduce the management overhead cost above by the percentagein the reduction of servers. For example, if virtualization eliminates 50% of theservers in the data center, cut management overhead costs in half.
5. Show how virtual environment reliability decreases the cost ofdisaster recovery.
One of the greatest beneOts of a virtual environment is reliability. Downtimeis signiOcantly minimized. It can be difficult to convince executives of theimportance of reliability if IT has done a great job of averting disaster or movingheaven and earth to restore servers and data. Carefully outlining the costs ofmaintaining uptime above will help you highlight virtualization beneOts here.
In virtual environments, operating systems, applications, and data easilymigrate – either automatically or at the behest of an IT technician – from oneserver to another. So, when IT sees that a monitored server is having troubleand in danger of failing, its work is quickly off-loaded to another virtual server.Nothing has to be conOgured or reconOgured. Maintenance work can be doneand then Oles migrated back without any interruption to end-user productivity.
Virtual environments typically include centralized virtual storage that isreplicated and stored off-site. If a production server is hit by a virus, or Pood, orpower outage, data backups and online virtual servers quickly restore data andapplication access. ere is no need to rebuild images or databases.
To calculate the savings, use the same calculations you used for maintaining up-time above. Apply the number of servers that will be in your virtual environ-ment, and reduce the IT staff time to 5 minutes (a generous estimate sincemigration will likely make that number 0 minutes) for planned maintenanceand one hour for disaster recovery.
6. Use storage expansion estimates to show a savings from virtual storage.
Since storage requirements do not have a one to one relationship to thenumber of servers in the data center, it’s possible that estimates for data growthwon’t necessitate additional storage units in the near term. On the other hand,data expansion does require quite a bit of IT management and oversight whichis why the calculation for time needed to specify and map storage volumes toparticular servers is important.
Virtual storage arrays store data in a single volume. ere is no need to createvolumes on the array. IT managers do not have to worry about the location ofdata or applications on physicals servers nor do they have to worry about thelocation of the servers themselves. And, there is no need to calculate the storagecapacity of a particular volume.
All of that time-consuming labor is handed by the virtual storage system. Tocalculate savings, use the cost of IT time to management storage (create andmap volumes, etc.) and reduce it to $0. (If you want to be more conservative,reduce it by 90%).
Working through the categories, you’ll both explain the beneOts ofvirtualization and show real IT savings. You’ll also need to determine theexpense of converting a physical environment into a virtual environment. ecosts will depend on the timing of conversion – will it happen in phases or allat once – and the hardware and soware that will be deployed.
Once you’ve decided to invest in virtualization, choosing a vendor is the nextimportant step. Ensuring fast implementation, high performance, and reliabilityare the keys the achieving returns on your virtualization investment.
The Dell Solution
An IDC white paper, Optimizing Hardware for x86 Server Virtualization(August 2009), points out that performance, energy efficiency, and TCO/ROI, andcustomization (availability of conOguration options) are key considerations whenselecting hardware for virtual environments. According to a Forrester Report(e Total Economic Impact™ of Dell’s Server Virtualization Solutions, February 13,2009), organizations deploying Dell virtualization solutions could experience returnon investment, greater than 100% payback, in just one year.
at ROI is made possible by the combination of servers, storage devices, andservices that Dell applies to SMB virtualization deployments. e number of serversin the data center is reduced with performance and reliability is increased. Not onlydo IT departments get a market-leading solution, they lower administrativeoverhead by developing a single vendor relationship.
PowerEdge Servers with Intel® processors
Many Dell PowerEdge servers are powered by Intel® Xeon processor 5600 series,next generation technology that allows SMBs to fully leverage their investment invirtualization. Intel Turbo Boost Technology automatically maximizes serverperformance by increasing core frequencies to enable faster speeds for speciOcthreads or heavy workloads. And, because they offer 15x better performance than2 socket single-core servers, they allow high consolidations rates. Other Intel Xeonprocessor 5600 series features include:
� Flexible virtualization extends failover, load balancing, and disasterrecovery by allowing IT to combine servers with multiple processorgenerations in one environment.
� New levels of secure server deployment are available through hardware-based acceleration for secure transaction servers with new AES-NIinstructions which is important for organizations that must comply withgovernment regulations.
� Intel Intelligent Power Technology automatically shis both CPU andmemory to the lowest power state that will deliver the performance requiressaving energy and reducing the server’s heat output.
� Idling cores (those that are not needed to support current workloads) arepowered down to near zero consumption independently of working cores toreduce overall power consumption.
Intel Xeon processor 5600 series are also known for energy efficiency. Powerconsumption is scaled to workload. Even if servers are le on to accommodatearound the clock workers and off-hours processing, less energy will be used at off-peak periods. at adds to the power consumption savings of server consolidation.
With dual internal SD (Secure Digital) modules and redundant components(fans, power supplies, etc.), Dell PowerEdge servers have no single points of failure.Redundant components are hot pluggable; IT staff can swap out components thathave failed while servers are up and running. End-users do not lose access toapplications when Oxes are being made.
It’s important to anticipate the increased utilization rates that are inspired andenabled by virtualization. Many companies reap long-term beneOts by investing inhigher-end server conOgurations; including high performance processors, increasedmemory, and more redundancy, that will provide seamless support for utilizationincreases and protect against hardware failure which is more disruptive in high-
utilization, consolidated environments. According to the IDC paper cited above, afour-socket system supports 2.5 times the number of virtual machines a two-socketsystem can support. at kind of capacity becomes quickly necessary for an SMBwith current and growing processing power requirements.
EqualLogic storage devices
Like Dell PowerEdge servers, EqualLogic storage devices are built to support virtualenvironments. All devices are enterprise-class in that they assume database growthand can scale out performance and capacity. SMBs purchase only the storage theyneed knowing that expansion can easily happen at any time. is prevents overpurchasing and under-utilization. It’s also why these devices are considered ex-tremely cost-effective.
Redundant, hot-swappable components (fans, power supplies, disk drives with hotspares, a fault-tolerant, redundant controller and enterprise-class RAID protectionenable devices to offer 99.999% availability.
Storage management soware is included with all EqualLogic storage units, thereis no extra cost. IT managers do not have to create or map volumes – virtual storagehandles that work. If control is required, IT managers can manage volumes withinthe storage array.
Comprehensive Services
Dell products – servers and storage devices – are available in a broad array ofcapacities and conOgurations that address speciOc requirements. Virtualizationsoware is also highly conOgurable. Dell services help SMB IT managers leverageoptions to design a virtual environment that reduces costs in the short term andprovides the performance and capacity required into the future.
Dell consultants help IT managers create a roadmap for virtual environments.Servers, storage units, and soware are speciOed for current conditions making surethat scalability will be seamless and meet ongoing demands. When organizationswant to spread virtualization deployment over time, consultants can help develop aphase-in approach down to timing purchase and delivery of components.
Dell technicians conOgure and test servers and storage units before they are packedso that, upon arrival in the data center, they can be unpacked, connected, and put towork. Dell offers remote or on-site deployment support and consultants familiarwith the installation are able to answer questions as they arise.
Conclusion
Once IT managers convince themselves that virtualization is an investment that willyield signiOcant data center budget reductions, it’s time to sell the idea to executivecolleagues. Creating a business case for technology investments can be a challenge.Walking executives through the high costs of physical environments and thenshowing the clear savings virtualization offers through server consolidation, spaceand power consumption reductions, management efficiencies, and disaster recoveryadvantages provide a compelling justiOcation. Executives oen worry, with goodreason, that the difficulty of technology deployment will erode any Onancial beneOts.e range of options available with Dell servers and storage devices along with end-to-end consulting and services that include speciOcation, conOguration, testing, andimplementation, ensure that virtual environments show immediate cost beneOts.
1 Based on Intel performance comparison using SPECjbb2005* business operations per second betweenfour-year-old single-core Intel® Xeon® processor3.8 GHz with 2M cache based servers and one new Intel Xeonprocessor X5670 based server. Performance tests and ratings are measured using speciOc computer systemsand/or components and rePect the approximate performance of Intel products as measured by those tests.Any difference in system hardware or soware design or conOguration may affect actual performance. Buyersshould consult other sources of information to evaluate the performance of systems or components they areconsidering purchasing. For more information, visit www.intel.com/performance/server.
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