Overview

This presentation presents the

business case for virtualizing IT
infrastructure based on:
• Capital and operating cost savings
from consolidation
• Simplified management and
provisioning
• Automated capacity optimization

The business impact of Virtual

Desktops, Disaster Recovery, and Lab
Automation are not in the scope of this
presentation.

Intended Audience and Usage

This presentation is designed for use
internally as organizations investigate
virtualization. IT

managers and directors responsible

for commissioning new projects should
understand the financial benefits and
impact on IT operations.
With the growth of IT as a strategic
business function and the shift to
industry standard x86 servers, IT
organizations find themselves facing
server sprawl across their
infrastructure. Most of these servers
are just 10-15% utilized, meaning IT
organizations are investing thousands
in an asset they barely use. IDC
estimates that there is a 3-year excess
supply of server capacity in the
market, costing the industry $140
billion.

Meanwhile, IT organizations need to

power, cool, house, and manage all
these servers. With power costs
increasing, IT organizations are
spending $0.50 in power and cooling
for every $1 spent on the server itself.
This adds up to $29 billion in annual
cost industry-wide.

Plus, all those servers take space and

space is expensive. At a cost of
$40,000 per rack to build a new data
center, companies should be looking
for any means possible to avoid
expansions or data center moves.
Finally, much of IT time is spent on
maintenance at a cost of 8 times that
of the server itself. IT organizations
would prefer to increase the server-to-
admin ratio to reallocate valuable
talent to more strategic initiatives.
To deal with these problems,
companies in every industry and of
every size are turning to virtualization.
Like ALSTOM, many companies see
cost savings of at least 40 percent
from both lower server AND operating
costs. For many more customer
stories visit:
http://www.vmware.com/customers/sto
ries/

However, as analysts like Forrester

observe, the motivation for
undertaking a consolidation project
goes further. Virtualization provides IT
significantly greater flexibility to meet
the changing needs of their business
partners.
 Traditionally, organizations have run a
single operating system (OS) and
application on each server, leading to
the server sprawl issues described
earlier.

Virtualization allows you to

encapsulate each OS and application
into a software file(1) called a virtual
machine. Each virtual machine is
completely hardware independent and
can be treated just like a file. It can be
moved around between servers,
copied, or run simultaneously on the
same server as other virtual machines.

Many VMware customers run 8, 10, or

more virtual machines for every
physical server(2). This dramatically
reduces the number of servers
required to support an identical set of
workloads, leading to significant
savings, as you’ll see in the following
slides

Footnotes:
(1) Technically, a VM is composed of a small set of files including the .VMX configuration file, the NVRAM BIOS image, and the .VMDK virtual disk
file.
(2) The actual consolidation ratio depends on the specific applications, resource requirements of those applications, and server configuration
including memory and number of CPU sockets
Here is a very typical customer
example involving 1000+ servers
running a variety of workloads, direct
attach storage, and a large mass of
cables, racks, and power cords to
support all of those servers.

The customer initiated a project to

implement VMware Infrastructure
across their entire IT infrastructure.

The end result: a dramatic reduction in

computing resources
• 1000 servers down to 80
• Silo’d internal disks consolidated into
a Highly Available tiered storage
architecture
• 3000 cables/ports down to 300
• 200 racks down to 10
The most obvious benefit of server
consolidation is the reduction in capital
invested in hardware. In this example,
the 1000 1 to 4 CPU servers were
consolidated onto 80 2 to 8 CPU
systems over a 3 year period. Netting
out the investment in software and
infrastructure, the project saved a total
of $5.8M, or $5,816 per workload, or
$5.3 Million in total.

Whether implemented during a server

refresh or to contain future server
growth, the reduction in server costs is
striking.
 Meanwhile, the cabling to support
1,000 servers is a tangled mess. With
3 network ports per server, that’s
3,000 ports and cables to buy and to
manage. Aside from the cost and risk
of an individual cable failing, the
opportunity for human error is
extremely high. It’s difficult trying to
identify what cables go from which
switch to which server. Imagine trying
to add a new server into this chaos
and adding it correctly to the network?

After virtualization, each server

actually has more network cards (5
versus 3), but the reduction in server
count is overwhelming. Total network
cables drop from 3000 down to 400,
saving $296 per workload over 3
years.

Data center space is also freed by

virtualization. Each server rack takes
up valuable real estate in the data
center. Moving from 200 racks down
to 10 can save ~1750 sq ft(1). Given
the high cost of leasing or building
data center space, an organization can
save or defer $430 for every workload
virtualized onto an existing server.

Footnotes:
(1) Data center space does not decrease linearly with number of racks due to fixed overhead
 Power Consumption
Processor power consumption has
historically grown roughly in line with
speed increases. So as processor
frequency doubled every 18 months,
power consumption grew. The electricity
bill is now a significant IT expense and one
that comes due every month. Some
industry analysts have noted:

• Gartner Group says energy costs may

increase from 10% of the IT budget today
to over 50% in the next few years
• Forrester says servers would use about
30% of their peak electricity consumption
while siting idle
• IDC says the cost to power servers will
exceed the cost of the servers by next year
• The U.S. Department of Energy states
that data center energy usage can be 100
times higher than those for a typical
commercial building
• IDC calculates that the total power and
cooling bill for servers in the US stands at
a whopping $14 billion a year, and if the
current trends persist, the bill is going to
rise to $50 billion by the end of the decade

At an average of 355W per server

workload, consolidation saves $759 per
workload over 3 years.

Data Center Cooling

Meanwhile, simple physics states that power consumed by the data center must be evacuated in the form of heat. Unfortunately, heat dissipation is very difficult, and
even more expensive than power consumption. IT organizations have responded with elaborate and often very expensive Data center design strategies, such as
raised floors and hot-aisle/cold-aisle configurations. Even so, airflow inefficiencies are the number one cause for x86 downtime and disk drive failure, the #2 cause, is
heavily correlated with airflow inefficiencies.

Accounting for just the air conditioning costs, the average data center can save 444W per server workload, or $949, over 3 years.

Find out more about Energy Efficiency at: http://www.vmware.com/solutions/consolidation/green/

To summarize, the cost savings from
consolidation with VMware
Infrastructure is compelling. Done on
a moderate scale, the average
company can save $8,251 per
workload over 3 years. The typical
return on investment (ROI) for a
virtualization project is 6 months or
less. Virtualization projects pay for
themselves.

Note: These figures are all PER

workload. Multiply by number of
workloads to measure total savings
over 3 years. Examples:
For 100 workloads virtualized, a
company saves $825,100
For 1000 workloads virtualized, a
company saves $8,251,000
But capital and operating cost savings
are just the tip of the iceberg in the
benefits of virtualization. A second
major benefit is in simplifying the often
arduous task of deploying new servers
and applications. Since virtual
machines are nothing but software
files, they can be copied, pasted, and
moved around with the ease of a file
copy.

With virtualization, companies can

provision a new virtual machine with a
mouse click. This is a sea of change
from the traditional model where it
typically takes days if not weeks or
months to provision a new servers.
Moreover, virtual machines can be
saved as ready templates that can be
instantiated as needed. With this
instant provisioning capability IT can
be responsive to the business like
never before.
Let’s now compare the provisioning
tasks in the physical versus the virtual
world. As an example, let’s assume
the marketing department wants to
deploy a new application that requires
a new server.

In the physical world, first IT works

with Marketing to determine the
hardware requirements and then puts
in an order for a new server from their
server OEM. A week or two later, the
server arrives, and now it needs to be
racked, cabled, and configured – a set
of manual tasks. Next the OS is
installed and configured. A new IP
address is assigned and the system’s
networking is configured. Only now,
after 20-40 hours of actual labor and a
few weeks of elapsed time is the
server ready for the application to be
installed. Meanwhile, all that human
intervention and manual process
means the risk of error is high.

In the virtual world, it’s much simpler.

A template already exists with the IT
department’s standard build. With a
few mouse clicks, a new virtual
machine is copied from the Template
and deployed onto the virtual
infrastructure. Within minutes, it’s
ready for application install. The
actual labor content is minimal at less
than an hour and the lead time from
server request to server delivery is
measured in 1 or 2 days, not weeks.
Now IT is seen as a responsive, agile
business partner. Now IT looks good.
Instant provisioning simplifies the task
of deploying new applications.
VMware Infrastructure also helps
simplify the ongoing management of
resources and service level for those
applications.

Since virtual machines are completely

hardware independent, virtualization
enables the live migration of virtual
machines from one physical box to
another without any end user
interruption. This ground-breaking
capability is known as VMotion, and
with the click of a mouse, applications
can moved to a completely new
hardware platform.

On top of VMotion comes policy-based

automation with Distributed Resource
Scheduler (DRS). This product
monitors virtual machine resource
requests across multiple hosts,
identifies capacity supply & demand
mismatches, and uses VMotion to
dynamically reassign virtual machines
to new hosts. In this way, the virtual
infrastructure is able to dynamically
and automatically load balance to
ensure every application is getting the
resources it needs at exactly the right
time.

These tools provide IT organizations a

new level of flexibility and automation
that greatly simplifies capacity and
change management.
The impact of VMotion and Distributed
Resource Scheduler are dramatic.

In 2 to 5 minutes, an application can

be moved to a higher performance
server, allowing the application to
scale as demand increases. This is in
stark contrast to a traditional
environment, where reassigning an
application to a new server takes 4 to
6 hours of labor and requires
downtime during the entire operation.
Thus, IT organizations normally spend
days or weeks in change management
planning and preparation. With
virtualization, this becomes
unnecessary. Reassigning a workload
becomes a standard operation,
allowing IT to manage capacity in a
much more flexible, fine-grained, and
automated manner.

Further, the flexibility of live migrations

frees organizations from “maintenance
windows.” If IT needs to do
maintenance on a server, they no
longer have to bring it down. They can
simply VMotion the virtual machines to
other servers, fix the original server,
and VMotion the virtual machines
back. This is all completely
transparent to the end users and
imposes zero downtime. Again, in the
physical world, this requires a 1 to 3
hour maintenance period preceded by
days or weeks of change management
preparation.

Thus, policy-based automation tools

can greatly simplify change
management and maintenance tasks
for IT personnel.
Freeing IT personnel from day-to-day
maintenance and break-fix means IT
organizations can finally dedicate
resources to strategic projects. Many
IT organizations, such as this Fortune
100 company shown here, have
historically dedicated 70%+ of their
productive time to maintenance, either
for applications or the infrastructure.

With virtualization, that changes

dramatically. By automating
processes and simplifying
infrastructure management, an IT
organization can dedicate more of
their time to Innovation for their
Infrastructure (from 5% to 10%) and
Applications (from 23% to 45%).

Thus, policy-based automation tools

can allow IT organizations to focus on
supporting business critical projects
and strategic improvements.
In summary, Consolidating servers
with VMware Infrastructure can:
• Save an organization $8,251 across
server and related hardware, power
and cooling, and data center space
• Provisioning new applications is
greatly simplified by virtual machines;
new services are as easy to deploy as
a few mouse clicks
• Free IT from the manual tasks of
balancing compute capacity to meet
uncertain demand, or from running off-
hour “maintenance windows” on
servers when VMotion and DRS make
this profoundly simple.