Assessing Server Virtualization

8/9/2019 Assessing Server Virtualization

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ASSESSING SERVER VIRTUALIZATION PAGE2

Efficiency, Flexibility, and Cost Savings Drive Server Virtualization Efforts

Industry analysts suggest that the nearly 80 percent drop in server prices over the last decade compels ITorganizations to purchase a new server for every new application, which leads to large-scale unusedserver capacity. By some estimates, utilization rates for servers average only between 5 percent and 10percent of total capacity.1

When deciding on such server provisioning, however, IT leaders frequently overlook the additional coststhat compose a physical servers total cost of ownership of a physical server, notably labor andoperational costs. For example, the labor required to maintain one small application server can costbetween $500 and $3,000 per month in a production environment.2 Aiming to minimize these costs byefficiently utilizing server capacity and reducing the number of physical servers, many IT organizationsimplement server virtualization.

Virtual servers give IT organizations the power to align the capacity of any kind and number of serverswith load continuously and precisely, thus enabling efficient use of server capacity.3 The followingdiagram summarizes the benefits that server virtualization can grant to IT organizations:

Benefits of Server Virtualization and Illustrative Case Studies

Pages 5-9 discuss the potential benefits and drawbacks of server virtualization in depth.

Technology

Overview

Benefits of

Virtualization

Drawbacks of

Virtualization

Deciding Whether

to Virtualize

Market

Overview

Source: IEC research

Fringe Benefits

RemoteManagement

DisasterRecovery

Planning

Virus

Detection

Server

RollbackCore Benefits

Efficiency

p. 5 p. 5

p. 7

p. 7

Adaptability

p. 6

Cost Savings

p. 8 p. 8


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100

200

300

400

500

600

700

800

900

Conservative

Aggressive

Analysts Expect Technology Improvements to Drive Market Growth Through 2009

The virtual machine (or virtual server) software market reached $330 million in 2004. 4 According to a2005 survey conducted by TheInfoPro, nearly 60% ofFortune 1,000 companies use virtual machinesoftware to virtualize servers, and another 30% plan to do so in the future.5

Analysts predict virtualization technology will continue to improve across the coming years, makingvirtual machine software increasingly easy to use and driving growth in the market. Notably, Microsoftplans to incorporate virtual-machine capabilities into the Windows operating system.6

Semiconductor giants Intel and AMD, however, are slated to release microprocessors that includevirtualization technology directly on the silicon chip 7, and in late 2005 XenSource, Inc. released open-source code for generating virtual servers on Intel-based hardware. 8 Both developments could tempergrowth in the virtual machine software market and shift spending to other areas in the overallvirtualization space.

The following graph illustrates projected growth in the virtual machine software market:

Projected Value of the Virtual Machine Software MarketMillions of Dollars

Technology

Overview

Benefits of

Virtualization

Drawbacks of

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330 330

383 396444

475515

570 598

684 693

821

Conservative(16% Annual

Growth)

Aggressive(20% Annual

Growth)

2004* 2005 2006 2007 2008 2009

* Actual Value

Source: Darrell Dunn, Virtual Showdown, InformationWeek, 15 August 2005.


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Virtualization Can Involve the Entire Data Center, a Single Server, or a Desktop Computer

In short, virtualization creates an abstracted operating environment, substituting physical computingelements with virtual machines (VMs) that replicate the original hardware or software they replace.9Virtualization was first developed in the 1960s to allow timesharing of large mainframe hardware.Today, virtualization can involve the entire data center, a single server, or a desktop computer.

Server Virtualization Enables the Partitioning of Servers and the Sharing of Resources

Virtual machine software utilizes spare capacity of servers by creating one or more abstracted operatingenvironments in that space. The software divides the physical operating system environment into severalVMs, each with its own set of virtual hardware upon which different operating systems and applicationscan run. In addition to running several applications on a single server, virtual machine software can alsoallow administrators to run one large application on multiple servers.10 Analysts predict that technologyadvancements in CPU virtualization will enable virtual machine software to manage the total resources ofthe server even more efficiently.11 The following diagram illustrates the differences between physical andvirtual servers:

Physical vs . Virtual Servers

Virtual Machine Software Products Use Hypervisors to Communicate with Server Hardware

An essential component of virtual machine software is the hypervisor, also known as the virtual machinemonitor. The hypervisor intercepts forbidden messages to the host OS and divides virtual environments. Itis also responsible for sharing the computers physical resources among the many VMs that could berunning and for redirecting virtual devices to physical devices.12

Technology

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Server

Operating System

Application Unused

Capacity

Physical Server

Virtual Server


Server

Operating System

Virtual Machine Software

VirtualServer A

VirtualServer B

Operating

System

Operating

System

Application Application


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Server Virtualization can Increase Efficiency of Resource Use

Many IT organizations run applications on unique servers to ensure availability despite variable peakloads. Such provisioning, however, can lead to the common underutilization of server capacity mentionedabove. In turn, this underutilization can entail a variety of management issues, including the following:

Strain on facility space

Low administrator-to-server ratios Excessive hardware costs

Excessive maintenance and operational costs (power, cooling, etc.)

Server virtualization, however, allows IT organizations to pool excess capacity from physical serverswhile maintaining partitioned applications, thereby reducing the number of physical servers needed andlowering the associated management, operations, and maintenance costs.

Case StudiesEfficiency

Industry: Financial ServicesAverage Annual Revenues: $22 billionEmployees: 45,800

Sumitomo Mitsui Banking Corp. lowers physical server count from 222 to 87 andincreases CPU utilization rates with server virtualization software

Sumitomo Mitsui Banking Corp., a subsidiary of Japan-based Sumitomo Mitsui FinancialGroup, was faced with low utilization rates for the 222 servers in its U.S. data center.Additionally, the large number of servers entailed high facilities and labor costs. Toreduce the number of physical servers, IT executives replaced 149 of them with 14 blade

servers running VMware virtualization software, which created 216 virtual servers. As aresult, SMBCs IT organization has increased CPU utilization rates to 40 percent andexpects that the virtualization effort will save it millions of dollars over the next threeyears.13

Industry: Food Processing/Agribusiness2004 Revenues: $3.1 billion2004 Employees: 11,500

J.R. Simplot Co. avoids outgrowing its data center by implementing server

virtualization softwareIn 2002, food-processing and agribusiness company J.R. Simplot Co. was about to run outof space for server racks at its data center. To avoid a costly and inconvenient facilitymove, IT executives implemented VMware virtual machine software for both itsWindows and Linux physical servers. As a result, the companys IT organization was ableto eliminate hardware at roughly a 3:1 ratio and avoid outgrowing its data center. TodaySimplots IT organization has 150 Windows guest operating systems and nearly 50 Linuxinstances running on only 15 physical servers.14

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Case StudiesAdaptability (Continued)

Industry: Technology2005 Revenues: $5.7 billion2004 Employees: 7,600

Qualcomm, Inc. virtualizes servers for application testing, nearly eliminating the timeneeded to create a test environment and saving $1.4 million in hardware costs

Faced with a completely separate physical-server cluster for applications testing, wirelesstechnology manufacturer Qualcomm, Inc.s IT organization saw hardware costs rising asdevelopers requested a new server to test each new application. To reduce hardware costs,IT executives implemented virtualization software from VMware. As a result,administrators were able to leverage spare server capacity to set up test environments inabout 30 minutes, as opposed to the nearly six weeks previously required to procure and

install new physical servers. Additionally, Qualcomms IT department consolidated itsservers by a 30:1 ratio and saved $1.4 million in hardware costs.23

Industry: Retail2004 Revenues: $12.1 billion2004 Employees: 31,500

7-eleven, Inc. accelerates application testing and streamlines server management withserver virtualization software

Faced with high hardware costs and time delays in server deployment, 7-eleven Inc.s ITexecutives implemented virtualization software from VMware in 2004. As a result,administrators were able to run multiple operating systems on a single physical machineand deploy virtual servers to development teams in a fraction of the usual time.Additionally, administrators gained the ability to manage servers from a central locationwith VMwares VirtualCenter, providing new servers and moving virtual machines todifferent physical servers as resource needs dictate.24

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Server Virtualization can Lead to Significant Cost Savings

Because server virtualization enables the efficient use of server capacity, IT organizations that run virtualservers are able to reduce or stop the growth of their physical-server inventories. As such, servervirtualization can reduce costs in the following areas:25

Hardware: Virtual servers can reduce server sprawl, thus reducing hardware procurement costs.

Labor: Monthly labor costs for a single physical server can reach $3,000. By reducing thenumber of physical servers needed and enabling central management, server virtualization canlower the staff hours needed to administrate each server and thus lower labor costs.

Operations and Maintenance: The total cost of ownership for physical servers also includes costs

for ordinary operations and maintenance, including the following:o Data center spaceo Powero Coolingo Network connectivityo Backup and recovery.

Because it can reduce the number of physical servers, virtualization can lower spending on thenecessary operational and maintenance costs for physical servers listed above.

Case StudiesCost Savings

Industry: Beverages/Food Processing

2005 Revenues: $577.8 million2005 Employees: 1,382

Welch Foods increases its administrator-to-server ratio and cuts maintenance costs inhalf with virtual servers

Faced with low server-utilization rates and less than optimal administrator-to-serverratios, IT leaders at Welch Foods, Inc. implemented virtualization software fromVMware. IT leaders virtualized 65 percent of the companys physical servers, increasingutilization by nearly 50 percent. As a result, the company increased its administrator-to-server ratio to 70:1 (the average is 30:1) and cut server-maintenance costs in half.26

Industry: Financial Services2005 Revenues: unavailable2005 Employees: unavailable

Stonebridge Bank virtualizes servers, removes 64 physical servers, and nearlyeliminates the cost of running backup cooling

In March 2005 privately held Stonebridge Banks IT executives, looking to increaseserver utilization and cut costs, implemented virtual machine software from VMware. Asa result, the company removed 64 physical servers and found it rarely had to run its three-ton backup air conditioner, which ran 24-7 during summer months prior tovirtualization. 27

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Potential Drawbacks of Virtualization Could Temper Cost Savings

Although server virtualization tends to increase efficiency, flexibility, and cost savings, industry expertsnote that virtualization can entail difficulties in several areas, including the following:

Patch management: If an administrator reboots a host operating system after applying a patch, allthe VMs running on that host OS will be taken down as well. This could lead to inconvenient andcostly downtime for the business.28

Security: Evidence suggests that attackers have already developed tools to exploit virtualenvironments, whether by searching for VM tools and drivers or by installing a mini-applicationthat detects the presence of VM environments (known as The Red Pill in reference to thepopularMatrix films) prior to an attack. If an attacker breaches a physical server known to be

running VM environments, damage could occur to all of the applications running on the onephysical server.29

Support: Major vendors are generally loath to provide support for their products if they determinethey are running in VM environments. For example, Symantecs Web site claims that the vendordoes not provide support for many of its products running in a VMware environment or in anyother Windows-emulation environment.30 Microsoft will not provide support for any of itsproducts running on non-Microsoft virtualization software.31

Licensing: Virtualization severs the ties that have historically bound software to hardware.Consequently, the traditional software licensing model of charging per CPU, which vendors stillwidely use, may force customers to pay full price for software that is not fully exploiting the

machine because it is in a shared virtual environment. Companies that do not press their vendorsfor policy changes could see software costs increase when they virtualize, as vendors mightcharge per CPU available to the software (which can be numerous in a virtual environment).32

Virtual-server sprawl: Although virtualization can keep physical server sprawl, the proliferationof multiple machines, in check, virtual machines can mult iply just as quickly. For example, manyIT organizations find that 10 physical servers can quickly become 100 virtual machines. Withoutproper management, such proliferation can cause operational problems, namely the disruption ofapplications running on all a physical servers VMs if the physical server is taken down.33

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Cost-Benefit Analysis and Risk Evaluation Should Figure Into Any Virtualization Decision

As they should with any strategic initiative, IT leaders should thoroughly examine the costs, benefits, andrisks associated with server virtualization before implementation. The following is a list of questions thatcan aid IT organizations in the decision-making process:

Questions to Ask Before Implementing Server Virtualization

Is the average CPU utilization rate at or below 30%?

Is the majority of our applications portfolio custom-developed?

Can our risk profile tolerate running applications on virtual servers, given that aproblem with one physical server could affect multiple applications at once?

Could virtualization improve our disaster recovery plans?

Do we have the resources to train administrators and managers to takeadvantage of the flexibility that virtualization provides?

Can our budget tolerate potential increases in licensing fees?

Do we want to implement grid computing?

Would virtualization help advance our SOA objectives?

Are we in danger of outgrowing our data center?

Is our administrator-to-server ratio below 30:1?

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1 Karen S. Henrie, Virtue in Simplicity; Virtualization software helps consolidate IT assets and cut costs, CIOInsight, 6 January 2006.2 ibid.3 Fred Hapgood, The Virtues of Virtualization, CIO , 15 September 2005.4 Lucas Mearian, Japanese Bank Expects Server Consolidation to Save It Millions, Computerworld, 10 October

2005.5 Ed Parry, Virtualization in the Data CenterA Look Ahead, TechTarget, 31 August 2005.6 Darrell Dunn, Virtual Showdown, InformationWeek, 15 August 2005.7 Michael Grebb, Thinking Inside the BOX,Banking Wire, 20 December 2005.8 Charles Babcock, Virtual Servers (For Real),InformationWeek, 12 December 2005.9 James E. Drews, Going Virtual,Network Computing , 14 September 2005.10 Don MacVittie, Storage and Servers,Network Computing , 18 December 2005.11 Jeffrey Burt, Intel, AMD Rev Virtualization, eWEEK, 7 March 2005.12 James E. Drews, Going Virtual,Network Computing , 14 September 2005.13 Lucas Mearian, Japanese Bank Expects Server Consolidation to Save It Millions, Computerworld, 10 October2005.14 Carol Sliwa, Open-Source Virtualization Beckons Users at LinuxWorld, Computerworld, 15 August 2005.15 Don MacVittie, Storage and Servers,Network Computing , 18 December 2005.16 Fred Hapgood, The Virtues of Virtualization, CIO , 15 September 2005.17 James E. Drews, Going Virtual,Network Computing , 14 September 2005.18 Sonny Discini, Host-Based Virtual Machine or Virtual Disaster?,Enterprise IT Planet, 26 May 2005.19 Michael Grebb, Thinking Inside the BOX,Banking Wire, 20 December 2005.20 Sonny Discini, Host-Based Virtual Machine or Virtual Disaster?,Enterprise IT Planet, 26 May 2005.21 Author Unknown, How to sell ServersThe art of saving energy, Computer Reseller News UK Edition, 14November 2005.22 Denise Dubie, Grid taking shape in enterprise nets,Network World, 10 October 2005.23 Karen S. Henrie, Virtue in Simplicity; Virtualization software helps consolidate IT assets and cut costs, CIO

Insight, 6 January 2006.24 Sonny Discini, Host-Based Virtual Machine or Virtual Disaster?,Enterprise IT Planet, 26 May 2005.25 Karen S. Henrie, Virtue in Simplicity; Virtualization software helps consolidate IT assets and cut costs, CIO

Insight, 6 January 2006.26 Deni Connor, Welchs reaps benefits from server virtualization,Network World, 4 January 2005.27

Michael Grebb, Thinking Inside the BOX,Banking Wire, 20 December 2005.28 Sonny Discini, Host-Based Virtual Machine or Virtual Disaster?,Enterprise IT Planet, 26 May 2005.29 ibid.30 www.symantec.com31 Microsoft, Support policy for Microsoft software running in non-Microsoft hardware virtualization software, 27October 2005.32 Jennifer Mears and Ann Bednarz, Advanced technologies muddy software licensing,Network World, 13 June

2005.33 Author Unknown, HP Attempts to Flatten the Bumps on the Road to Virtualization, eWEEK, 8 November 2005.


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RESEARCH METHODOLOGY

The information contained in this report was researched using secondary-source search engines such asLexis/Nexis and Factiva, IT journals such asInformationWeekand Network World,company Web sites,

and Hoovers.

Professional Services Note:

The Corporate Executive Board has worked to ensure the accuracy of the information it provides to its members. This project

relies upon data obtained from many sources, however, and the Corporate Executive Board cannot guarantee the accuracy of the

information or its analysis in all cases. Furthermore, the Corporate Executive Board is not engaged in rendering legal,

accounting, or other professional services. Its projects should not be construed as professional advice on any particular set of facts

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Assessing Server Virtualization

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