How To Make A Data Center More Efficient

Data Center Efficiency in the

Virtual Era: Three Key Steps

Step 2: Simplify

A UBM white pAper

auguST 2010

2

Simplifying Through Virtualization

Step 2: Simplify

Companies standardize, simplify, and auto-mate to better serve business needs. By making infrastructure and data centers more efficient, IT departments make better use of corporate capital and resources — freeing money for innovation that would otherwise have gone to maintenance. Efficiency efforts also result in a better return on technology investment.

Standardization is an important first step, but that step alone isn’t enough. Understanding the need for simplification requires a quick look at how data centers developed in the past 15 years.

The Growth of Complexity

In the 1990s and early 2000s, corporations invested in new business systems that came to market promising levels of efficiency never before seen. Installations of these separate pro-prietary packages quickly turned into functional silos. Complicating the number of systems were the acquisitions and mergers that allowed

cor-porations to swell in size, but brought streams of additional IT systems that had to be digested.

As a result, companies developed patch-works of proprietary technologies. Getting con-trol over infrastructure and data centers became nearly impossible because the collection of hard-ware, softhard-ware, and tools was so varied and diversified. The mix made it impossible to effi-ciently use technical expertise or combine pur-chasing sufficiently to maximize leverage.

Furthermore, internal politics began to affect IT decision making. When technology is standard, there’s less need to pay experts who specialize in specific hardware or software pack-ages. No specialist wants to be turned into some-one exercising commodity skills.

Standardization: A First Step

Standardization can help solve some of these problems. But even if a company manages to standardize everything in its IT arsenal by swap-ping out the oddball hardware, operating

sys-Rapid changes in the business environment have put tremendous pressure on corpo-rations and their IT infrastructures. Tough global competition required new levels of operational performance while keeping costs low. Executives, customers, regulators, and investors became ever more demanding. And then the economic roller coaster took every-one on quite a ride.

At first, enterprises turned to faster and more powerful hardware. But buying a com-pany’s way into better operations is expen-sive and highly inefficient. Companies that tried quickly ran out of room for new equip-ment and the power and cooling to run it.

Some corporations experimented with simplifying their infrastructure: some server consolidation here, a little virtualization there. But that became just another way to

spend more money on IT. To achieve their business goals and unlock the value of their infrastructures, companies needed a more disciplined and structured way to eliminate inefficiencies. A growing number have turned to a three-step process: standardize, simplify, and automate.

This installment, the second in a three-part series, explores how simplification extends the value of data center stand- ardization efforts and forms a stable, efficient base that can be used to support automation. By tackling each of the three steps, in order, enterprises can ensure that their infra-structures provide the flexibility to meet cur-rent and future demands, the cost-effective-ness to extract ROI from existing technology investments, and a foundation for new tech investments to carry efficiency forward.

uBM TECHWEB WHITE PaPER | Data Center Efficiency in the Virtual Era: Three Key Steps

3

tems, tools, and applications for their sanctioned equivalents, it may still end up with a compli-cated, convoluted, and expensive mess that fails to deliver sufficient value.

For example, in its 2009 Q4 global ERP con-solidation survey, Forrester Research found that 12 percent of the companies interviewed had from five to nine global instances of their ERP packages. An additional 14 percent had 10 or more instances, and a fifth of respondents didn’t know the number.1

Clearly, even standard software doesn’t ensure efficient deployment. And standardiza-tion only helps if there is a standard to move to. More than 25 percent of the companies Forrester interviewed ran 100 or more custom applications globally; 37 percent ran from five to 99.

Problems facing a modern enterprise that are beyond the power of standardization include: • Excess capital investment. Having too many

servers, storage systems, and network seg-ments means low utilization of existing capac-ity. A company runs more systems, often to accommodate rare peak workloads, than is necessary to do its everyday work. That means significant capital is tied up for no reason; it’s the equivalent of building a four-lane highway for a one-stoplight town.

• Sprawl. A company that runs inefficiently needs more infrastructure as a result. All those servers, storage units, and networking equip-ment must live somewhere, and the physical real estate needed costs money to lease and maintain. Not only does the corporation tie up capital, but it increases facilities expenses. • Power and cooling. The more powerful the

equipment, the more energy it consumes. Power and cooling requirements have increased over time, and existing data centers were never designed with such needs in mind. As busi-ness grows, demands on IT systems increase. Without greater capacity utilization, corpora-tions must expand the amount of equipment they run. Eventually, they may run out of space, power, and cooling, requiring the company to build new data centers.

• Redundant administration. Even with stan-dardized equipment, there is only so much work each administrator can do. As the amount of equipment grows, enterprise IT departments must hire additional people to adequately cover administration needs, unnec-essarily inflating head count.

• Inflexible resource deployment. In theory, standardized equipment and software can move easily from one part of a company to

FlExIBlE VIRTuAlIzATIOn MAnAGEMEnT wITh DEll AIM

In addition, AIM makes it possible to:

• Manage physical and virtual resources with a single solution

• Move workloads seamlessly across hardware platforms for increased availability and scalability

• Transform physical servers with virtualization-like functionality, including automated failover, dynamic load balancing and business continuity • Decrease the time and personnel required to deploy hardware and to get

applications up and running with a repeatable, scalable framework for hardware implementation

• Integrate existing servers, storage and network devices into an AIM solution to extend the useful life of existing investments.

For more information about AIM, go to http://content.dell.com/us/en/enterprise/ infrastructure-management.aspx.

4

another. In reality, the cost of redeployment, usually involving an upgrade of capability, is high enough that IT departments typi-cally choose to buy more equipment instead, increasing the amount of excess capacity. • Management complexity. A byproduct of

equipment bloat is more complicated infra-structure management, because more copies of management tools are needed. Greater complexity requires more effort to locate sys-tems, provision services for new business appli-cations, and perform basic administrative tasks. The additional effort required ends up delaying the underlying business processes and needs. The corporation becomes slower to react and innovate, damaging its competitiveness. • network strain. The more servers and

storage pumping data over a network, the more complex the architecture, routing, and control of traffic. The more complex the data flow, the more difficult it is to run the network efficiently, which can affect applications and, by extension, corporate operations.

• Taxed strategic resources. As existing appli-cation portfolios and associated infrastructure

consume resources to “keep the lights on,” less money, time, people, and attention are left for strategic investment and growth.

• Migration complications. As old hardware comes to the end of its life, unit-for-unit replacement requires additional investment in underutilized systems and results in disrup-tive transfer of data and applications. To keep things as they are, even with standardization, means inevitable periodic interference with the very business processes and activities that the IT infrastructure is supposed to enable.

Good economic times can mask the inefficiency of an IT infrastructure and data center. But economic challenges bring the problems to light. IT consultancy The Hackett Group recently tested the operational efficiency of large corpo-rations by examining whether companies could proportionately scale their sales, general and administrative (SG&A) costs as revenue varied by 15 percent—a condition many businesses faced during the recent economic turndown. “Three-quarters of the global 2000 companies [we tested] failed,” says the group’s IT advisory practice leader Honorio Padron, in part because

5 TIPS FOR SIMPlIFICATIOn SuCCESS

For greatest success, simplification must involve five different areas, each with its own mandate:

1. Budget. Spend only what is necessary to create an infrastructure that will provide the business with the capabilities it needs today to grow to meet future demands.

2. Architecture. Design an infrastructure with as small a footprint as possible to deliver the necessary computing and communicating capacities while maintaining the ability to move infrastructure into the future without ven-dor lock-in.

3. Installation.Change when needed, but structure the simplification process to leave in place that which can remain.

4. Operations. Effectively use people and tools to control operations centrally in the most efficient way.

5. Processes. Create a holistic approach to the process of managing the entire infrastructure and don’t focus solely on the individual parts.

By addressing all five aspects, simplification creates a dynamic and agile infra-structure that allows a company to more directly match technical resources to business needs at any given time and can free up to half of a company’s IT budget.

uBM TECHWEB WHITE PaPER | Data Center Efficiency in the Virtual Era: Three Key Steps

5

IT expenses made up half the total SG&A cost. Padron notes that one measure of com-plexity is the number of different applications a company supports per thousand users. The greater the number of applications, the more complex the infrastructure must be. “World class companies that have done…transformative strat-egies, including the redesign of the service deliv-ery model, show 17 applications per thousand users,” Padron says. “A company that has not done that will have 28 applications per thousand users. It’s almost two-to-one.”

A Comprehensive, Phased Approach

Simplification is the hallmark of intelligent cor-porate infrastructure because it enables agility and reduces unnecessary expenses. Technically, simplification is a three-phase process: rational-ization, consolidation and virtualization.

Rationalization involves determining what the company needs for its operations and designing an architecture accordingly. According to a June 2009 Gartner press release on data center costs, rationalization and consolidation aid asset and inventory management, lower annual energy costs (typically by $400 per server per year), and yield a 5 to 10 percent saving in overall hardware costs.2

Consolidation involves reconfiguring servers, networks, storage, and applications to

accom-modate the rationalized design and eliminate redundant hardware, software, and data centers. Gartner estimates that data center consolidation will typically save from 5 percent to 15 percent of the overall data center budget.

Virtualization involves separating physical resources from virtual processes and treating servers, storage, and networks as pools of capac-ity deployed as necessary. Virtualization can also free additional hardware for further consolida-tion. According to Gartner, users see net savings within two years, with server energy use down by 82 percent and floor space savings of 86 percent.

When a company undertakes rationaliza-tion, consolidarationaliza-tion, and virtualizarationaliza-tion, it makes its IT systems more effective in a number of ways, answering the problems that standardization alone still leaves. The benefits enterprises derive from simplification efforts include:

• Efficient capacity. A company has the right number of servers, storage systems, and net-work segments and needs significantly less hardware than before, which frees capital. By reducing the amount of equipment, IT also constrains data traffic and demands on man-agement processes.

• Reduced facility requirements. Reducing the amount of equipment also decreases space,

7 CRITICAl QuESTIOnS whEn ChOOSInG VEnDORS

• Does the vendor base its hardware on a standard Intel x86 chip architecture? • Do the servers run third-party operating systems, or does the vendor

pro-vide a proprietary operating system?

• Do the vendor’s management tools work with a variety of hypervisors? • Do the vendor’s tools manage a variety of hardware, or can they only

man-age equipment from one vendor?

• Does the vendor rely on a vertically integrated product stack, or is it com-patible with products from a variety of vendors?

• Will you be locked into the vendor’s architecture, or do you create your own infrastructure architecture and work the vendor’s approach into yours? • How much of the equipment that you already own and run will be you able

to use?

power, and cooling requirements.

• Right-sized administration. When a com-pany radically reduces the amount of equip-ment it runs, it pares the degree of administra-tion required. IT can reduce headcount or even redeploy people to activities that create more value for the company.

• Flexibility. A company turns its servers, stor-age, and network into resource pools that it can assign quickly and as needed to best sup-port business requirements at any given time. Provisioning resources for new business needs, migrating end-of-life equipment, performing system recovery, or integrating new technolo-gies become easy tasks.

Battling Politics

Simplification must transcend technology Because the business as a whole drives IT, true simplifica-tion must start with the business processes that drive the need for applications and information. That requires the process of rationalization; that is, determining what software and hardware the company actually needs to run its business.

“The planning and design is the most crucial piece,” says Irwin Teodoro, director of engineer-ing and systems integration at IT consultancy Laurus Technologies. Teodoro works with many healthcare organizations, and software for that industry often has poor virtualization support. “There could be supportability issues that pro-hibit that application from going to a virtualized environment. Not every platform or application is a candidate for virtualization.” The question comes down to what problem a company wants to solve.

Simplification starts with analyzing the busi-ness problem, including what the company wants to attain and how its organization works. It means, in part, looking beyond functional silos. Without a holistic view, each silo tries to optimize its own performance. But the result can hurt the performance of the company as a whole.

Planning IT rationalization and consolidation involves crossing organizational boundaries in technical and business silos. Corporate IT depart-ments tend to conceive of their infrastructures

in several main categories: servers, storage, net-works, and applications. Each technical area has its own managers, employees, budget, authority, and processes – in short, its own organizational silo independent from that of the others.

“Different IT teams who are using discon-nected processes, maybe a mix of manual or automated tools, are each doing their own thing in terms of deploying apps, the database, the OS, security, the network connections, and storage resources,” according to Mary Johnston Turner, IDC research director for enterprise systems man-agement, in an April 21, 2010 InformationWeek webcast. The result is that getting anything done that requires cooperation is a chore.

Then there is the organization of the busi-ness itself. Just as IT has its silos, the busibusi-ness side also has silos based on corporate function, business unit, department, and even project. When the technical and business departments interact, the already fragmented direction and control over infrastructure and data centers only gets worse, making it even more difficult for a corporation to extract value from its infrastruc-ture investments.

Companies must address these organiza-tional issues, including managing the politics. According to The Hackett Group’s Padron, the recently difficult economic climate has made it easier to move beyond individual objections and restructure infrastructure. “People are say-ing, ‘Forget the cultural issues that kept us from consolidating in the past,’” he says, because businesses can no longer afford to operate that way. Padron says The Hackett Group has seen rationalization and consolidation strategies accel-erate significantly over the last two years.

“For instance, in 2004, only about 24 per-cent of the companies [we surveyed] had shared services with two or more functional areas in it, like IT and finance or procurement or HR,” Padron says. “Now that number is about 65 percent. That means those companies moved in the direction of standardization of process, which allows standardization of application, which allows you to move into standardization of infrastructure.”

The challenges these silos pose underscore the need for rationalizing choices of software and hardware, consolidating infrastructure, and, most importantly, virtualizing. By doing so, a company can effectively wrest control of serv-ers, networks, and storage from individual silos

6

Simplification is the hallmark of intelligent corpo-rate infrastructure because it enables agility and reduces unnecessary expenses.

uBM WHITE PaPER | Data Center Efficiency in the Virtual Era: Three Key Steps

7

and turn them into pools of corporate assets that can be assigned to specific needs as necessary.

However, companies must take care when specifying their rationalized platform. Vendors that may claim to have open products might effectively be proprietary. For example, two ven-dors can base their servers on Intel x86 architec-ture. One of the hardware lines could work with third-party products while the other requires that the corporation source everything from the one

vendor. If a company chooses the second option, it effectively locks itself in with a specific vendor and limits itself to the third-party applications that are compatible with that vendor’s approach to virtualization.

Three problems result from vendor lock-in. One is the realization of the worst risk analysis fear: If the company faces a problem in moving a silo to the new technology, it may find it impos-sible to return to the previous state.

InTEl SIMPlIFIES VIRTuAlIzATIOn

As companies turn to virtualization for workload consolidation and to improve utilization, they need to consider the increased network bandwidth and storage demands that come with higher server utilization, as well as the potential for virtual machine sprawl and management complexity.

hardware-assisted Intel® _{Virtualization Technology (Intel VT) helps}

pro-mote efficient data center growth. with support from the processor, chipset, BIOS, and enabling software, Intel VT offloads workloads to system hard-ware, which enables virtualization software to provide more streamlined software stacks and “near native” performance characteristics. Intel VT simpli-fies data centers in three key areas:

• Virtual machine migration.Intel VT FlexMigration enables flexible workload migration and performance optimization across 32-bit and 64-bit operat-ing environments. Data center managers and system administrators can set simple rules for virtual machine migration based on time of day, workload, or memory requirements. In conjunction with VM tools such as VMware’s Enhanced VMotion, FlexMigration also protects infrastructure investments in xeon processors by providing architectural compatibility from one generation to another.

• unified networks based on 10 Gigabit Ethernet (GbE). Faster processors, virtualization of applications and increases in virtual machine density all raise the potential for I/O bottlenecks. A unified network fabric based on Intel Ethernet 10GbE can simplify infrastructures and lower TCO while posi-tioning data centers to meet future bandwidth needs. Intel 10GbE increases Ethernet speed to 10Gbps, lowers power requirements and reduces the num-ber of ports, switches and cables needed. 10GbE with Data Center Bridging improves quality of service when data and storage share the same network. And because Intel Ethernet 10GbE builds on existing tools and processes, costs are lower than with other technologies. Interoperability with existing network infrastructure and support from many equipment vendors allow a high degree of flexibility in network design.

• Convergence of servers and storage. As storage needs and performance expectations grow, storage architectures put ever greater demands on man-agement systems. Storage and computing systems are converging to address these needs. Many storage vendors, including EMC, are choosing Intel xeon processors as their architecture of choice.

For more details about Intel virtualization technologies, go to www.intel. com/technology/virtualization/server/index.htm.

8

STuDIES In SIMPlIFICATIOn

here’s a look at three companies that have put simplification to work in their environments:

Dell, a $53 billion company that’s one of the leading PC manufacturers in the world, found itself with the same IT problems many giant corporations face. new equipment deployment took as much as 45 days from order to installation. The company was running out of space, power, and cooling for servers. Out of tens of thousands of servers, three-quarters stayed under 20 percent utilization. Dell’s IT department worked with the company’s consult-ing arm to develop a strategy to combat these inefficiencies. The company first standardized on Intel xenon-powered Dell PowerEdge R900 servers and Equallogic PS5000xV storage area networks, then simplified by virtualizing thousands of servers, all controlled by VMware. The company’s efforts paid off in consolidation ratios of up to 20 to 1 and a 30 percent jump in utiliza-tion. Dell saved an estimated $29 million in hardware purchases, reduced space, cooling, and power costs, and shrank the time for new deployments from 45 days to 4.

Emerson, a 120-year-old $22 billion technology company, needed flexi-ble and agile communications and computing to support a long-term growth strategy. however, the legacy IT system consisted of implementation silos that extended to 135 data centers. The company implemented a consolida-tion strategy with Dell PowerEdge M610 and PowerEdge M710 blade servers using Intel® Xenon processor 5500 and 5600 series architecture and Dell/EMC

CX4-960 storage area networks. The PowerEdge servers reduced footprint by half. Emerson reduced all the data centers down to four and eliminated about 3,600 servers in the process. Because of the new servers, the com-pany’s new global production center in St. louis lowered its energy use by 31 percent. In addition, the IT department expects to decrease the operating costs of its windows server environment by 15 percent a year.

PACCAR, a $7.6 billion transportation company that manufactures premier truck brands, had nearly 1,000 servers split among several global locations with 15 percent to 25 percent annual growth. The company had to put considerable resources into maintenance, which diverted attention and resources from innovation. PACCAR hired Dell Global Infrastructure Consulting Services to help develop a simplification plan using Intel xenon-powered Dell PowerEdge 2950 and 6850 servers, with VMware running 15 to 20 virtual machines on each server, and Dell/EMC Cx700 storage area networks. Consolidation reduced the number of servers by half, and the cost of each virtual server is about half that of a physical one, but the real advan-tage to PACCAR came from improved IT efficiency. For example, the SAn systems dropped application recovery time from five hours to 20 minutes. The IT department can now create a virtual test and development environ-ment in a few minutes. And virtualization now makes it possible to provision resources for a new application in about 20 minutes.

uBM WHITE PaPER | Data Center Efficiency in the Virtual Era: Three Key Steps

9

The second is the potential of future incom-patibility with emerging standards. Unless the proprietary vendor embraces the new tech-nologies, companies may find themselves unable to use them. New capabilities that could further simplify IT operations or systems administration would be incompatible with the proprietary infrastructure.

The third problem is cost. Open systems drive down cost because of competition. Closed systems leave a company at the mercy of the vendor as well as of employees with highly spe-cialized experience, consultants, and third party software firms that provide scarce goods and can charge accordingly. That increases budget rather than reducing it and freeing money for other uses. To truly simplify, corporations must pick technology that preserves flexibility and options.

Incremental Virtualization

Before virtualization, companies typically achieved only 36 percent utilization, accord-ing to information IDC’s Turner presented in the InformationWeek webinar. Within the next two years, IDC expects utilization to rise to 67 percent.

By the end of 2010, IDC expects more than half of all workloads to run on virtual servers. Yet, IDC projects that number will only rise to 69 percent by 2013.3

Initial virtualization and consolidation efforts go for the low-hanging fruit—servers that can be virtualized and consolidated with at low risk. And consolidation can bring welcome early gains, especially now that vendors such as Intel have overcome limitations that had previously created system latencies, limited server utilization rates, or left gaps in virtual machine availability and connectivity (see “Intel Simplifies Virtualization” on page 7).

Once that initial stage is complete, compa-nies tend to hit a virtualization wall; further prog-ress means driving virtualization into proprietary silos, which is a riskier undertaking. Furthermore, not everything can be virtualized. For example, many organizations in the healthcare sector, according to Laurus Technology’s Teodoro, are just beginning to adopt virtualization. “It’s a non-competitive industry to begin with,” he says. With relatively few vendors and hospitals often serving independent sets of customers, there was far less pressure than in other industries to become more efficient, and so vendors didn’t

write their software packages to be compatible with virtualization. Hospitals were effectively locked into whatever packages they already used and couldn’t easily transition to another vendor’s offerings. However, even in healthcare, with national pressure to reform practices and costs, the days of dedicated servers are coming to an end. “We’re having conversations with healthcare companies now that you had with non-healthcare companies three or four years ago,” Teodoro says. As the customers demand virtualization, vendors will begin to comply.

In healthcare, as in nearly every other industry, the rip-and-replace approach of changing everything at once is unrealistic. Enterprises must approach virtualization in a pragmatic and phased approach, targeting high-reward and low-risk areas for initial implementations and then continuing into other areas as software and project schedules allow. Instead of rip-and-replace, intelligent enter-prises opt for a strategy of expand-and-embrace, incorporating the infrastructure in pieces until everything comes under the virtualization umbrella.

For most companies, that means an incre-mental and circular process of standardizing some portion of the infrastructure, virtualiz-ing that part, and then usvirtualiz-ing freed resources 3 _{Johnston Turner, Mary. Automation and Integration Vital for Efficient Data Center Operations, IDC white Paper, April 2010.}

0 10 20 30 40 50 60 70 80 Utilization Before Virtualization Utilization Today Planned in Two Years

N=258 Source: IDC Virtualization Multiclient Study

67%

36%

56%

Server utilization Before and

After Virtualization

10

to repeat the process in another part of the infrastructure. Not only does this incremental approach allow a company to work within its budget and resource limits, but it also lets the company start with the most receptive operating silos and, over time, bring pressure to bear on less receptive ones.

Simply Efficient

Enterprises that approach simplification with the rationalization, consolidation, and virtualization approach in mind can free resources and reduce

expenses. Even more importantly, building on open, standard technologies allows them to preserve and even expand choices in how to run their business.

The built-in scalability and flexibility offered by a standardized, simplified data center infra-structure enables IT to respond quickly to business needs and enables the enterprise to take advan-tage of changing opportunities. Furthermore, simplification prepares the business to make the most of automation. Read how in the final installment of this series.

Dell Inc. (NaSDaQ: DELL) listens to customers and delivers innovative technology and services they value. a leading global systems and services company uniquely enabled by its direct business model, Dell is No. 33 on the Fortune 500 list of america’s largest companies. For more information, visit www.dell.com or to communicate directly with Dell via a variety of online channels, go to http://www.dell.com/conversations. To get Dell news direct, visit http://www.dell.com/RSS. Intel (NaSDaQ: INTC), the world leader in silicon innovation, develops technologies, products and initiatives to con-tinually advance how people work and live. additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com.

DEll AnD InTEl

0 10 20 30 40 50 60 70 80 2013 2012 2011 2010 2009 2008 2007 2006 2005 8.7 13.9 22.4 33.0 42.1 51.3 59.4 65.1 68.6 (%)

Source: IDC Virtualization Multiclient Study, 2009