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Virtualization ROI calculator helps convince management

A financial services provider used its proprietary ROI calculator to show its CIO the value of virtualization. Calculating virtualization ROI also exposed some problem areas.

By Michelle Boisvert, Managing Editor of E-Publications

Overcapacity issues in data centers can affect cooling, compromise floor space and elevate power usage. But as this case study shows, a return on investment (ROI) calculator can demonstrate the need for virtualization technologies to address these problems.

When server performance at OpenSolutions Inc. began to suffer because of overcapacity and antiquated equipment, the company had to make a choice.

Do switches enhance virtualization ROI?
As part of server consolidation, data center managers might expect additional savings and enhanced virtualization ROI from fewer switch ports, but they shouldn't downsize their network switches just yet.

Server consolidation places a number of virtual machines (VMs) onto one physical server. The reality is that each VM requires some amount of network connectivity, and many VMs can easily overwhelm a server.

It's not just about network access for applications -- moving and migrating VMs and other backup tasks can also impose significant bandwidth overhead on the network, said Gary Chen, research manager for enterprise virtualization software at IDC.

There is often some measure of savings. For example, a 50-server infrastructure may use 50 switch ports. If those 50 servers are consolidated to 10, and those 10 physical boxes are fitted with three NICs each, that's a total of 30 ports -- a savings of 20 ports.

Some organizations choose to re-invest this savings into redundant switches to facilitate a fault-tolerant network.

—Stephen J. Bigelow, Senior Technology Writer

"We had a lot of very old equipment," said Ryan Marsee, director of corporate networking for OpenSolutions, a financial services provider in Glastonbury, Conn. "The only way to get fix it was to buy all new equipment or go to virtualization."

The virtualization ROI calculator as a selling point
The already-taxed OpenSolutions data center needed the ability to grow following a recent acquisition, but physical expansion wasn't an option.

"We were at 100% capacity from a cooling perspective," Marsee said. "Even if we resolved this, we had no floor space left."

Using his company's proprietary ROI calculator, Marsee worked the numbers.

"Fixing the cooling issue would cost around $250,000," he said.

And fixing only the cooling issue meant the company would keep things status quo for the equipment in the data center -- a step above putting a Band-Aid on the problem. Ultimately, that solution didn't allow any room for growth. Instead, Marsee considered eliminating some of his energy-inefficient monster servers. Although management rejected the idea of virtualizing servers in the past, the $250,000 quote on a new cooling system made virtualization seem that much more attractive to the CIO.

Factors the virtualization ROI calculator included were the need to increase cooling, the need to decrease the cost of a per-server deployment -- logical or physical -- and the desire to reduce the center's 15:1 compression ratio.

"Based on this, we were able to realize about a seven-month ROI on the initial virtualization project," Marsee said.

Future virtualization ROI calculator plans
Using the virtualization ROI calculator from the onset gave the company a good idea of what to expect in virtualizing the data center. It also shined a light on some known inefficiencies in the corporate networking infrastructure that had to be fixed anyway.

Virtualization ROI guide
This tip is part of our guide on ROI calculations for virtualization projects.
In the end, the company virtualized 100% of servers on VMware ESX with Virtual Center as the management console. Virtualized machines now encompass 75% of the data center. Non-virtualized machines include those tied to physical hardware. As the company continues to scale up, Marsee is looking into virtual desktop infrastructure for remote workers but will adjust his virtualization ROI calculator to a more end-user-centric model.

Dig Deeper on Server consolidation and improved resource utilization

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