Transcript Slide 1

The Business Case in Virtualization
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Table of Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
Executive Summary…………………………………………………..
Detailed Fit Indicators………………………………………………..
Benefit Drivers………………………………………….………........
Common Pitfalls……………………………………………………..
Making the Virtualization Business Case………………………....
Cost Avoidance………………………………………………………
Cost Savings………………………………………………...…...….
Necessary Expenditures…………………………………………….
Creating the Plan…………………………………………………….
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26
29
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Executive Summary
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Executive Summary
Mid-market enterprises are in the sweet spot to achieve cost
savings from virtualization

Despite being a very powerful technology, virtualization benefits are more readily realized in
certain types of enterprises.

Two key factors are leading indicators of greatest success:
Size of Enterprise
Number of Servers
(# of employees)
(# of Supported Physical Servers)
• Enterprise size affects the role of IT, the
materiality of expenditure and savings,
and comfort with new technologies.
• Very large companies may experience
more difficulty in implementation due to
established bureaucracies.
• Thirty servers or more leads to the
greatest and most demonstrable cost
savings and benefits when taking
implementation costs into consideration
• Very small companies have trouble
justifying the investment.
Sweet Spot: ~100 to ~5,000
Sweet Spot: 15+
If there is organizational fit, virtualization does provide most vendor-stated benefits.
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Executive Summary
The virtualization business case will be rooted in hardware
savings

Implementation of Virtualization does not affect the number of applications, but rather the
number of physical boxes in use.

Thus, the majority of pure cost savings are linked to reduction in physical boxes.

Cost avoidance and incremental business benefits exist in areas of Disaster Recovery
(DR)/Business Continuity (BC) and efficiency, but are not always as tangible.
Business Case Value
1. Reduction in one-time and ongoing hardware
acquisition costs
40%-75%
2. Reduction in hardware-related maintenance
costs
25%-50%
3. Efficiency benefits from
increased manageability
Acquisition Cost Savings
Monthly Recurring Savings
4. DR/BC enabled by
removing need for
homogeneous
hardware
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Evaluating Your Company’s Fit
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Detailed Fit Indicators
In the context of virtualization, success means achieving all
three set benefits
TANGIBLE BENEFITS:
Achieved the stated business case financial
objectives, including one-time and ongoing
cost savings and on-time implementation
completion.
SUCCESS
INTANGIBLE BENEFITS:
STRATEGIC BENEFITS:
Recognized value of virtualization
and have plans in place to leverage
technology for future growth.
Recognized feature benefits inherent
in virtualization and exhibited
improved efficiency.
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Detailed Fit Indicators
It’s necessary to look both within and outside of IT to
accurately assess fit

Virtualization can be implemented in any enterprise; however, success (as defined on the
previous page) of that implementation depends on a number of factors, broken down into
three categories:
Company
Characteristics
IT Department
Characteristics
Server
Infrastructure
Despite being a “cool” technology, perform adequate due diligence in assessing fit.
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Detailed Fit Indicators
Company
Characteristics
Small and mid-sized companies make the most
use of virtualization technology
100%

Virtualization is really an infrastructure
initiative that can bring some level of
benefit to any size of company.
Although adoption penetration of
virtualization is greater in larger
companies, the proportion of their
environment that is virtualized is much
less significant.
90%
80%
70%
Penetration

60%
Not Using
50%
40%
Planned/POC
30%
Using
20%
10%
0%
1-100
101-500
5011000
10012500
25015000
5001+
# Employees

The greatest benefit can be seen in
small and mid-sized organizations.
70%
67%
% of Servers Virtualized
60%
50%
40%
30%
20%
11%
10%
0%
Small/Medium Enterprise
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Detailed Fit Indicators
Company
Characteristics

Smaller companies have seen greater benefits in
the implementation of virtualization
Being a more innovative IT solution, small to midsized companies have significantly better success
in implementation for the following reasons in order
of impact (shown as Harvey Ball on right):
Company Size
(# Employees)
1-100
Virtualization works, but is
less compelling.
101-250
1 Greater Executive Comfort with Virtualization
• Greater Executive Comfort with Virtualization:
Comfort tends to be significantly higher in smaller
organizations, in a large part due to the less complex
political climate and ease of buy-in into the potential
savings from a virtualization implementation. Further,
smaller organizations tend to be less risk averse to
new technologies than larger organizations.
250-500
Sweet spot.
500-1000
1001-5000
5001+
Virtualization works, but is
more difficult to implement and
usually of reduced scope.
2 •Relaxed
Formal
Approval
ProcessProcess:
No Need
for a Formal
Approval
Flexibility of a smaller company, in most cases,
eliminates the need for a formal approval process,
which can introduce risk by necessitating education of
a broader audience on the workings of virtualization.
2 • Appetite
for Incremental
Cost Savings
IT Department
Autonomy:
Incremental savings resulting from benefits, such as
maintenance efficiencies and power savings, have
proportionally more impact on a small company (who
feels the impact immediately) than a large enterprise.
3 • ITReduced
Department
Autonomy
Political
Complexity:
Across organizations interviewed, the IT departments
of smaller companies had more latitude to make
decisions regarding virtualization and related
infrastructure topics.
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Reduced Political Complexity
Although never absent, fewer established (and
isolated silos) and a flatter organization cause more
pragmatic decision-making. The IT strategic vision
can be politically diluted in larger companies.
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Detailed Fit Indicators
IT Department
Characteristics
IT’s commitment to virtualization is key to
reaping maximum benefits

IT departments’ current infrastructure and commitment to virtualization play a key role in
determining success of an implementation.

Three characteristics are indicative of success:
1 • ITITComfort
Comfortwith
withVirtualization
Virtualization:
Much like executive comfort with the technology,
the technical team must be willing to move away
from physical servers.
2
3 • High
Proportion
of Server
Virtualization
Proportion
of Servers
to be
Virtualized:
Value in Virtualization is achieved when more,
rather than less, of the server infrastructure is
migrated. Migrating 50% or more of the
environment is a good indicator of success.
• Material
MaterialValue
ValueofofPower
PowerSavings
Savings:
Facility space and power savings are two great
benefits of implementing virtualization. If the IT
organization views these as material, given their
current environment and costs, then it indicates a
good fit for the technology.
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Detailed Fit Indicators
Server
Infrastructure

If you have 15 or more servers and plan to buy
new virtual host machines, you’re in business!
The physical servers that exist in an enterprise are an important component of determining
the fit of virtualization within the environment.
Please see Page 23
1 15 or More Physical Servers
for more details…
• 15 or more Physical Servers:
The break-even point for virtualization of a small
number of servers (considering hardware and
software only) is roughly three servers. The value
increases as the number of servers grow. Once all
other costs are incorporated, 15 servers is the
threshold to achieving greatest value. In short, the
more, the better.
3 Acquisition of New Physical Servers
• Number of Low-Utilization Applications:
Reuse of physical servers to act as host
machines is a great way to increase the utilization
of those machines; however, for most
implementations, purchasing new hardware will
extend the life of host machines and could
provide additional scalability.
2 Number of Low-Utilization Application Servers
• Acquisition of New Physical Servers:
Quick wins can be achieved by virtualizing lowutilization and low-complexity server applications
like DNS and Web-servers. Critical applications
are certainly candidates as well, but require more
time to test thoroughly and may extend the
payback timeframe.
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Benefit Drivers
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Benefit Drivers
There are real savings resulting from virtualization
implementation

Virtualization implementations bring benefits that span both
tangible and intangible benefit areas:
Cost
Avoidance
Cost
Savings
•
•
•
Cost Savings (spending less)
Cost Avoidance (not spending more)
Intangible Benefits (not quantifiable)
Many clients
interviewed realized
ongoing savings of
30-50%
DECREASE HARDWARE ACQUISITION COSTS
by buying and setting up fewer servers
Please see Page 23
for more details…
SHRINK YOUR FOOTPRINT
by decreasing rack space and cutting back on cooling/electrical costs
Please see Page 25
for more details…
ENABLE AUTOMATIC FAILOVER
to improve/enable DR and BC operations
Please see Page 26
for more details…
HELP BUSINESS GROW FASTER WHILE KEEPING STAFF CONSTANT
by making staff more efficient and repurposing/reallocating freed resources
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Please see Page 27
for more details…
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Benefit Drivers
Intangible benefits can deliver as much value as hard cost
savings
Shortened
Improved Manageability & Flexibility

Virtual servers can be monitored and managed from
one console and allow for capabilities such as failover
and snapshot image backups. Features like these
improve the efficiency of system administrators while
maintaining, or improving, stability.
Enabling
Intangible Benefits
Improved Performance

Products like VMware allow for resource pool
management, which dynamically load balances virtual
servers across physical hosts. The result is more
consistent performance and less manual intervention.
Virtualization of Desktops
Many companies are now virtualizing desktops to
manage security (by allowing remote access to desktop
images) and image integrity (through the ability to
refresh a desktop image when necessary).
Separate Hardware from Software when Upgrading
Controlling Server Sprawl

Management of virtual servers should be accompanied
by a cultural change that reduces or eliminates the
purchasing of physical servers outside of the IT
department. The IT department will provision virtual
instances as required and hold the power to make
decisions over incremental purchases.
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Timelines for Development Projects
Development projects are often slowed by the
availability of development and testing environments.
With template-like functionality, virtual servers can be
brought up and refreshed from a single console within
minutes to meet project requests.
An interesting benefit to organizations running large,
demanding applications on servers that require
frequent hardware upgrades is that no re-installation or
re-configuration is required upon hardware changes.
Reduce
the “Mess”
Perhaps not as salient, reducing cabling by five- or
eight-fold does significantly reduce the possibility of
human error in unplugging the wrong cable.
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Common Pitfalls
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Common Pitfalls
Heed the warnings of your peers (continued)

Business case pitfalls
 Be wary of including FTE headcount reduction
Be Wary of Including FTE Headcount Reduction
Companies we spoke to had found improved efficiency in their maintenance staff, but this is rarely sufficient to
remove resources altogether since, in most cases, the system administrators perform other roles in the IT
department.
Quell Your Expectation of HUGE Consolidation
Number of Virtual Machines
Quell your expectation of huge consolidation. Consolidation ratios mentioned by the vendors differ from actual
client experiences.
12
What vendors report…
9
6
What to expect…
3
0
Per Core
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Common Pitfalls
Heed the warnings of your peers (continued)

Implementation warnings
Executives
and Staff Need to Have Faith
 Executives and Staff Need to have Faith
Don’t underestimate the culture shift required to remove physical servers and replace them with virtual ones.
“Server Huggers” (found in IT and in the business) need time to come on board and support the initiative.
You Will Most Likely Hit an I/O Bottleneck
 You will most likely hit an IO Bottleneck
Memory and CPU can be managed and allocated to keep up with most virtual server demands. NICs can be
scaled and added as necessary. I/O, however, will most likely be a bottleneck and the limiting factor as to the
number of virtual machines a host can manage. For example, this is particularly true in Exchange
environments with consolidated storage and a high number of BlackBerry users. From a capacity planning
standpoint, one BlackBerry Exchange user translates into four standard Exchange users on an I/O basis.
Please see Page 36
for more details…
Vendor
Support
May
Bebean

Vendor
Support
may
anIssue
issue
Although they are coming on quickly, not all vendors (especially smaller ones) are supporting their
applications in a virtual environment. That being said, many enterprises we spoke to became reference
clients for their software vendors once the virtual server implementation was complete. VMware currently has
a number of initiatives underway to help gain software vendor support, one of which includes a group who
works directly with ISVs. Of the top 70 ISVs, 75% now support VMware as a platform. Over time, vendor
support will becomes less of an issue, as the vendors are recognizing virtualization’s prevalence in the
market. Build in time to manage these issues with your vendor(s).
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Common Pitfalls
Heed the warnings of your peers (continued)

Implementation warnings continued
Virtual
Machine
Image Backups
Canlarge
Be Very Large

VM
Image Backups
can be very
Although a terrific feature, managing point-in-time snapshots of virtual machine images may not be worth the
size requirement to make it beneficial.
Beware
of Vendor
Licensing

Beware
of Licensing
CostsArrangements
Some vendors may still be inclined to charge based upon the total available power of the host system, as
opposed to the apportioned pool of resources allotted to each virtual machine. Investigate licensing in a virtual
environment when assessing applications for migration.
Maintenance
Contracts
Could
Bebe
ininJeopardy

Maintenance
Contracts
could
jeopardy
Much like vendor support, hardware hosting outsourcers may not support environments running virtual
servers. Build in time to renegotiate contracts or find new service providers.
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Common Pitfalls
Heed the warnings of your peers (continued)

Post-implementation considerations
Increased
Pay/Incentives
New Skill Set

Increased
pay for stafffor
dueITtoStaff’s
skill sets
Once staff is trained in the implementation and maintenance of a virtual server
environment, think about financial incentives since they will now possess a hot skill
set. This could be akin to what happened with ERP skills in their prime, although not
of the same magnitude. While this shouldn’t be a grave concern, include it in the
business case as necessary.
Implement
Appropriate
Access
Controls to Server Management Console

Appropriate
Security
Considerations
Server management is made much easier through the implementation of a virtual
server farm. However, this ease of management also requires appropriate controls
and access permissions given the larger number of servers and scope of features
that are being managed from one “pane”. Give few people access, and restrict
features where feasible.
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The IT
administrators at
one client
location would
failover
instances
between
physical hosts
many times a
day because
“they could”.
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Making the Virtualization
Business Case
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Business Case Areas
The business case should be based primarily on hard cost
savings

Virtualization has the benefit of having real cost savings; use these instead of quantifying
other intangible benefits or cost avoidance items that may obfuscate the real cost-saving
benefits which exist.

The preliminary business case can have a tolerance of +/- 25%, but be sure that all areas are
addressed, as per the table below:
Ongoing
One-time
Cost
Savings
•Facilities: Cooling, Power and Rack Space
• Hardware Acquisition
•Incremental Hardware Acquisition
•Disaster Recovery and Business Continuity
Cost
Avoidance
Costs
•Labor and Maintenance Savings
•Host Machine Hardware
•Virtualization Software Maintenance
•Virtualization Software
•Staff Training (Turnover)
•Purchase of the SAN (if required)
•Salary Increases (In-demand Skills)
•Staff Training and Consultancy Costs
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Hardware Acquisition Cost Savings
Hardware acquisition savings are the main force driving the
virtualization business case
Break-even Is 3 Virtual Servers per Host Machine
 Depending on the approach taken, host machines for
virtualization will either be purchased new, or existing
high-end servers can be reused:
• New server acquisition: the break-even point is
collapsing three servers onto one virtual machine
host assuming a two-way server configuration.
• Reusing a server: The server can be reused in
an other part of the business OR a host
purchase is not required, saving an additional
$3,000-$6,000 and reducing break-even to a
two-server consolidation.
• This does NOT include the purchase of a SAN if
one is not available in your environment.
General Rule
Virtual Server Break-Even
$9000
-$18000
$6000
-$12000
$3000
-$6000
15 Servers Needed to Cover Implementation Costs

Including testing, labor costs, training and other
implementation costs, the break-even point is at 15
physical servers or more.
Please see Page 41
Blades Are Viable Options As Well
for more details…
 Blade servers are complementary to virtualization as
they provide a hardware-based redundancy.

0
Cost of
New
Server
$3-6K
Cost of
New
Server
$3-6K
Cost of
New
Server
$3-6K
Acquiring
New Servers
Cost of
Virtual
Software
$3-6K
Cost of
Virtual
Host
Hardware
$6-12K
Virtualizing
The Total Cost of Ownership (TCO) of an eight-server
blade environment is now 21% less than its equivalent
rack-mount server installation.
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The more servers that can be consolidated onto the hosts, the
better the savings (one-time and ongoing)
70%
10:1
Consolidation Ratio
A
professional
services client
consolidated
seven servers
on each
z host
machine,
realizing
hardware
savings of
over 60%
67%
9:1
63%
8:1
57%
7:1
50%
6:1
40%
5:1
25%
4:1
3:1 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Average % Hardware Cost Savings
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Facilities Cost Savings
If deemed material, facilities savings and cost avoidance are
a key driving factor

Facilities savings come from two key areas:
Power Savings
• Power: server power and cooling
Savings in power consumption come from a reduction in the number
of physical servers and reduction in the air conditioning needs.
Rack
Space
Availability
• Rack
space
Whether through simple virtualization or a combination of blade
servers and virtualization, large amounts of rack space or raised-floor
space are freed with server consolidation.

More than half of the clients interviewed state that shrinking
the footprint was a driving force behind virtualization adoption.

However, this driver is less applicable to enterprises with
unlimited space and large amounts of power in production,
such as manufacturing companies.
Bennett Jones, a large
Canadian law firm,
avoided the cost of
building a new facility
through virtualization.
Graycon, a mid-sized
professional services
firm, emptied 40% of
its rack space, and
plans to have 60%
emptied once
implementation is
complete.
Virtualization can help to cut power consumption in half, while freeing up considerable rack space
in the server room.
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Cost Avoidance in Disaster Recovery / Business Continuity
Enable high availability and DR

Implementation of virtualization automatically enables some level of high availability and
business continuity. Cost avoidance areas include:
Heterogeneous
Hardware
Heterogeneous
Hardware:
No need for homogenous servers to achieve high availability/failover. Redundancy
can be had without the need for “two of everything”.
Hardware
Sharing
Hardware
Sharing:
Whereas applications, in the past, may not have coexisted within an environment,
hardware can now be shared amongst competing applications as each will have its
own dedicated environment. This enables failover to any available physical server.
Failover
without
Failover
withoutUser
userImpact
Impact:
Products like VMware’s VMotion allow for uninterrupted user experiences while
moving instances between physical servers.
Coorstek, a large
manufacturing
company, was
able to cut its
annual DR costs
by over 35%
because of
virtualization.
Backup
and Restore
– Snapshot
Capability
Backup/Restore:
Snapshot
Capability:
Point-in-time snapshots can be taken of an entire virtual machine image,
minimizing the amount of time necessary to return an application to a particular
state. Note here that applications that rely upon data on a SAN would only have the
local storage contents restored.
Virtualization is software – hardware redundancy is still required.
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Labour and Maintenance Savings
Introduce efficient processes for server management
More
Efficient
Processes

More
Efficient
Processes

Eliminates delay related to new server delivery, set up, and takedown.

Reduces development time by enabling the creation or refresh of development and
testing environments in minutes.

Reduces time required to manage server farm by leveraging virtual machine
management tools that allow for single-pane control of multiple servers.
Repurpose Employees


Efficiency leads to the ability to repurpose IT staff and get other initiatives underway
which otherwise would have been postponed or incurred costs of contractor
resources.
Many companies interviewed report a drop in new hires despite growth of the
business and IT environment.
Clients stated
that they are
able to keep IT
staff constant,
despite growth
in their
business of up
to 50%.
Reduce
Costcost
of Hardware
Maintenance

Reduce
of hardware
maintenance

Fewer physical machines can mean a tangible reduction in hardware maintenance
contracts with server, or third-party, vendors
Better staff utilization through virtualization allows more efficient management of the IT
department, repurposing of employees, and meeting of business growth demands.
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Low Benefit Areas
Don’t look here for savings…
License
Costs

License
costs

The only benefit noticed was with clients who used the OS-hosted Microsoft solution,
which allows for four Microsoft servers to be run in virtual instances under one license.

Otherwise the number of OS licenses remains constant.
Insurance
Costcosts
Reduction
Insurance
reduction

No noticeable benefits realized yet, but this may be something to watch for in the
future.

FTE
Reductions

FTE reductions

In most cases virtualization is not significant enough to justify head-count reduction
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Necessary Expenditures
Ensure the following key costs are included in the project
budget
The cost side of the business case should contain the following items:
Please see Page 41
for more details…
Hardware

Hardware


Acquisition of new servers to host virtual machines.
•
Multi processor servers or blade servers.
The purchase of a SAN.
Please see Page 42
for more details…
Software

Software

Virtualization software server license.
Please see Page 43
for more details…
Resources

Resources



Training.
Consultancy costs.
Additional remuneration for virtualization-trained IT staff.
Many companies
interviewed stated
that they were able
to use existing
hardware as host
machines, or
repurpose existing
hardware in other
departments
To achieve maximum benefit from the implementation, it is highly recommended that a SAN be
included in the project budget.
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Creating the Plan
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Twelve critical planning steps for virtualization implementation

Based on successful cross-industry implementations, below is a compiled leading-practices
guide to moving forward with virtualization.
Step 1:
Determining the
Approach
Step 7:
Resourcin
g
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Step 2:
Developin
g the
Business
Case
Step 3:
Gaining
Buy-In
Step 4:
Capacity
Planning &
Benchmar
king
Step 5:
Hardware
Selection
Step 6:
Software
Selection
Step 8:
Applicatio
n
Sequencin
g
Step 9:
Testing
Step 10:
Centralize/
Consolidat
e
Step 11:
Migrate
Step 12:
Monitoring
&
Expansion
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Step 1: Determining the Implementation
Approach
Organization and project characteristics will determine the
implementation approach
IT Autonomy
HIGH
LOW
High autonomy is characterized by:
 Executive trust in IT decision-making, resulting in a less formal
approval process
 Relatively high risk tolerance within the IT group
 Consolidated IT budget versus departmental IT budgets
Low autonomy is characterized by:
 Need for a formal business case and approval process
 Focus on hard cost savings and benefits as a result of C-level
understanding of IT
 Non-IT executive involvement and responsibility for IT projects
Scope of Implementation
Scope of Implementation
HIGH
LOW
 Scope covers most
systems
 Project goals are to
maximize cost savings
 IT-specific systems being
affected (e.g. internal help
desk, DNS servers, Web
servers, etc.)
Run as an internal IT
project, and keep
business and executives
informed.
Start small as an internal
IT project. Learn from
mistakes, and become
more formalized with
time.
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HIGH
LOW
 Scope covers many critical
systems
 Many lines of business
affected
 Minimizing overall upfront
costs and risks
 Mostly development and
testing systems are tackled
Involve the business,
and understand the full
implications and Return
on Investment (ROI).
Consider consultants.
Be transparent in your
plans. Gain executive
approval and support.
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Step 1: Determining the Implementation
Approach
Type of implementation is influenced by company size
Scope of Implementation
High
Small
Companies
Large
Companies
Mid-Sized
Companies
Enterprise
Companies
Low
Low
IT Autonomy
High
Small and mid-sized companies are more likely to virtualize a higher percentage of their servers
and execute their projects as an IT-only Initiative.
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Step 2: Developing the Business Case
Key components of the business case
1.
Assess Fit: Assess whether the enterprise is an ideal candidate for virtualization based on fit indicators
and benefit drivers described in this document and accompanying evaluation tool.
2.
Determine Scope: Determine what servers and applications are candidates for migration.
3.
Evaluate Alternatives: Make sure key categories, listed in the slides to follow, are covered: software and
hardware selection (including the consideration of blades), the number of servers to consolidate initially,
the implementation of a SAN, and training/external assistance.
4.
Estimate Expenditures: Create a project budget by first identifying the necessary expenditures involved
with the implementation.
5.
Estimate One-Time and Ongoing Savings: Quantify the cost savings and consider the savings in cost
avoidance that would be realized if they are tangible and recognized for the enterprise.
6.
Estimate ROI: Determine the estimated ROI based on the above factors to be used for executive
approval. Business cases typically have a +/- of 25, so make sure to caveat the estimates.
7.
Develop Implementation Plan: Develop a timeline with key milestones for testing, training,
implementation, and the date which the enterprise plans to revisit and expand the deployment.
While the depth of the business case will vary, it is important to consider all of the mentioned
components prior to implementation.
www.infotech.com
Impact Research
34
Step 2: Developing the Business Case
Considerations that drive duration of implementation
Number of
Servers
Being
Migrated
General Rule
Duration of Virtualization Implementation
Impacts
As a General Rule, based on our analysis
of various companies who have
implemented from 15 to 200+ servers, a
predictable correlation exists between the
number of servers and duration.
Staffing and resourcing implications are
discussed in Step 7.
Please see Page 43
for more details…
Size of
Organization
Generally, larger organizations have more
formalized processes in place, which
means acceptance testing and sign-offs
will extend duration.
Total Duration =
2 Months + 1 Day per Migrated
Server
30
Duration (Weeks)
Drivers
25
26
23
20
20
15
10
17
14
11
5
0
15
Criticality of
Applications
Being
Migrated
www.infotech.com
The more critical the application, the
more time should be set aside for testing.
Consider regression, user acceptance,
and performance testing scenarios.
Impact Research
30
45
60
75
90
# of Servers
35
Step 2: Developing the Business Case
Considerations that drive duration of implementation
(continued)
Drivers
Application Vendor
Support
Impacts
If the application vendor won’t support a virtual implementation, don’t think all is lost.
In most cases we found the vendors came around with some proof-of-concept work
and, in the end, used the account as a reference. Build in time for this “negotiation”.
Almost all of interviewees stated that the project was met on time and was of anticipated complexity.
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Impact Research
36
Step 3: Gaining Organizational Buy-In
Three key points to help gaining organization buy-in

Depending on the approach that is most suited for the enterprise, deep buy-in may not be
required, especially if the implementation is being run as in internal IT project.
Appoint
a Team

APPOINT
A Lead
TEAM LEAD
A formal team lead acts as the key contact for issues, questions, and
communication distribution. Having a point-person helps to alleviate user
concerns by matching a face to the project.
Bring
the “Server
Huggers”
onHUGGERS
Board

CONVINCE
THE
SERVER
Overcome initial misconceptions about the technology through education. A
proof-of-concept in a very effective way of getting quick on-the-job training
for the IT staff and addressing some users concerns.
For executives, a well-positioned business case (with adequate contingency)
is the best way to present the message as it is a compelling technology in
that respect.
A few successful
clients have had
great success in
putting together a
formal presentation,
in laymen’s terms,
that describes the
technology and
benefits.
Roll
It
into an
Application
Release

ROLL
IT INTO
AN APPLICATION
RELEASE
As an alternative to a pure infrastructure project, a number of companies
interviewed were successful in launching virtualization as part of a broader
application release initiative (i.e. incremental servers).
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Impact Research
37
Step 4: Capacity Planning and Benchmarking
Four-step process to determining capacity
1
Identify application servers that are candidates for migration:


2
Determine the average utilization rate, and make note of peak utilization rates.
Ideally, a month’s worth of data would represent an adequate sample.
Choose the type of server that will host the virtual machines:



For most implementations, a two-way server is the minimum that should be
considered given Hypervisor or OS overhead.
For higher ratio consolidation effort machines, four-ways deliver the best value.
Refer to the chart on the next page for virtual machine-to-processor ratios of
successful implementations.
One-way
Typically
Underpowered
www.infotech.com
Two-way
Ideal for LowUtilization
Application
Servers
Impact Research
Four-way
Best Value
for High
Consolidation
Ratios
A large biotech firm
hired consultants
for the explicit
purpose of creating
a capacity plan to
feed into the
business case and
implementation
plan.
Eight-way
Price Prohibitive
38
Step 4: Capacity Planning and Benchmarking
A good guideline is to consider three to four virtual machines
per processor

Most companies have found a good mix of performance and
consolidation value around three to four virtual machines per
processor.

To be more accurate in planning, you can consider the number of
virtual machines per processor core.
Low
0
1
High
Median
2
3
4
5
6
7
8
9
10
Number of Virtual Machines per Processor
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Impact Research
39
Step 4: Capacity Planning and Benchmarking
Four-step process for determining capacity (continued)
3
Set the target utilization rate for the host server considering failover capacity


4
Target utilization on host machines should be no more than 60% if the plan is to fail
instances to it.
About 80% should be the maximum utilization on a host server in order to allow for
adequate resource balancing for spikes in processing need.
Performance test to account for memory, NIC, and I/O constraints.

Be wary of any hard-stated recommendations of consolidation ratios or host
server capacities.
www.infotech.com
Impact Research
Basin Power
Electric Company
went from having
an average server
utilization rate of
3% prior to
virtualization, to
host machine
utilization of 50%
with a 17:1
consolidation ratio.
40
Step 5: Hardware Selection
Blade servers are complementary to virtualization software
and a viable choice

While virtualization software provides redundancy at the OS level, blade servers can perform
a similar function at a hardware level.

Consider the merits of both when making a decision.
Blade Server Considerations
Multi-processor Server Considerations
PROS
• Can host large numbers of virtual machines in fourway and eight-way configurations
• Existing servers can be upgraded to act as host
machines
PROS
• Have very small footprint and provide good
scalability (limited by chassis)
• Provide some level of hardware redundancy
between blades
CONS
• Can be costly to outfit with internal hardware
redundancy
CONS
• Run very hot for their size (dependent on number
of blades of course)
Although not mandatory, a SAN will enable many of the benefits of a virtualization implementation.
Make sure to include this expense in your calculations.
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Impact Research
41
Step 6: Software Selection
VMware is the current preferred product and market leader
Vendors
Price


Need for
Host OS?

Unsupported version is free
Supported Enterprise
version 2-Socket license is
$750

No – includes Hypervisor

Free


Yes – Windows


Supported
Guest OSs

Benefits


Hosted solution is free
Hypervisor 2-Socket license
ranges from $1,000 to
$5,750
Free version requires
Windows or Linux
Licensed version includes
Hypervisor
Linux, BSD in free version
Windows, Linux, BSD, and
Solaris in Enterprise version

Windows, most Linux

Windows, MS-DOS, Linux,
Novell, FBSD, Sun Solaris
Open-Source product offers
very reasonably prices toolset

Install up to four copies of a
server OS on one license

Mature tools for resource
management and business
continuity
Our interviews showed that the majority of companies are using VMware products, with a few
running Microsoft Virtual Server.
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Impact Research
42
Step 7: Resourcing
Start by estimating the total number of resources required

Determine resource and staffing needs as this
has potential impact on three types of costs:
•
•
•
Training costs
Costs of backfilling seconded staff
Consultant costs
Estimate
Staffing

Estimate
Staff Needs
 Determine how many staff should be involved to
execute the implementation within the duration desired.
A general rule for calculating staff requirements based
on work effort appears on the right.

Ensure that project complexity and organizational risks
are taken into consideration.
Determine
Availability
and Capabilities
of Staff
 Determine
Internal Availability
and Capabilities
 Next, decide if the skills sets required are available and
the resources with those skills have capacity to take on
additional tasks, or be seconded to the project full-time.
www.infotech.com
Impact Research
General Rule
Work Effort Required for Implementation
Total Work Effort (in Person Weeks) =
(2.9 x # of Servers) -31
Staff Requirements =
Total Work Effort (in Person Weeks)
# of Weeks of Desired Duration
Number of
Servers
15
Duration in
Weeks
4
15
8
1.6
30
8
7.0
30
16
3.5
60
16
8.9
60
26
5.5
Staff (FTE)
3.1
43
Step 7: Resourcing
Company size is a good indicator of what type of training or
external assistance you should investigate
Once staffing needs, resource availability, and
capabilities have been identified, consider the mix
of training and external consultants that you will
leverage.

Our interviews led us to the conclusion that
staffing mix and training are strongly correlated to
the size of company, not necessarily the size of
the implementation:
Small
Companies

Small
Companies
Given a smaller staff with varied duties, small companies
tended to allow their staff to learn on the job while
executing the project.
Medium-Sized
Companies

Medium-sized
Companies
These companies would send one or two resources to
training to become the trainers for the rest of the staff.
Large
Companies

Large
Companies
In most cases, given the transparent nature of the project,
and the various parties involved, consultants were brought
in to provide guidance and ensure an expedient
implementation.
www.infotech.com
Impact Research
High
Consultants
Cost of Resourcing

On-thejob
training
External
training
External
training
On-thejob
training
On-thejob
training
Low
Small
Medium
Large
Size of Company
44
Step 7: Resourcing
Key considerations when evaluating training and external
consultant alternatives
Consulting Costing Questionnaire
Staff Training Costing Questionnaire
2
1
Do my staff have the
understanding to build
these new skills?
3
Do I need consultants for
point expertise to
complement your team?
Do I need to backfill
staff on training?
If not, consider
consultants and/or new
hires.
2
1
10-20% of total project
time is probably
adequate.
If so, what is the cost?
Do I need the
consultants to
augment my team
under the assumption I
can’t meet my
deadlines with current
staff?
3
4
Do I have high turnover?
Should I include a salary
premium?
Do I need consultants to
run the project?
If so, consider the
recurrence of training
costs.
If training, consider that
these staff are now
more valuable in the
market
No more than 80%.
Ensure a project
manager comes with the
consultant staff.
Maximum 80% staffing
of consultants is
recommended. internal
staff should be involved
to some extent.
Recommended to keep
the mix around 50%.
The larger your implementation, the proportionally less relevant the training and consultancy costs.
www.infotech.com
Impact Research
45
Step 8: Application Sequencing
Virtualize low-utilization applications if the project is an
internal IT initiative
LOW-UTILIZATION INTERNAL IT
APPLICATIONS
CRITICAL APPLICATIONS
Migrate critical applications first when:

Migrate low-utilization internal IT apps first
when:
A business case has been created and formal
approval process completed. In this scenario,
business representatives are involved at the
appropriate levels to gain buy-in for a critical
application.

Improving DR capabilities is top concern.

Consultants have been brought on board to guide or
execute the implementation. Their experience should
be leveraged towards critical application migration.

The project is being run as an under-the-radar
internal IT project with goals to minimize risk.

Cost savings is the main concern.

Gaining buy-in and building faith in the technology
are key goals, with plans to move to more critical
systems later.
Note: Not every service can be virtualized and some services require special attention in order for virtualization to work.
Investigate vendor licensing in a virtual environment first – some vendors may still be inclined to
charge based upon the total available power of the host system, as opposed to the apportioned
pool of resources allotted to each virtual machine.
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Impact Research
46
Step 9: Testing
Step 10: Centralize and Consolidate
Given the nature of this technology, adequate stability and
performance testing is a must

Two types of testing are critical to the
success of a virtualization implementation:

Virtualization is a consolidation exercise and,
as such, centralization of servers is key to
achieving favorable consolidation ratios.
Regression/Stability
Testing
 Regression/ Stability
Testing
The testing of an application’s behavior in a virtual
environment cannot be predicted and must be tested
thoroughly before production launch
Centralize First

The majority of our interviewed companies were
already centralized, or centralized a portion of their
infrastructure prior to virtualization.
Performance
Testing
 Performance
Testing/ Tuning
Even with a detailed capacity plan, some
performance testing and tuning must occur in the
testing environment. Resource allocation and load
balancing features must be configured and tested to
handle peaks.
Unless
you have a Business Case Not to

We did find, however, that mini-business cases can
be created at a branch level given a critical mass of
servers at each location, and a justification (either
bandwidth or staff location) for not moving servers
away.
Info-Tech recommends purchasing a SAN when implementing virtualization.
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Impact Research
47
Step 11: Migrate
Roughly 85% of your time should be spent on implementation
steps




Percentages listed below are rough guides for time allocation across the steps.
Pre-implementation activities will take longer in larger organizations than smaller ones.
The key to success is getting into the implementation steps quickly and working out the issues
in a testing cycle.
Once testing is complete, the migration may take the same or less time to complete.
Pre-Implementation
Implementation
Acquisitions Approach
Implementation Steps
Staff
Training
Testing
Results
Centralize
and
Consolidate
Partnerships
Business
Case Development
Time to Implement
Expanded Services
Organizational
Buy-in
Migrate
Average
Implementation
Takes
Seven
Months
Status Quo
Capacity
Planning
5%
40%
40%
Exit / Sell
Hardware/Software
Selection
15%
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Impact Research
48
Step 12: Monitoring and Expansion
Virtualization implementation is an ongoing process

Once the initial implementation is complete, key processes and plans need to be put into place:
a Roadmap
of Application
Servers
Create
Roadmap
of Applications
to Migrate
to Migrate
To continue the benefits stream, a roadmap of future application servers to migrate should be created
(assuming the initial implementation migrated a subset of servers).
Process
for Requests
Server Instance
Establish
Process
for Server
Requests
Virtual server sprawl is as much a problem as physical server sprawl. A request process should be put into
place to manage server instances.
Ongoing
Capacity
Monitoring
Continue
On-Going
Capacity
Planning
and Planning
As additional instances are migrated and as application dynamics change, constant monitoring of resource
pools is required to ensure performance targets are being met. This is especially important as physical hosts
are targets for DR of failover instances.
Cross-training
Begin
Cross-Training
Immediately
System administrators will now have control over a larger pool of server instances. To ensure succession
planning in the event of turnover or absence, a knowledge transfer and cross-training plan should be put into
place post-implementation.
Original
Business
Case Metrics
Collect
Collect
Business
Case Metrics
To maintain faith in IT’s abilities to deliver value, close the loop and collect post-implementation metrics to
validate the original business case.
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Impact Research
49
Step 12: Monitoring and Expansion
Implementing virtualization can be an entry into utility
computing

Despite virtualization being an infrastructure initiative, there are process and strategy
ramifications on how IT can/should operate with the new flexibility of virtualization.
to Utility
Chargebacks
Transition
Chargebacks
andComputing
Transition toand
Utility
Computing
Virtualization inherently lends itself to utility computing, where each virtual instance, the memory, CPU, and
disk it uses are procured as required and charged for. Chargeback models, if a cultural fit for your
enterprise, are complementary to virtualization in that measurement of chargeback metrics is made easier
as is the provisioning of capacity to meet various Service Level Agreements (SLAs).
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50