Data Center Solutions - Modular Design
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1 June 29, 2010 Issue Dustin Kehoe Current Analysis Principal Analyst, The economics of data centers are completely out of sync for many enterprises. This is caused by a range of interconnected variables such as soaring energy costs, which have increased by a factor of four over the past decade; insufficient power supplies to support high-density computing such as blade servers; unplanned outages and associated risks related to application availability, business continuity / disaster recovery as well as governance risk management and compliance (GRC). There are also environmental issues and desire to one day become green to project corporate social responsibility (CSR) and this requirement is appearing in more RFPs. Customers can no longer build new facilities as they tend to require a 20 year CapEx commitment where operating costs could be four to five times more expensive to run. This in turn is fuelling the demand for modular data centers and utility pricing. Above all, there is also a disconnect between IT (which is often seen as a cost center) and business requirements. Corporate governance in most enterprises is generally weak. Therefore, data center transformation (DCT) is no longer just an IT issue, but rather requires a holistic approach to succeed. This advisory considers the different components behind a successful transformation and critical success factors. Current Perspective Many of the drivers behind DCT have to do with the costs and complexities, though every IT manager has their own unique headaches and challenges. Businesses continue to perceive IT as cost centers and lack an overall vision of how IT can be strategic or be exploited for competitive advantage. Most data centers, which are the central nervous systems to IT are reaching the end of their lifecycle, and are generally ill equipped to support modern requirements for power and computing. IBM, for example, notes that 78% of data centers are over seven years old. Other research puts the figure at years. They were originally set up for mainframes and are being overwhelmed with the proliferation of X86 servers. IT tends to be reactive, not strategic. Budgets tend to be absorbed in maintenance and administration and not in any value creation. As data centers are critical for IT operations, there is a great demand for transformation that is a multi-step process. DCT typically involves a broad ecosystem of suppliers from energy management systems, ISVs, solution providers, IT service providers, business consultants and increasingly energy suppliers themselves in addressing different layers of a very complex problem. DCT has many stages and no two enterprises are in the exact the same place. While green is an important agenda topic for DCT, there are no real industry-wide standards for measuring the environmental friendliness of one solution over another. There are metrics such as power usage efficiency (PUE) and its reciprocal data center infrastructure efficiency (DCIE), but they only address part of the problem. Nevertheless, there is a push for corporate social responsibility (CSR) driving the green agenda. This is becoming a regular Europe +33 (0) Or visit our Web site: 1
2 component in RFPs, and often goes hand in hand with requirements around cloud services and DCT. HP and IBM are some of the first movers helping enterprise customers address the challenges and complexities of DCT. Both companies have a long list of reference customers and will tend to highlight and apply their own internal experiences to customer environments citing best practice methodologies. The two companies also offer the broadest portfolios and tend to be deeply embedded in the DCT ecosystem. For example both companies use APC s InfraStruXure solution as part of their modular data center design. Overall, IBM still manages more data center facilities while HP appears to see more radical DCT as critical for its future growth and profitability. (See HP Adapts to a Changing Services Landscape with a $1 Billion, June 3, 2010.) Case Study: HP vs. IBM HP (Pre-EDS acquisition) Reduced 180 data center facilities to six facilities across three continents Rationalized an excess of 6,000 applications to 1,500 Reduced networking costs by 50% Consolidated to one data warehouse Reduced IT spending to 4% of revenue Doubled storage; increased processing power by 250% Plans now with EDS to further consolidate 100 data centers (including collocation, leased and own facilities) to approximately 50 in next three years IBM ( ) CIOs 128 in 1997; 1 today Reduced 155 host data centers in 1997 to seven Consolidated 80 web hosting centers in 1997 to fi ve Reduced networks from 31 in 1997 to one Rationalized 15,000 applications to approximately 4,700 Power and Cooling are the Next Highest Costs After Personnel One of the starting points of any DCT is evaluating a company s site and facilities given the historic inefficiencies of data center. This includes major IT service providers (ITSPs) such as HP and IBM, but also other companies such as Fujitsu, T-Systems and Unisys that have also acquired a lot of experience around transformational services. Outside of APC, other energy management suppliers include Eaton, Emerson and Rittal which will work directly with end customers or in partnership (and/or in direct competition) with a major service provider. Enterprise customers looking to build or revamp existing facilities can count on two general areas of support. On the low-end, this could range from DIY solutions such as the installation of blanking panels around servers and equipment to keep cooling contained to its source, clearing of cables from under plenum (raised floor) to improve airflow, install in-row cooling, perforated tiles to reduce hotspots and sensor technology to better monitor the environment and specific areas. On the high-end, this could involve the use of entail thermal assessments and computational fluid dynamics (CFD) to determine where equipment should be located and to design more efficient power and cooling systems which will offer some immediate cost savings. Modular Designs Will Lead to Standard Architectures and Will Facilitate Utility Pricing Data centers are also being built to modular designs. This is to help customers leverage investments in areas such as power density and energy efficiency while ensuring the availability of additional space without having to change the underlying design. With such a design the underlying infra- Europe +33 (0) Or visit our Web site: 2
3 structure of cooling pipes, bus bars, cables and access points remain in place regardless of how much the customer expands or contracts. This helps to avoid high CapEx by building everything at once and accelerates time to market since most suppliers have an established supply chain and a pre-defined architecture purchased in large quantities to bring down costs. The concept is similar to how IKEA designs furniture. Another major advantage of this approach is that it can reduce new data center build time from 18 months to about 16 weeks. (There are also companies offering shipping containers with pre-configured data centers which could be shipped in even less time). A number of these providers are also beginning to move to a utility, pay-as-you-go model, where the customer pays have the option to pay for usage. One company interviewed will start using energy consumption as the primary metric for billing (this company negotiates directly with energy suppliers for the best terms before passing it on to customer). Outside of this metric, the company has a list of extra options positioned as extras depending on how much outside support the customer needs. Modular data centers are an emerging trend which will eventually replaces one-off with standard designs and 20 year budget outlays with utility pricing and a degree of elasticity to expand and/or contract data center energy and floor space with business requirements. Consolidation and Virtualization Will Lead to the Biggest Cost Savings In parallel with the building and designing next generation data centers, most companies are closing down sites and bringing them into more strategic locations. There are many reasons for this trend. In many cases this is to improve business continuity and disaster recovery. Often times, these discussions are in parallel with the tier of a facility and whether it has a tier 3 plus compliance from Uptime Institute. The organization sets guidelines around what a modern data center looks like to guarantee security, resiliency and high availability. The physical location is also important as the latency of data can impact performance of applications and user experience. This is especially important for customers given the general rise of mobile workers and push for more cloud services which will put more strain on network and data center resources. Some companies have consolidated too quickly and were helpless to serve end-users in other regions and continents. As a follow on, virtualization is also an enabler for consolidation but also one of the causes of the need for higher density power supplies. Virtualization is no longer for testing and development, but is used widely in production level environments and supporting high-end mission-critical applications. More than 50% of CIOs are deploying virtualization solutions (typically VMware, Citrix and Microsoft) in their servers. Equally blade servers will also become more prevalent in the data center supporting more processing power from less space. (They also bring with it the baggage of needing extra power and cooling which many facilities are not equipped to support). Virtualization is also being used in other areas such as storage as well as desktop services. The latter is being used to accelerate the provisioning and maintenance of new machines, support task-driven environments, reducing laptop estates and for disaster recovery. IT and Automation Will Help to Reduce Management and Administration Costs While virtualization is allowing IT managers to get better utilization from their IT equipment and increase energy efficiency, it creates an entire new set of problems. Most industry estimates put the ratio between virtual to physical machine ratio at 10:1, it is widely agreed that the percentage of virtual machines will only increase. Ratios of 20:1 or 30:1 are already not uncommon. In addition as more storage devices, applications, databases and OS s become virtual (and especially with cloud computing on the horizon), the need for visibility and policy-based management on an Europe +33 (0) Or visit our Web site: 3
4 end-to-end level will become very important. This is not only important for ensuring a high level of business continuity but also for meeting various governance, risk management and compliance (GRC) requirements (the number of which continue to increase). It is also important for keeping administration costs under control and can help to reduce human error in an increasingly complex environment. While a number of IT service providers are developing strong automation platforms that promise the vision of end-to-end management, few enterprises have ever deployed such capabilities on this scale as most are still struggling with reducing costs through better power and energy management at this stage of the market. Aligning Business and IT While DCT holds the immediate promise of bringing down costs related to energy and administration, higher efficiency and potentially CSR credentials, the ultimate desired state of transformation is to align IT with business requirements (e.g., lowering costs, mitigating risk, etc). However a company cannot expect to achieve this level of transformation without also changing some of their underlying business processes, building broad-based support and having it underpinned with strong governance. Cloud computing does hold promise for accelerating DCT given its broad appeal (e.g., usage-based pricing, elasticity, flexible delivery and billing). However this will also take time to gain traction as most enterprises do not fully understand the implications of cloud computing ranging from security and compliance through to the technical (e.g., what to put in cloud) as well as the financial aspects (TCO/ROI). There are many IT service providers offering cloud workshops, assessments and planning, but very few have any reference customers that have completed this journey, which suggests the market is very nascent. Recommended Vendor Actions There is a growing frustration within the data center that is fuelling the demand for first phases of transformation (e.g., energy efficiency, consolidation and virtualization). While IT service companies should continue to highlight their capabilities around IT and data center transformation, customers are looking for answers to solve their immediate pain points and this is where the discussions will need to start. IT providers should anticipate the growth in demand for data center transformation to be met by an increase in competition. While HP and IBM have a strong market position, they should expect more activity from IT providers such as Fujitsu (which has also worked in partnerships with companies such as BT Germany), Unisys as well as Dell with the acquisition of Perot Systems. Cisco is a major force within the telecom vertical and SUN is very active in the ecosystem. There will also be new entrants from energy management consultants, ISVs and potentially utility companies themselves. While lowing energy costs is really top of mind for most companies, unplanned outages due to power constraints are not uncommon. Service providers should also raise awareness around the importance of business continuity and continue to build this into their DCT messaging. Many customers cannot afford any significant downtime and may take this journey for this reason alone. In parallel with DCT, service providers should continue building up their own utility computing propositions (IaaS, SaaS, PaaS) while redoubling their efforts around developing professional services capabilities around cloud services. Customers do not fully understand the implications, need outside expertise and learn best practice methodologies. There are needs to be a greater effort in ensuring security, and GRC as these requirements are likely to only increase in importance. Cloud services will also be an important driver to DCT as it is based on creating an entirely new Europe +33 (0) Or visit our Web site: 4
5 service delivery model. While cloud assessments and workshops are widely promoted among the leading IT service companies, providers should balance the need to make customers aware of the important issues and steps against the perception of paying for expensive consultants. Providers should look at offering lower cost consulting package alternatives to the highly customized one-off engagements. Recommended User Actions Enterprise customers, especially Fortune 2,000 should look to HP and IBM for support in DCT. Both companies have expertise in many areas of DCT from facilities and site design, virtualization, application rationalization, automation through to corporate governance. They also bring significant experience in transforming their own IT environments. While IBM has completed much of its projects in 2007 (over a ten year period), HP has more recent experience and future plans to see its vision through over the next three years. DCT should be considered holistically and applied an end-to-end strategy that integrates all of the major components together. Projects should not be carried out in isolation, but linked together so the outputs of the first set of tasks become the inputs into the next. While quick fixes can provide immediate gains, they can also drive up costs, or increase risks. For example optimizing power in one area may increase chances of an outage in another. DCT should be seen as having a delicate set of interdependencies involving assets, people, processes and technology. Europe +33 (0) Or visit our Web site: 5
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