CASE STUDY IT Management and Virtualization Software Reduce Cost and Energy Consumption at BMC Datacenter: An ROI Case Study

Transcription

1 CASE STUDY IT Management and Virtualization Software Reduce Cost and Energy Consumption at BMC Datacenter: An ROI Case Study Sponsored by: BMC Software Randy Perry Tim Grieser July 2008 Eric Hatcher Global Headquarters: 5 Speen Street Framingham, MA USA P F EXECUTIVE SUMMARY This case study analyzes the benefits and return on investment (ROI) gained by BMC Software Inc. from applying IT management software to enable the adoption of a virtualized server infrastructure. Solutions were deployed for x86 architecture servers in the company's Houston production datacenter and R&D labs that are used by BMC developers to build the software that BMC sells. Principal benefits include reduced server hardware costs due to server consolidation, reduced energy costs for power and cooling, reduced datacenter floor space requirements, leveraging of IT staff for server management, and improved availability for end users. The benefits in reduced power, cooling, and space requirements are major components of green IT 1 initiatives. The following is a summary of the principal results obtained in this study:! Server consolidation. The number of physical servers was reduced from 3,000 to 2,300 over a one-year period. Utilization of x86 servers running virtual images increased to 60 80%.! Annual power savings. Power consumption has been reduced by 23%, from 15 million kilowatt hours per year to 11.5 million kilowatt hours per year.! Carbon reduction. The power savings translate to a carbon reduction that is equivalent to taking 130 midsize automobiles off the roads.! Space savings. Floor space reductions from server consolidation have allowed the postponement of a new $10 million datacenter expansion for three to five years.! System administrator efficiency. A system administrator can now manage fewer physical servers. In the R&D labs, an administrator can manage 200 system images with virtualization compared with 50 "standalone" servers.! Cost savings and ROI. Based on a three-year analysis, IDC estimates an average cost savings of $6.68 million per year, resulting in an ROI of 567%. 1 "Green IT" refers to initiatives that replace power- and space-intensive hardware with technologies that have more capacity per square foot and use less energy. These technologies reduce operation costs and create more floor space in the datacenter.

2 Table 1 shows the BMC datacenter improvement over three years. TABLE 1 Changes in Datacenter over Three Years Category % Change Number of physical servers -50 Number of OS images 73 CO2 reduction 49 User productivity 33 Costs per year -52 Source: IDC, 2008 KEY IT CHALLENGES Today's IT organizations act as service providers to the business. IT must align with business strategy, minimize operational costs, maximize the return from investments and operational expenditures, and respond to rapidly changing business needs. Figure 1 shows the results of a recent IDC survey asking IT CIOs, IT managers, and IT professionals to rank the importance of key IT priorities for FIGURE 1 Ranking of Top IT Priorities for 2008 Improve customer service Lower IT costs/improve TCO Better alignment between IT and business priorities Improve IT service availability Virtualization (% of respondents) n = 78 Note: Multiple responses were allowed. Source: IDC, October # IDC

3 According to these survey results, top priority is given to improving customer service, closely followed by controlling costs, more closely aligning IT with the business, and improving service availability. Virtualization ranks as the fifth highest priority, showing the importance of this technology to IT organizations in At the BMC Houston datacenter, virtualization became key as IT turned to efficiently providing business services as well as striving for greener and more energy efficient solutions. Collectively, the preceding results demonstrate the high priority IT organizations are placing on aligning with the business by delivering services that provide value for customers and end users on a cost-effective basis. SOLUTION APPROACH: VIRTUALIZATION Server virtualization is a key technology initiative for transforming IT infrastructure and operations to support improved service delivery, better cost control, reduced energy consumption, reduced use of floor space, and higher availability. While virtualization is a long-standing approach for resource sharing in high-end mainframe and Unix platforms, server virtualization is a relatively new development on x86 architecture platforms, with growing use over the past three years based on software hypervisors from VMware, Microsoft, and XenSource. Key Use Case: Server Consolidation. x86 server virtualization is rapidly taking hold as a key technology to support a number of IT use cases, especially server consolidation. Software hypervisors on x86 servers enable the partitioning of physical servers into a number of logical servers or "virtual machines," each of which can contain an operating system and applications. This means that applications running on lightly utilized x86 servers can be moved and consolidated onto a single physical server, as virtual machine images, thus reducing the overall number of physical servers. Server consolidation is the primary use case for IT organizations moving to x86 virtualization. Benefits of Server Consolidation. Server consolidation using virtualization brings a number of direct benefits to IT, as follows:! The amount of x86 server hardware deployed in a datacenter can be substantially reduced while maintaining the same level of service, leading to direct hardware cost savings, including support and maintenance costs. Server hardware can be pooled for efficient use by a variety of virtualized applications.! Energy consumption for power and cooling can be reduced, resulting in lower utility costs.! Datacenter floor space requirements can be reduced, resulting in operational cost savings.! IT staff efficiencies can be improved by leveraging simplifications that come with the use of virtualized images.! Higher availability can be realized from flexibility in assigning virtualized workloads to servers, as needed IDC #

4 NEED FOR SYSTEM MANAGEMENT While virtualization brings the opportunity for many efficiencies and cost savings, it also increases the importance of system management. Although all of the system management functions previously needed for physical servers remain, an increased importance is placed on resource management and capacity planning. Similarly, there is an increased reliance on IT processes such as ITIL change management to ensure compliance and control VM sprawl. In addition, virtual infrastructure and virtual (logical) images must also be managed in a manner compatible with physical servers. Indeed, based on many end-user comments to IDC, IT organizations strongly prefer a common management umbrella for physical and virtual server resources. IT organizations moving to a virtualized x86 server infrastructure need to perform a variety of functions and tasks to plan, develop, implement, operate, and optimize the virtualized environment. Typically, the overall number of server images both logical and physical will increase by a factor of 5 to 10 or more in common virtualization use cases, thus adding complexity and greatly increasing the number of "moving parts" that must be managed. System management software is essential for effective management of virtualized environments. BMC SOLUTIONS: VIRTUAL SERVER MANAGEMENT BMC Software provides a comprehensive family of solutions for managing both physical and virtualized server environments. The BMC solutions support a range of virtual infrastructure management tasks that include discovery, planning, configuration, provisioning, monitoring, and management. Key BMC Software solutions for managing virtual server infrastructure include the following:! BMC Service Assurance. BMC Service Assurance solutions help optimize physical and virtual IT infrastructures to deliver required performance service levels to end users. Key functions include real-time monitoring of the physical and virtualized environments, with alerting capabilities for critical performance and availability thresholds. For VMware-based virtualization environments, BMC Performance Management can be used to discover all virtual machines and map them to the associated physical VMware ESX servers. BMC enterprise-level reporting capabilities display a variety of performance metrics including resource availability, resource consumption, and sources of delays and potential bottlenecks. BMC Service Assurance provides comprehensive event analytics that identifies probable cause to facilitate problem isolation between physical and virtual resources. In addition, transaction management solutions monitor the effect of virtualization on application performance and provide an early warning of service degradation.! BMC Capacity Management. BMC Capacity Management solutions support physical and virtual server environments, including VMware ESX servers and virtual machine images running in ESX environments. Key capacity management functions include determining when server capacity must be upgraded, choosing optimum server hardware configurations, and selecting candidate servers for server consolidation both physical and virtual. Other functions include 4 # IDC

5 identifying sources of resource contention and potential bottlenecks among virtual machines, reporting of performance information, and trends and extensive "what if" facilities for analyzing the performance impact of changes in hardware, software, and workloads so that required service levels can be delivered to end users while deploying an optimum level of server hardware in the datacenter.! BMC Service Automation. BMC Service Automation solutions automate many key server management functions including provisioning, configuring, patching, and repair of software, including the virtual operating system, guest operating system, applications, and virtual machine images. BMC Service Automation solutions are tightly integrated with BMC Service Support functions such as change control and not only automate the provisioning and configuration of virtual and physical systems but do so in conjunction with standard change control processes and procedures. BMC ROI CASE STUDY BMC Approach to Virtualization At the onset of the BMC virtualization efforts, the Houston datacenter owned approximately 3,000 servers; some of the machines were more than 10 years old. BMC turned to virtualization to reduce the number of boxes purchased per year, conserve floor space, and maximize average server utilization rates. The pilot phase of deployment targeted "the low-hanging fruit": BMC retired the oldest, slowest, and least efficient servers in the environment first and at the same time deployed enterprise-level machines that would support the new virtual machines. During the pilot phase of virtualization, BMC replaced "the oldest, grungiest hardware in the shop in order to give the customer a feel for what their virtual world experience was going to be like," said Steve Carl, manager of R&D Support. The plan was designed as a proof of concept the goal was to show the IT managers the benefits of virtualization to prepare the IT organization for a cultural and organizational shift toward improved performance and user experience. The pilot phase resulted in greater system reliability, better performance, and satisfied internal customers. BMC is now in the process of consolidating and upgrading the entire Houston datacenter using the same approach applied in the pilot phase. BMC's approach to virtualization is as follows:! Identify the oldest and slowest machines in the datacenter easily done using the information in the asset database/cmdb! Incorporate new, enterprise-capacity servers into the environment and create the virtual machines modeling capacity scenarios! Move the workloads from "legacy" machines to the virtual servers! Retire the old physical servers 2008 IDC #

6 The benefits from the BMC efforts fall into several areas: hours of staff maintenance time have been cut, user productivity has been improved, downtime hours have been reduced, and operating costs are lower. BMC is also enjoying "green" benefits that have lowered the datacenter's power requirements, leading to lower CO2 emissions. In addition, BMC has reduced the total floor space needed to house the servers. BMC retired 23% of its old servers in the first year, replacing them with new, highly efficient, and far more powerful machines. It retired up to 47 physical servers for each new machine purchased. The new servers support an average of 17 virtual machines and are equipped with 16 processors and up to 128 gigabytes of RAM. Benefits Figure 2 shows the proportion of average annual benefits realized in this study. The data in this figure was calculated in a three-year ROI analysis. FIGURE 2 Average Annual Benefits Hardware cost reductions ($502,968) Downtime reduction ($226,698) Green cost reductions ($1,454,138) IT staff efficiency ($2,474,783) User productivity/reduced downtime ($2,026,759) Total = $6,685,345 Source: IDC, 2008 Increased IT Staff Efficiency BMC experienced a significant reduction in server provisioning hours. Before the initiative, the IT staff would order the server, wait for it to arrive, build it, then get it online. This translated into a two-week turnaround time at best. By moving to the BMC Service Automation solution, BMC lowered the server build time to five minutes. Server administrators use a Web page where they can create a brand-new virtual machine with the click of a button. A comparison of the old method versus the new method of server configuration shows that the BMC Houston datacenter saves 1,417 hours per year, or three-quarters of an IT full-time equivalent (FTE). 6 # IDC

7 The BMC Service Automation solution also allows for standardized settings across the environment. Configurations can be saved as a template, and each virtual server does not have to be built from scratch. Because all the servers have a uniform configuration, changes to security settings are detected quickly. When a setting is changed, managers are alerted, and they can determine if the alteration is valid or if it should be reset. In addition, the solution ensures that the security features not only are installed but also are operating properly. Server provisioning typically requires extensive coding and script writing. In the past, each new machine would require that configuration scripts be written by a system administrator. Derrick Palmer, IT manager at BMC, said, "It actually takes a large amount of time to set up various scripts and have these various scripts constantly checking your system." To remedy this, BMC Service Automation allows the administrators to create configuration templates that are saved and applied to each new virtual machine. Automating server configuration saves the IT staff approximately two hours of setup time on each new machine. Remote management is another key feature of BMC Virtualization Management. Prior to the initiative, if a physical server crashed in the middle of the night, an administrator would have to drive to the datacenter and manually repair and reboot the machine(s). Now the errors occur on virtual machines, residing in a physical box that is still powered and still offers user access. With remote access, the IT administrator avoids approximately two hours of work and performs the repair in about five minutes. When calculated over the course of a year, this time savings equals $506,880, or seven FTEs. The virtualization initiative's success has been measured, in part, by the ratio of physical servers per administrator. When the process began, that ratio was roughly 60 to 1. Now, it is 400 to 1 an improvement greater than 600%. The increase in efficiency will eventually allow the IT staff to spend less of their time in pure administrative roles; instead, they will be investing more time in capacity planning and effective configuration management. A greater investment in modeling leads to more end-user productivity and greater uptime. Carl said, "I'm going to be moving more and more people over to more project/strategic roles, away from just day-to-day administrative stuff. Hopefully what's happening is that they're moving more into cooler, more interesting kinds of things." When the IT staff benefits are totaled, they equal $2,474,783. User Productivity/Reduced Downtime Redundancy in the environment has reduced the number of incidents. Palmer noted that the virtualization effort made it possible to create redundant nodes in the event that one virtual machine fails, all of its functions instantly move to the subsequent node and the transition is seamless to the end users. Increased server uptime results in greater end-user productivity BMC will enjoy an average annual benefit of $2,026, IDC #

8 Maintaining availability of key applications means that the BMC IT department focuses on constantly patching, updating, and maintaining the systems each month. Each update would require a restart, which absorbed considerable amounts of time when each server was a physical server. Palmer said that the restart time dropped from 20 minutes to five minutes. BMC Capacity Management solutions are used to model and predict how the state of the environment will change over time. BMC plans capacity more accurately and effectively, allowing the IT department to avoid incidents. As Carl stated, "My goal is to be able to walk in there and say, 'Mark the day. That's the day that server farm X is going to be out of CPU.'" The reduction in downtime equals an average annual savings of $226,698. IT Cost Reduction One of the primary purposes of virtualizing an environment is to reduce the total number of physical servers in the department. Fewer servers are purchased over time and maintenance costs are reduced with fewer machines to manage. Carl estimates that BMC will be "dropping the total number of servers from 3,000 to roughly 1,500 over three years." However, despite the decline in total number of physical servers, with the new virtual servers, BMC is able to increase the support of the total number of OS images by 20% per year. The flexibility of the virtual environment also means that servers have a longer life. Most companies extend their server replacement cycle from 3.3 years to 5 6 years. With fewer servers, BMC can now reduce the number of ports on network switches. Reduced port usage translates to reduced number of switches, which not only saves space but also reduces the use of electricity. When the savings from the reduction in servers and switches are combined, BMC is realizing an average of $502,968 annually in avoided hardware costs. With the reduction in total physical servers, the floor space savings is so great that BMC has avoided opening a new datacenter. BMC estimates that the company saved $10 million in operating costs by delaying the building of a new datacenter by three to five years. 2 In addition, BMC reduced its annual server investment from $1.84 million to $385,714. Figure 3 shows the difference in annual server spending before and after the initiative. 2 The costs associated with avoiding a new datacenter purchase are not included in the ROI analysis. 8 # IDC

9 FIGURE 3 Comparison of Annual Costs ($) 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , ,840,000 Annual cost of old servers (10-year life cycle) 385,714 Annual cost of new servers Source: IDC, 2008 "Green" Benefits The virtualization program also has several benefits that favorably impact the environment. First, BMC has greatly reduced its power consumption: In just the first year of the project, BMC was able to reduce its power consumption by 23%, from 15 million kilowatt hours per year to 11.5 million kilowatt hours per year. In the second year, BMC will reduce its power intake by another 30% to 8 million kilowatt hours per year this means BMC is cutting its power costs almost in half in just two years. Where each server consumes an average of 2,500 kilowatts of power per year, BMC is saving an average of $480,000 per year after the virtualization effort. While reducing the need for power saves BMC money, it also means more electricity is on the grid and available for other resources. The green initiative results in an average annual benefit of $1,454,138. Power consumption directly correlates to CO2 emissions because the electricity was generated by oil, gas, or coal-operated equipment. The virtualization effort has resulted in BMC cutting its carbon footprint by 953,883 pounds of CO2 in the first year this is equivalent to permanently removing 130 midsize cars from the roads and BMC will achieve the same reduction in the second year of the deployment IDC #

10 Reducing the number of servers in the environment affects not just the power bills but also the air temperature inside the datacenter. Palmer recalled that BMC has "seen our temperature inside the Houston datacenter drop by 10 degrees." In addition to these benefits, BMC's new server materials are environmentally friendly. That is, the new servers are RoHS compliant they meet the environmental standards set by the European Union in These machines were constructed without lead, mercury, or other dangerous materials proscribed by RoHS they are a safer technology that will not cause harm when they are retired and destroyed. The Benefits of Managed Virtualization IDC analysts have developed a set of metrics to define the relative maturity of virtualization adoption. Table 2 shows five discrete levels of virtualization maturity. As companies move to higher virtualization levels, they achieve additional benefits. TABLE 2 IDC Virtualization Maturity Index Category Virtualization Level Description Unvirtualized 0 Physical x86 server/physical OS usage no virtualization. Systems are configured at less than 10% capacity. Basic virtualization I Basic x86 server consolidation using virtualization, commonly used in test and dev. scenarios, but production use is not widespread. No advanced functionality such as live migration; automation and management are limited or applied selectively. Systems are utilized on average at 60% capacity. Standard virtualization II Includes a mixture of uses ranging from test and dev., static server consolidation, to a mix of production workloads, with systems configured to utilize approximately 60% capacity. Penetration could exceed 15% of x86 servers. It will use management tools on both OS images and application workloads on a moderate to widespread basis and may use advanced features such as live migration for some application workloads. Advanced virtualization III Widely virtualized infrastructure (>25%), includes both server virtualization and at least some storage virtualization. Management tools along with automation such as workload redistribution and automatic workload migration used on both live VMs and cold OS images. Live migration used both for meeting service-level agreements and for availability purposes. Systems are utilized on average 80% of capacity. Dynamic virtualization IV Majority of x86 systems (>50%) use hypervisors. Live migration, active image and workload management used comprehensively, new systems go online virtualized. Storage resources virtualized; moving to adopt network and I/O virtualization as those technologies emerge. Source: IDC Business Value of Virtualization Research, # IDC

11 BMC can be classified at the advanced virtualization level because it is a wellmanaged operation and can benefit from the use of management software to enable virtualization. The difference between advanced and basic virtualization is most significant in the benefits associated with downtime reduction and user productivity. However, all benefit areas are impacted. In total, IDC estimates that BMC derived more than $2 million in additional benefits from using IT management software to enable virtualization, representing an increase of more than 46% over basic virtualization (see Figure 4). FIGURE 4 Additional Benefits of Advanced Virtualization IT staff efficiency User productivity 587, ,717 1,330,042 1,887,206 Green cost Hardware cost Downtime 91,613 27,626 77, , ,342 1,576, ,000 1,000,000 1,500,000 2,000,000 Basic Advanced ($) Source: IDC, 2008 INVESTMENTS Companies seeking to improve the bottom line when they virtualize their environment must first take on the costs associated with new hardware and software. Staff setup and maintenance time and consulting and training time are other costs that result from a new deployment. The initial purchase tends be the greatest percentage of the total investment. After deployment is complete, annual costs per year typically decline over time. Table 3 displays the initial and annual investments made by BMC IDC #

12 TABLE 3 Initial and Annual Investments ($) Investment Area Initial Annual Servers 750, ,714 Remote management infrastructure 130,000 Software 75,000 25,000 IT FTEs 69,120 External FTEs 92,160 Source: IDC, 2008 The Business Value of Virtualization IDC ROI Methodology In this study, IDC interviewed two subject matter experts from the BMC Houston datacenter. The interviews were designed to gather quantitative and qualitative information that is the foundation for the ROI analysis in this study. IDC approaches ROI analysis in three steps: 1. Uncover the benefits of the initiative. The interviews are the source of the benefit information and capture the actual experiences of the IT department and users. The ROI calculation based on this data paints a more accurate picture than industry averages. 2. Determine the investment required to generate the benefits. These costs include the initial investments in upgraded hardware, software (including virtualization software and any additional management software), IT time required for setup, and IT training and consulting. Investments also include staff costs, services, and purchases that must be made annually (e.g., software licenses, hardware turnover, and staff training). 3. Use discounted cash flows to compare the investments with the benefits over a three-year time period. The discounted cash flow analysis calculates the ROI over three years and the number of months needed for a full return on the initial investment (payback period). A three-year analysis period is used because that is the typical server turnover time. This analysis also allows the benefits to accrue over time. IDC uses a high, standard 12% discount rate to cover the cost of capital plus a significant risk factor, which provides a conservative estimate of the ROI and does not overstate the results. 12 # IDC

13 Table 4 shows the results from the ROI calculation. The three-year discounted benefits are $15.95 million, while the three-year discounted investments are $2.39 million. BMC expects a payback on its investment in 3.1 months. TABLE 4 Three-Year ROI Analysis Metric Value Benefits (discounted) $15,953,216 Investments (discounted) $2,389,996 Discount rate 12% ROI 567% Payback period (months) 3.1 Source: IDC, 2008 Figure 5 shows the benefits, investments, and cash flow over time. Note that the investments are highest in year 0, or the "investment year," of the analysis and then decline and become level over time. In contrast, the benefits realized each year increase annually IDC #

14 FIGURE 5 Benefits, Investments, Cash Flow 20,000,000 15,000,000 10,000,000 ($) 5,000, ,000,000 Year 0 Year 1 Year 2 Year 3 Total benefits Total investments Cumulative cash flow Source: IDC, 2008 CONCLUSION Production shops planning to adopt virtualization face two primary challenges. One, the group must secure organizational buy-in for the virtualization initiative. To demonstrate the benefits of virtualization, IT departments should execute a pilot program, as this case study outlined. A program targeting older, slower physical servers would show increased capacity and faster processing speeds. A broader buy-in would be achieved by proving the results of virtualization in a test phase. Two, many IT organizations are concerned that implementing virtual servers will result in a loss of vendor support. A company needs to show it has an established method of moving from a physical environment to a virtual environment with gains in overall capacity and performance. In addition, the IT organization should prepare a strategy in the event a vendor will not support the virtualization initiative. This plan will ensure the effort's progress. The primary reasons BMC virtualized its environment were to reduce the total number of physical servers and to reduce the amount of floor space consumed by server sprawl. Floor space is consumed quickly when an organization battles poor system performance by purchasing countless numbers of physical servers over the years. BMC takes pride in the "wall of computers" it has retired, said Carl. BMC is realizing several other benefits that are directly attributable to BMC virtualization efforts as well. Three years after beginning the efforts, BMC will have seen: 14 # IDC

15 ! Power costs reduced by 50%! CO2 emissions reduced 23% in the first year of the deployment! IT staff time savings averaging $2,474,783 per year! Increase in user productivity of $2,026,759 annually! Annual hardware costs reduced by an average of $502,968 BMC has successfully upgraded to a leaner, greener, and better-performing environment that is saving the company $6.68 million per year. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2008 IDC. Reproduction without written permission is completely forbidden IDC #