Manufacturer Saves $1.5 Million, Caps IT Costs by Using Hyper-V Technology

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1 Microsoft Virtualization: Data Center to Desktop Customer Solution Case Study Manufacturer Saves $1.5 Million, Caps IT Costs by Using Hyper-V Technology Overview Country or Region: Slovenia Industry: Manufacturing High tech and electronics Customer Profile The is a consortium of companies that manufacture parts for electric motors used by the automotive and other industries. The Idrija, Slovenia based firm has 4,000-plus employees. Business Situation Rapid growth caused the Kolektor data center to expand rapidly, sending server costs skyward. Kolektor found that server virtualization with VMware was getting expensive, and VMware management tools were inadequate. Solution Kolektor switched from VMware to the Windows Server 2008 R2 Datacenter operating system with Hyper-V, and used Microsoft System Center data center solutions to manage its workloads. Benefits Savings of U.S.$1.5 million 10X growth without increasing IT costs Faster service delivery Improved performance, reliability By moving from VMware to Hyper-V, we will save 200,000 [U.S.$274,000] over the next six years in virtualization software licensing fees. The is a European manufacturer of electric motor parts. The Slovenian firm has enjoyed rapid growth through acquisition, but this has meant new IT services and more servers. To curb server expansion, Kolektor first turned to VMware virtualization software. However, when licensing costs soared and VMware management tools disappointed, Kolektor jettisoned VMware and switched to Windows Server 2008 R2 Datacenter with Hyper-V technology. Kolektor calculates that it will save U.S.$1.5 million in software licensing, hardware, and energy savings over the next few years. By using Hyper-V and Microsoft System Center data center solutions, Kolektor has been able to grow the business by a factor of ten without IT staff increases. The IT staff can deliver new services in minutes rather than hours, has sped up application performance by 30 percent, and has increased server reliability.

2 We ran detailed comparison benchmarks and saw that Exchange Server ran better on Hyper-V than on VMware. Situation The is a consortium of companies that manufactures a variety of parts that are used in electric motors: commutators, slip rings, soft ferrites, wound components, plastic components, and electronics. Its parts are used primarily by the automotive industry but are also found in home appliances and many other products. Kolektor is headquartered in Idrija, Slovenia, has manufacturing plants around the world, and employs more than 4,000 people. Kolektor has grown at a dizzying pace over the past five years, quintupling in size, primarily by snapping up smaller manufacturers across central Europe and around the world. The company s IT organization worked frantically to keep up with the growth. Nine years ago, we had one data center location and a handful of servers. Today, we have branch offices all over Europe and manufacturing plants all over the world, says Gorazd Šemrov, System Engineer at. To facilitate this growth, we implemented many new applications, such as Microsoft Office Communications Server 2007 and the Windows Server 2008 R2 and Windows 7 operating systems, to help people in our various plants better communicate. But all those applications needed servers, which multiplied to 140 in just a few years time. The IT department had a hard time provisioning servers as quickly as the business needed them, which caused it to inhibit rather than enable business growth. Also, IT costs were soaring, with rack after rack of servers filling up. To reduce the cost of server hardware and speed up server deployment, Kolektor deployed VMware server virtualization software in 2005, one of the first Slovenian companies to do so. VMware was the major virtualization player at the time, Šemrov says. However, as our server needs grew, VMware licensing costs became exorbitant. Also, the IT staff found it so difficult to apply security updates to VMware that they often did not install them. This left these critical servers vulnerable and at risk. Solution In mid-2008, Kolektor took a hard look at its technology infrastructure and realized that it depended on Microsoft software for just about everything but virtualization. When Microsoft announced the Windows Server 2008 operating system with Hyper-V virtualization technology, Kolektor was eager to give Hyper-V a try. Performance, Cost Advantages In late 2008, the company deployed Windows Server 2008 Datacenter on a host server, created several virtual machines, and installed Microsoft Exchange Server 2007 as its first Hyper-V based application. We ran detailed comparison benchmarks and saw that Exchange Server ran better on Hyper-V than on VMware, Šemrov says. When we calculated the savings that we would realize by switching from VMware to Hyper-V, the switch became even more compelling. Kolektor moved about 25 percent of its virtual workloads from VMware to Hyper-V. At the same time, the company deployed Microsoft System Center Virtual Machine Manager 2008, a management program used to create and manage virtual machines. When Microsoft introduced Windows Server 2008 R2 in mid-2009, Kolektor upgraded to that version, to take advantage of new features such as live migration and Cluster Shared Volume (CSV). Using the live migration feature, Kolektor can dynamically move virtual machines to different host servers without

3 We saw an enormous improvement in CPU utilization with the move to Windows Server 2008 R2. I can run 1.5 to 2 times more virtual machines on a Windows Server 2008 R2 host server. interrupting or bringing down workloads running on those virtual machines. Kolektor can use this to deliver high levels of availability. Cluster Shared Volume, a feature that is available with the Windows Server 2008 R2 Datacenter and Enterprise editions, simplifies the configuration and management of clustered virtual machines. With Cluster Shared Volume, multiple clustered virtual machines can use the same disk while still being able to fail over (or move from node to node) independently of one another. Kolektor can use this as a cost-effective way to achieve high availability using virtual machines. Also, we saw an enormous improvement in CPU utilization with the move to Windows Server 2008 R2, Šemrov says. I can run 1.5 to 2 times more virtual machines on a Windows Server 2008 R2 host server than I could on Windows Server 2008 and the first version of Hyper-V. I capacity-tested the operating system on an IBM x3850 server with two processors, creating around 30 high-performance virtual machines. CPU utilization was only about 50 percent, and I still had plenty of usable space for more virtual machines. Heavy-Duty Production Workloads Virtualized With the migration to Windows Server 2008 R2 Datacenter, Kolektor gradually moved all remaining VMware workloads to Hyper-V and today has 140 virtual machines running on eight clustered host servers. The company has achieved a virtual machine density of 17:1, or 17 virtual machines running on each host server, but expects to easily achieve a 30:1 density in the near future. I can now achieve same number of virtual machines per host that I could with VMware, and at the same time achieve 30 percent better performance. This is more than I ever expected to get from virtualization, Šemrov says. Using Hyper-V, Kolektor has virtualized every production workload that it can, including its recent upgrade to Microsoft Exchange Server 2010, Microsoft SQL Server 2008 data management software, Microsoft Office SharePoint Server 2007, Microsoft System Center data center solutions, Microsoft Forefront client security software, its customer relationship management application, manufacturing applications, engineering applications, domain controllers, and its public key infrastructure. Our most demanding workload is probably the SQL Server database that supports System Center Operations Manager 2007 R2, used for server monitoring, Šemrov says. This application collects monitoring data on all our servers and applications. We have 13 domain controllers that collect 40 audit events per second on one server and application. They also perform complete performance and event monitoring. All that data goes into this database around 600 SQL transactions per second totaling around 600 gigabytes of data. We were a little bit scared to virtualize this database, because we were well aware of how intensive it was, but it actually runs better on Hyper-V than on a physical server. Management Efficiencies Kolektor saved costs by licensing System Center Virtual Machine Manager 2008 R2 and other Microsoft System Center data center solutions using the Microsoft Server Management Suite Datacenter license. With this suite of solutions, the IT staff can centrally monitor, manage, and optimize the performance of its entire data center landscape, including physical and virtual servers.

4 We have grown our number of users and our IT holdings by a factor of ten with the same size IT staff. System Center is a lifesaver. The IT staff uses System Center Virtual Machine Manager to create new virtual machines, delete unneeded ones, and monitor the performance of all physical and virtual servers. One of the great features of System Center Virtual Machine Manager is the ability to control both VMware and Hyper-V from the same console, which we had to do during our migration from VMware, Šemrov says. We also migrated all the VMware workloads to Hyper-V using System Center Virtual Machine Manager. Another great feature is the self-service portal, which allows us to delegate control and access of virtual machines to end users. Kolektor uses System Center Virtual Machine Manager in combination with System Center Operations Manager 2007 R2 to monitor the performance of both virtual and physical servers. If a physical or virtual server needs more processing power or memory, the IT staff can allocate the resources from a central console. IT staff uses Microsoft System Center Configuration Manager 2007 to configure and distribute software and apply security updates to all servers. The job that was so difficult with VMware tools is push-button easy with System Center Configuration Manager. We simply right-click on the host server that needs the software upgrade, and System Center Virtual Machine Manager uses the live migration and Cluster Shared Volume features of Windows Server 2008 to automatically move workloads to another host server while the updates are being applied during the maintenance window, Šemrov says. When the updates are complete, System Center Configuration Manager moves the workloads back using a System Center Virtual Machine Manager Windows PowerShell command-line interface script. Kolektor uses Microsoft System Center Data Protection Manager 2010 to back up its virtual machines that are using the Cluster Shared Volume feature. System Center Data Protection Manager is optimized for branch-office backup, Šemrov says. We are using it to back up everything to a central location. It s also really good for backing up Microsoft workloads such as Exchange Server and Office SharePoint Server. We can even back up virtual machines during live migration. Benefits With Windows Server 2008 and Hyper-V, Kolektor is keeping IT costs in check, even in the face of rapid growth, and delivering IT services faster. It has also boosted application performance, improved server reliability, and decreased energy costs by reducing its dependence on physical servers. Hardware, Energy, and Licensing Savings of $1.5 Million By increasing its server virtualization efforts, Kolektor is saving money on physical servers, the electrical energy needed to power and cool them, and the physical infrastructure needed to support high availability. It has also reduced virtualization software licensing costs. We will probably save 400,000 (U.S.$541,000) in new servers over the next four years by virtualizing our data center, Šemrov says. Further, Microsoft estimates that energy savings on the cost avoidance of 100 new physical servers over four years is approximately 51,000 ($70,000) a year. Kolektor also has been able to create a high-availability infrastructure without investing in duplicate servers, switches, and storage, a savings of ($609,000). Without Cluster Shared Volume, we would have to purchase two of everything to

5 Now, when a business unit needs a new server, it takes about seven minutes to create a virtual machine in Hyper-V, versus an hour or two to provision a physical server. attain high availability, Šemrov says. It would also be double the work to monitor a redundant physical setup. With CSV, we get high availability for practically free. Finally, Kolektor is realizing considerable savings by switching from VMware to Hyper-V. By moving from VMware to Hyper-V, we will save 200,000 [$274,000] over the next six years in virtualization software licensing fees, Šemrov adds. Business Growth of 10X with No Increase in IT Spending Kolektor has been able to accommodate its terrific growth without increasing its IT staff. We have grown our number of users and our IT holdings by a factor of ten with the same size IT staff, Šemrov says. In the next two years, we expect to double in size. We can use Hyper-V and System Center solutions to keep our IT infrastructure and staff lean. System Center is a lifesaver. Those programs automate so many infrastructure management tasks that they effectively multiply our staff. Faster Service Delivery Kolektor can also move much faster with a virtualized data center. We need to provision servers really quickly, because the company is moving so fast, Šemrov says. Now, when a business unit needs a new server, it takes about seven minutes to create a virtual machine in Hyper-V, versus an hour or two to provision a physical server. This enables us to get test, development, and production server resources to business teams as soon as they need them. IT is enabling rather than slowing down the business. Improved Application Performance By moving from VMware to Hyper-V, Kolektor has seen application speedups of 30 percent. SQL Server and Office SharePoint Server especially show big performance gains running under Hyper-V. In our experience, VMware was unable to take full advantage of the host processors, using only about 30 percent of available CPU power, while Hyper-V can more fully utilize the resources on the host, Šemrov says. Top-notch application performance is important to the Kolektor IT department, because it is a profit center in the company, selling server resources, mailboxes, and other IT services to Kolektor business groups. We have to meet promised service levels and provide excellent IT services to our users, or they won t pay for our services, Šemrov says. Increased Reliability Kolektor has also realized improved application reliability with the move to Windows Server 2008 R2 Datacenter, because the IT staff can use live migration to move workloads between host servers with no interruption in service. Live migration has also been valuable because of the many time-zone differences separating Kolektor companies. The IT staff can move workloads around whenever it needs to without disrupting users or applications. We have no off hours when downtime is acceptable, Šemrov says. Also, because it is now so easy to apply security updates to host servers, the IT staff applies these updates regularly. This increases the stability and reliability of servers by better defending them against malicious software. Kolektor can also better protect its data center using the Internet Protocol Security (IPsec) protocol, because Hyper-V is IPsec-capable, whereas VMware was not. Environmental Benefits On top of all these benefits, Kolektor has the satisfaction of knowing that it is a

6 For More Information For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) In Canada, call the Microsoft Canada Information Centre at (877) Customers in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to: For more information about Kolektor Group products and services, call or visit the Web site at: better environmental citizen by using virtualization. With Hyper-V, we are making a bigger impact in our markets, but a smaller impact on our planet, Šemrov concludes. Microsoft Virtualization Microsoft virtualization is an end-to-end strategy that can profoundly affect nearly every aspect of the IT infrastructure management lifecycle. It can drive greater efficiencies, flexibility, and cost effectiveness throughout your organization. From accelerating application deployments; to ensuring systems, applications, and data are always available; to taking the hassle out of rebuilding and shutting down servers and desktops for testing and development; to reducing risk, slashing costs, and improving the agility of your entire environment virtualization has the power to transform your infrastructure, from the data center to the desktop. For more information about Microsoft virtualization solutions, go to: Software and Services Microsoft Server Product Portfolio Windows Server 2008 R2 Datacenter Microsoft System Center Configuration Manager 2007 Microsoft System Center Data Protection Manager 2010 Microsoft System Center Operations Manager 2007 R2 Microsoft System Center Virtual Machine Manager 2008 R2 Technologies Hyper-V Hardware Eight IBM x3850 servers with two multicore processors in each server This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2010