Hosting Provider Plans to Expand Cloud Business by 80 Percent Using Software Upgrade

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1 Hosting Provider Plans to Expand Cloud Business by 80 Percent Using Software Upgrade Overview Country or Region:United States Industry: Hosting Customer Profile Hostway is a leader in cloud, managed, and hybrid hosting, delivering a wide range of infrastructure-as-a-service solutions to more than 600,000 customers around the world. Business Situation Hostway offers both hosted public cloud and private cloud services from its data centers. However, it lacked network virtualization and other capabilities that could make it even more competitive. Solution Hostway upgraded to Windows Server 2012 R2 operating system and Microsoft System Center 2012 R2 to provide cost-effective network virtualization, simpler private cloud management tools, and disaster recovery capabilities to their growing cloud base. Benefits Business growth of up to 80 percent from software innovations With Windows Server 2012 R2, we have a private hosted cloud solution that can compete and often beat any solution on the market today and is going to be a significant source of revenue for us. Aaron Hollobaugh, Vice President of Sales and Marketing, Hostway Hostway is a global leader in cloud, managed hosting, and hybrid cloud hosting. It used Hyper-V technology in the Windows Server 2008 R2 operating system to deeply virtualize three of its data centers but sought a cost-effective network virtualization solution, simpler private cloud management tools, and disaster recovery capabilities. Hostway upgraded to the Windows Server 2012 R2 operating system and Microsoft System Center 2012 R2 data center solutions to address all three needs. With these new capabilities, Hostway envisions being able to expand its cloud business by as much as 80 percent. It is using the Windows Azure Pack and System Center 2012 R2 to cost-effectively build a private cloud management console and will use the Hyper-V Replica feature in Windows Server 2012 R2 to create a low-cost disaster recovery service that will deliver greater business continuity to customers. Simple, cost-effective privatecloud management Competitive disaster recovery offerings

2 We ve had to turn down some very big opportunities because we couldn t offer robust network isolation. In this area, we were operating at a competitive handicap. Aaron Hollobaugh, Vice President of Sales and Marketing, Hostway Situation Hostway Corporation is a leader in cloud, managed hosting, and hybrid cloud hosting. Hostway delivers reliable, secure, and scalable infrastructure-as-a-service (IaaS) solutions to more than 600,000 customers worldwide. It primarily serves its clients from its five geographically diverse data centers in North America. Hostway has emerged as one of the largest cloud hosting and IaaS providers in the world due to its expertise in developing secure, multitenant hosting environments and is committed to providing small and midsize businesses (SMBs) and large enterprises with cost-effective business solutions. The company is based in Chicago, Illinois, and has more than 400 employees. Since 2009, Hostway has used the Hyper-V virtualization technology in the Windows Server operating system to virtualize its data center servers and dramatically reduce server acquisition and management costs, accelerate server deployment, speed newproduct development, and improve service availability. It also uses Microsoft System Center 2012 data center solutions to efficiently manage its virtualized infrastructure solutions. Hostway offers multitenant solutions where multiple companies share the same hardware (a public cloud), as well as single-tenant solutions where companies have dedicated hardware (a private cloud) to meet the various needs of its many customers. While Hostway had made huge strides in virtualizing its server infrastructure, most recently using the Windows Server 2008 R2 operating system, it wanted to apply the same efficiencies to its networking infrastructure. Traditional data center networking designs had scalability limits and were difficult to manage in cloud environments. Many of our private-cloud customers require network isolation, says Aaron Hollobaugh, Vice President of Sales and Marketing for Hostway. For example, many retail customers have to comply with PCI [Payment Card Industry] security standards, and even in our private-cloud, or dedicated hosting, environment there was little isolation between tenants in Windows Server 2008 R2 Hyper-V. We ve had to turn down some very big opportunities because we couldn t offer robust network isolation. In this area, we were operating at a competitive handicap. Hostway also needed better private cloud management capabilities; it had developed a management console for its publiccloud environment, but it was not suitable for managing the private cloud infrastructure. The company was about to develop its own, which would be expensive and timeconsuming. Additionally, for all its service offerings, Hostway did not have an automated disaster recovery solution for customers. We had data center redundancy, but we couldn t protect and reinstate specific customer workloads if a disaster took physical servers offline, says Mike Robski, Vice President of Research and Development at Hostway. Solution When Microsoft announced the Windows Server 2012 R2 operating system and Microsoft System Center 2012 R2, Hostway quickly deployed both products to test network virtualization, virtual machine replication, and other features. Network Virtualization For Hostway, one of the most interesting Windows Server 2012 R2 features was Hyper-V Network Virtualization, which extends the concept of server virtualization to allow multiple virtual networks, potentially with overlapping IP addresses, to be deployed on the same physical network. Hostway can set policies that isolate network traffic of different customers within its private cloud environment, and even move virtual machines within its virtual infrastructure

3 By using Hyper-V Replica, customers whose servers were affected by a disaster event can be back online in minutes, thanks to continuous replication. Mike Robski, Vice President of Research and Development, Hostway while preserving their IP addresses. This simplifies the process of importing existing customer virtual machines or physical servers into the Hostway infrastructure. Windows Server 2012 R2 introduces a multitenant site-to-site gateway which provides network routing for tenant virtual machines between sites and between physical and virtual environments that use Hyper-V Network Virtualization. This gateway bridges virtual and physical networks in our environment, Robski says. It s key to enabling us to use Hyper-V Network Virtualization and provide our customers with true hybrid-network solutions. Private Cloud Management To more easily manage its private cloud environment, Hostway is using the Windows Azure Pack for Windows Server, a collection of Windows Azure technologies that service providers and companies can run inside their data centers to offer rich, self-service, multitenant services. Windows Azure is a cloud operating system that provides compute, storage, hosting, and management services for hosting customer-developed applications and services. Windows Azure Pack will be perfect for our private cloud, for providing multitenant isolation and private cloud management, Hollobaugh says. Without it, we would have to implement our own management console, which would prolong the launch of future private cloud services. Hostway also uses System Center 2012 R2 to provision, monitor, manage, and automate processes within its privatecloud environment. It has big plans for the Orchestrator component of System Center 2012 R2, to automate management workflows and enable customers to automate their own management workflows. Disaster Recovery Built into the Operating System Hostway plans to use the Hyper-V Replica feature, originally introduced in Windows Server 2012 and enhanced in Windows Server 2012 R2, to provide robust and costeffective disaster recovery services. Hyper-V Replica provides virtual machine replication between sites over a standard broadband connection. In Windows Server 2012 R2, Hyper-V Replica has been enhanced to allow for granular replication intervals of 30 seconds, 5 minutes, or 15 minutes; to support multiple replication locations; and to provide faster replication. By using Hyper-V Replica, customers whose servers were affected by a disaster event can be back online in minutes, thanks to continuous replication, Robski says. Most importantly, our customers can replicate their on-premises systems to our data centers for disaster recovery. Deployment Plans As soon as Windows Server 2012 R2 becomes commercially available, Hostway plans to deploy Windows Server 2012 R2 in production in three of its data centers, in Austin, Texas; Tampa, Florida; and Vancouver, British Columbia. The company will migrate all of its existing Windows Server 2008 R2 workloads to Windows Server 2012 R2. Most of these workloads have high scalability and security requirements and include customers ranging from online media companies to retail firms and software-as-a-service providers. The Hostway Hyper-V environment currently consists of 35 Dell PowerEdge servers and has capacity for approximately 700 virtual machines. Benefits With its upgrade to Windows Server 2012 R2 and System Center 2012 R2, Hostway will be able to expand its cloud business by as much as 80 percent by offering privatenetwork services within its private cloud

4 The richer Microsoft software becomes, the more resource-efficient we and our customers can be. Aaron Hollobaugh, Vice President of Sales and Marketing, Hostway environment. By using the Windows Azure Pack and System Center 2012 R2, the hosting provider can quickly build a private cloud management console and automate manual processes. Hostway will use Hyper- V Replica to offer low-cost disaster recovery service, another competitive differentiator. Business Growth of Up to 80 Percent from Software Innovations By implementing Hyper-V Network Virtualization, Hostway can attract a broader range of customers. We ve been playing with a handicap with our private cloud offerings in terms of network virtualization, security, and scalability, Hollobaugh says. With Windows Server 2012 R2, we have a private hosted cloud solution that can compete and often beat any solution on the market today and is going to be a significant source of revenue for us. Our cloud services business has grown 40 percent annually, and it s not unrealistic to expect that we ll grow our cloud revenues by another 60 to 80 percent in We re building our future on the Windows Server 2012 R2 platform. Hostway especially sees growth opportunities in the SMB market due to the pervasiveness of the Windows operating system in small and midsize businesses. The fact that many SMBs use Windows onpremises presents a big opportunity for us in the replication space, as one example, Robski says. Customers can use Hyper-V Replica to replicate their on-premises servers to our data center, and the software on both sides will be completely compatible. Hollobaugh adds that the cloud visions of Hostway and Microsoft are perfectly aligned. Our goal is to give the SMB market cost-effective access to cloud technologies, he says. The Microsoft cloud operating system vision closely aligns with our vision of allowing companies of all sizes to have an equal playing field in terms of infrastructure access, whether onpremises, off-premises, or hybrid. Approximately 90 percent of our customers use Windows in their business, so using Hostway cloud services is a natural extension of what they already have and know. Simple, Cost-Effective Private Cloud Management Hostway is also using management innovations in Windows Server 2012 R2 and System Center 2012 R2 to simplify the management of its private cloud environment. With Windows Server 2012 R2, we can consume the APIs [application programming interfaces] provided by the Virtual Machine Manager component of System Center 2012 and cost-effectively create a very powerful management console, Robski says. Orchestrator will further allow us to optimize workflows and eliminate code that we had created with older versions of Windows Server. Hostway even plans to enable customers to build their own simple workflows by using Orchestrator. We want to help customers automate typical administrative scenarios such as deploying virtual machines and recovering from failures, so they don t need to wake up their administrators in the middle of the night or hire more administrators, Hollobaugh says. The richer Microsoft software becomes, the more resource-efficient we and our customers can be. Competitive Disaster Recovery Offerings By using Hyper-V Replica, Hostway can finally offer a robust, cost-effective disaster recovery solution to customers. It can bring up disaster recovery sites within 15 minutes of a disaster, with minimum provisioning and no expensive third-party products. Disaster recovery is critical to us as a hosting provider because companies buying services from us expect high availability and rapid recovery times, says Hollobaugh. If a network adapter card fails or there is an issue in a virtual machine, we

5 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: can use the capabilities in Windows Server 2012 R2 to ensure that virtual machines seamlessly fail over and continue to run without interruption. With all these new features, we can move workloads easily and seamlessly across data centers, without worrying about the physical network infrastructure and topology. That s a huge competitive differentiator. Transform the data center The hybrid cloud from Microsoft transforms the data center by extending existing investments in skills and technology with public cloud services and a common set of management tools. With an on-premises infrastructure connected to the Windows Azure platform, you can deliver services faster and scale up or down quickly to meet changing needs. For more information about transforming the data center, go to: For more information about Hostway products and services, call (866) or visit the website at: Software and Services Microsoft Server Product Portfolio Windows Server 2012 R2 Datacenter Microsoft System Center 2012 R2 Technologies Hyper-V Windows Azure Pack for Windows Server Hardware Dell PowerEdge servers This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published October 2013