Data center flexibility and efficiency: increasing the business value of IT

IBM Global Technology Services Thought Leadership White Paper February 2012 Data center flexibility and efficiency: increasing the business value of IT Increasing demand for services provides opportunities to simplify operations

2 Data center flexibility and efficiency: increasing the business value of IT Contents 2 Introduction 2 Building consensus: asking the right questions for the business 3 Crafting the strategy: discovery and analysis 4 Turning plan into reality: continuous transformation execution 9 The results: savings and improvements 10 What comes next: plans for the future 10 Applying the lessons 11 End rewards for the CIO 11 For more information Introduction Cost reduction. It allows organizations to survive tough years and increase profits during good years. It provides an opportunity to innovate, as well becoming the vehicle through which IT executives discover new ways to restructure for growth to respond to changing business requirements more quickly, improving service quality along the way. Cost reduction was the original impetus behind IBM s efforts to integrate our internal data centers around the globe. The process started in 1997, when IBM created a global office of the CIO, transferring governance from a geography-centric model to a centralized one that encompasses all IT services for all employees. In the ten years from 1997 to 2007, IBM has seen significant improvements in operational costs and efficiencies as a result. Hosting data centers have been consolidated from 155 to five strategic sites, 31 networks have been combined into one globally managed network and deployed applications have been reduced from more than 15,000 to 4,700. The result? From 2006 to 2011, IT transformation and optimization efforts yielded US$1.25 billion in savings. Global data center integration has also allowed IBM to improve operational efficiencies by increasing security and resilience, mitigating risk and delivering applications and information to employees in ways that increase productivity and collaboration, while providing the building blocks for further innovation. Of course, no business environment remains static. Continual refinement of the global data center strategy is needed to respond successfully to changing business needs that range from regulatory requirements to new acquisitions to enhanced customer relations. This white paper outlines the steps IBM has taken to update our data center strategy, build a unified plan and execute against that plan. This paper also examines the end results, plans for the future, and best practices uncovered along the way. For IT executives who are looking to re-engineer their strategies and processes to create tighter global integration with business needs, the information in this white paper can be leveraged to help create an integrated data center strategy and plan, reduce costs and improve enterprise-wide ability to adapt to change. Building consensus: asking the right questions for the business In 2009, an IBM Academy of Technology study made it clear that IBM needed to continue to improve the alignment of tactical data center initiatives with strategic goals in order to optimize business performance. Definitions of what comprised a strategic data center, the business logic used in selecting the data centers, as well as the required services and capabilities, needed to be documented to allow IBM to achieve more operational flexibility.

IBM Global Technology Services 3 With more than 400,000 employees accessing data and applications that were known to be running outside of strategic data centers due to acquisitions, organic growth and skunk works projects all over the globe, it was important to choose a manageable starting place to update IBM s data center strategy. In order to help overcome stakeholder s assertions that data centers needed to be located within each geographic region, the office of the CIO hired outside data center strategy experts from IBM Site and Facilities Services. This team works with clients to use objective, fact-based tools and analytics to guide executive agreement on the decision model that is used to make strategy recommendations. This allowed the office of the CIO to engage key owners during the analysis process increasing stakeholders confidence that their individual needs were being met in a way that provided optimal value to IBM as a whole. The Site and Facilities Services experts reached across all of the groups involved to solicit input and discuss over 300 potential decision criteria, arriving at a universally agreed upon set of key criteria that provided the best direction for the business. For IBM, these items focus on aspects of responsibility, financial requirements, workload and governance and provide clear and overarching executive guidance that enables the technical teams to execute with a high level of confidence that the results will link positively to IBM s business strategy. As each organization has different business strategies, the criteria developed for your own data center strategy may be different, but will still help you build tight linkages between business strategies and technical execution. Decision model tenets All data centers should be governed under a single, globally integrated technology delivery model To assure the highest value to the business, total cost of ownership (TCO) should be measured at a global corporate level, not by individual workload, application or data center Appropriate business continuity and security measures should be applied across all data centers matching measures to the criticality of data and applications within each server Location of workloads should be determined by overall business objectives and data center efficiency, not by the user or asset owner. Crafting the strategy: discovery and analysis Taking inventory One of the tactics recommended as part of the globally integrated governance model was the development and execution of a process for maintaining a current and accurate inventory of servers, data and applications and their locations. This provided the input needed to determine which data centers to hold or vacate. Priority was given to establishing an accurate and upto-date inventory of every asset in use within the specified scope for North America and Europe before expanding to include Asia Pacific and Latin America.

4 Data center flexibility and efficiency: increasing the business value of IT An accurate global inventory was harder to achieve than anticipated as inventory databases did not always contain applications that were created and maintained outside the office of the CIO, and did not count servers which had been provisioned by individual business units often outside of raised-floor space in the identified data center sites. The Site and Facilities Services experts applied the time-tested rule that says that 80 percent of an organization s applications are generally delivered via 20 percent of the data center capacity. They started with the largest locations where internal IBM data and applications were located, and then worked out until they had covered all the locations in scope. Whenever possible, the identification of applications and infrastructure was automated using the enterprise portfolio registry, server security database (mixed address database) or the application inventory process and repository utilizing Tivoli Application Dependency Discovery Manager (TADDM) and Cognos business intelligence reporting. Purpose-built analysis tools developed by IBM Research helped speed up the process, along with helping to assure that all servers, applications and data were properly examined and accounted for. Information captured included the server count by type, data and applications on each server and whether each server platform was the most efficient one for the associated assets. Information on server real estate (in square feet), energy usage and network connectivity was also captured. Building the data center strategy Once accurate and up-to-date inventory information was available, this information was filtered through the key decision model tenets (see the Building consensus section) to create a data center integration strategy and associated processes that would achieve the goal of enhanced flexibility through optimization. Important strategic elements included: Site selection for target migrations based on overall IBM business needs. Three strategic, global data centers would support 80 percent of the application portfolio. The remaining portfolio, including unique workloads to support manufacturing and regional requirements for security and privacy, would be housed in special-purpose data centers located to match the assets housed. Growth in the strategic data centers would be optimized by virtualizing servers and recovering existing space consumed by aged and/or redundant servers. Existing data centers would be vacated as indicated to mitigate risk of critical applications being housed in less resilient or secure locations and consolidating expenses to the strategic data centers. A continually updated service catalog would be established to help assure end-to-end IT service management, allowing the right level of hosting support and services to be applied to all assets. Turning plan into reality: continuous transformation execution With the strategy and decision model tenets established, the office of the CIO executed the processes as shown in Figure 1 to simplify the data center infrastructure and manage the associated services. This was accomplished by focusing on four major areas: migration and consolidation, storage growth, flexible delivery and end-to-end service management.

IBM Global Technology Services 5 In IBM s data center strategy, technology and business requirements work hand-in-hand and are continually reviewed for flexibility and efficiency Build consensus Balance business requirements Enable business growth Ensure application availability Improve operational efficiency Craft data center strategy Decision model tenets One globally integrated technology delivery model TCO measured at global level Continuity and security applied to each data center, matching measures to data/application criticality Location of workloads determined by business objectives and data center efficiency Continuous transformation Execute per technology objectives Manage the services Create end-to-end IT service management with standard services Simplify the infrastructure Migrate and consolidate servers Manage storage growth Achieve flexible service delivery Server type matched to data/application needs x86, UNIX, mainframe Cloud delivery where applicable Figure 1: By applying consistent governance and processes through the data center consolidation project and continually closing the loop by evaluating results against the decision model and strategy IBM has been able to fully leverage the opportunities presented by optimization.

6 Data center flexibility and efficiency: increasing the business value of IT Migrate and consolidate to best-fit platform One of the most significant ways to minimize capital expenditures and measure total cost of ownership (TCO) savings at a corporate level was to migrate and consolidate workloads to the best-fit platform. Specific workload recommendations from the strategy team were used during execution, including: Fit for purpose were the bywords when making application consolidation decisions. Is the application currently being used to access and work with data the best fit from both a user and corporate perspective? Is a newer, more effective version of the application already available within the organization? Is there a standardized application that can do as good a job, or better? To deliver optimal efficiency and cost savings, virtualization should be the standard Utilization of each data center should be maximized to avoid unnecessary expenditures or new capacity Automation and processing tools should be used to minimize conversion costs Optimal TCO can be achieved by eliminating redundant, overlapping or similar IT services. With the data center inventory in hand, the execution team was able to eliminate significant up-front effort by contacting application owners to sunset applications and decommission servers that were no longer in use. Initially, over 500 servers in 377 cities were found in the wild belonging to an individual location or business unit and operating outside strategic data centers. As the team expanded their focus to include Latin America and Asia Pacific, they found that nearly 30 percent of the application portfolio and equipment could be retired avoiding the costs associated with migration and virtualization. The remaining servers and applications are to be migrated to the strategic data centers that will support 80 percent of the application portfolio or to the special-purpose data centers. The team knew from prior consolidation efforts that a workload-centric view of the data center would prioritize the lowhanging fruit, but would fail to optimize floor space and leave a Swiss-cheese-like pattern of missed servers. Instead, the team used a location-centric view of the migrations literally using yellow caution tape to delineate the servers in scope within an individual data center. This enabled the elimination of data center fixed infrastructure to drive further benefits. Based on the fit-for-purpose evaluation, decisions were made to keep or retire existing applications, with retained applications being made more widely available and consistent through virtualization and relocation into one of the strategic data centers. While consolidating workloads takes hard work and expertise, IBM has found that the results are well worth the effort. Since the project s beginning, scope has increased from 3,900 servers to over 15,000 with significant advances in efficiency. Results through the end of 2011 are as follows: Over 6,500 servers have been consolidated and virtualized, bringing the total number of servers virtualized to 65 percent of the total inventory. When the 2015 roadmap is completed, 90 percent of the total servers will be virtualized. TCO has been reduced by a dramatic 70 percent achieved by increasing average utilization from 10 to 60 percent and resulting in approximately US$50 million in total cost take-out and US$100 million in savings. Contribution to IBM s environmental savings has been enhanced, with over 30,000 megawatts of energy saved per year and 74,000 square feet of floor space returned to the business. Enhanced migration efficiency with the average migration time being improved by 55 percent taking 90 instead of 200 days along with a 72 percent reduction in migration costs per server.

IBM Global Technology Services 7 Manage the explosive growth in storage With over 10 petabytes of storage in production use and 15 petabytes allocated for backup, managing the projected 25 percent compound growth in storage at flat cost is an integral part of achieving the optimization and TCO objective. Smarter information lifecycle management (ILM) techniques and essential storage technologies are a key part of IBM s execution tactics to: Reduce volume of data to be stored via advanced techniques for compression and de-duplication Maximize utilization of available storage through virtualization and thin provisioning Achieve the right balance between efficiency of data access and storage cost through automated tiering and migration. Applying storage tiering to identify the correct data placement and managing the migration using automation and tiering tools developed by IBM Research IBM has been able to achieve orders-of-magnitude improvement in storage efficiency. For example, migrating 57 terabytes of data now takes just six hours, instead of the previous 235 hours a 98 percent reduction in time and effort. Flexible service delivery with cloud The workload recommendations, centered on flexibility of location, directed that applications be coded to avoid tying them to a specific infrastructure location or platform. Along with making virtualization a standard for implementation, this sets up the foundation to leverage cloud technologies for rapid and flexible deployment of resources and accelerated and efficient service delivery. For IBM s internal data centers, the adoption of cloud is shaped by workload affinity and characteristics and deployed on a best-fit basis across all delivery models and platforms. Virtualized private cloud has been selected for workloads that are suitable for virtualization, but require a more robust level of security and control than can be supplied in a public cloud environment. Examples include workloads that depend on sensitive data normally restricted to the enterprise, workloads composed of multiple codependent services, and those requiring a higher level of auditability and accountability. Other candidates for virtualized private cloud include workloads based on third-party software which does not have a virtualization or cloud-aware licensing strategy, those that require detailed chargeback or utilization measurement and workloads requiring flexibility and customization. Virtualized public cloud has been chosen for workloads such as web infrastructure applications (wikis and blogs), email and collaboration workloads, development and test workloads, batch processing jobs with limited security requirements and Software as a Service (SaaS) applications. Other virtualized public cloud candidates include high-performance computing workloads with low security requirements, storage-intensive workloads with low security requirements, and secure offsite backup/restore solutions for data protection and disaster recovery.

8 Data center flexibility and efficiency: increasing the business value of IT The benefits of deploying cloud within IBM s internal data centers have been significant, including: For development and testing the time to set up an image has been reduced from five people-days to just one. As a result, over 100 new server images per month are provisioned. Nearly 100 percent of the requests for server provisioning/ de-provisioning are coming through the development and test cloud as opposed to the previous manual-build request process. This improves the speed, flexibility and level of self-service. Complementing this is a 50 percent reduction in IT labor cost and a 75 percent improvement in capital utilization. For the desktop tailored thin clients (customized by role) are being deployed to 2,000 users in our China development labs running on a private desktop cloud, with plans to expand to an additional 2,000 users for an estimated 20 to 30 percent savings per user. For storage automated self-service provisioning, flexible pricing, elastic capacity and advanced virtualization supports over 130,000 users accessing email, collaboration and other applications. End-to-end IT service management Four workload recommendations drove the improvements in the end-to-end IT service management process. Location of workloads should be determined by overall business objectives and data center efficiency, not by the user or asset owner. Applications should be provided with disaster recovery solutions that leverage common infrastructure, tools and methodologies. Management of all data centers should utilize a consistent set of tools to allow for maintenance and support efficiencies. Equitable billings for service should be assured to encourage users to seek more effective ways to store and manage their data and applications. The establishment of a single point of governance within the office of the CIO over a decade ago paved the way for implementation of enterprise-wide IT service management (ITSM) for internal workloads. ITSM shifts the focus from one-off builds and stand-alone applications to standardized services and end-to-end integration of the portfolio. Rather than a focus on service level agreements (SLAs) for individual applications and siloed cost management, ITSM provides for the use of key business process service level objectives (SLOs) and the ability to measure and reduce total cost of ownership organizationwide. As a result, top priority can now be put on relevance to the business, rather than the performance of individual parts of the infrastructure. The goal is to support 80 percent of the application portfolio with standard services in a single catalog. No longer are all applications treated the same and given the same level of support. Instead, they are classified by criticality and level of support needed, allowing a corresponding match in service. Application owners select from one of four levels of support or tiers based on the required level of availability, support, redundancy and monitoring needed. Over 80 percent of the applications have been classified in tiers 3 and 4, allowing service and support cost to be dramatically reduced. Centralized service management of the application portfolio has also resulted in a 36 percent improvement in average deployment cycle time for simple applications so far.

IBM Global Technology Services 9 The results: savings and improvements Executing the enhanced strategy for internal data centers has allowed IBM to continue to reduce costs. More importantly it has paved the way for operational efficiencies that provide new opportunities for innovation and operational flexibility to meet our changing business needs. Thus far, the effort has yielded the following improvements (also shown in Figure 2): IBM now governs internal data centers under a single, globally integrated technology model 3 global data centers now support 80% of applications Agreement on the number and location of strategic data centers optimizing the cost and performance of the application portfolio to the best interests of the corporation as a whole. This has required greater visibility into the server inventory for production workload, allowing for the mitigation of risk for servers not on a hardened floor in more than 290 cities. Migration and consolidation of applications to the best-fit server platform, reducing the total cost of IT operations by 70 percent. This includes returning 74,000 square feet of raised floor space from internal use to revenue-generating use for strategic outsourcing clients, deferring over US$70 million in capital costs to build additional data center capacity. Managing growth in storage volumes to support 25 percent annual compound growth at a flat cost. Flexible service delivery with rapid deployment of resources within the cloud in hours versus days, and the use of cloud to implement lower tier applications. Creation of end-to-end IT service management to support 80 percent of the application portfolio with standard services. Continual transformation to deliver optimization through flexibility Reduce cost of IT operations through total cost of ownership (TCO) reduction Manage 25% compound growth in data at flat cost Enable rapid and flexible deployment of resources via cloud 65% of application portfolio eligible for self-managed cloud Support 80% of the application portfolio with standard services Figure 2: Consolidating and optimizing its internal data centers has allowed IBM to realize significant savings across all areas of data center implementation and maintenance IBM has also realized benefits beyond the numbers, such as improved continuity and resiliency, better mitigation of risk and a more thorough and accurate asset inventory.

10 Data center flexibility and efficiency: increasing the business value of IT What comes next: plans for the future The pace of change will continue into the foreseeable future with continued need to improve IT operations and respond to the changes in the business requiring IT support, such as organic growth, increasing acquisitions, new products and new markets. With results such as those outlined in the previous section, IBM s roadmap through 2015 will continue to build flexibility by leveraging optimization, focusing on three key areas: Optimization of global hosting into the strategic data centers that have been identified. This includes completing the migration of ~3,000 servers, exploiting the latest server technologies and continuing with virtualization on new servers as a standard practice. Implementation of storage tiering and deployment of IBM DB2 Analytics accelerator for faster business insights will also be continued. Fully leveraging new asset consumption and delivery models by expanding usage of cloud technologies 65 percent of the already consolidated application portfolio has been determined to be eligible for self-managed cloud. Increase in development and deployment of applications through standard services, as defined by the new end-to-end IT service management model. Applying the lessons The learning curve: management strategies to consider 1. Think and act globally Within many global corporations, an assertion exists that to be a true geographic unit, you need a data center within your unit boundaries. By separating the selection of strategic data centers from the organization s financial structure and making decisions based on a consensus on financial feasibility, business capabilities and physical/ technical capabilities and, most importantly, involving all the players in the planning process IBM was able to not only overcome resistance, but transform resistors into enthusiastic participants. 2. Find your assets It can be extremely difficult to identify and capture complete inventory information for all data centers and assets. Accuracy and consistency may be the responsibility of many people, or no one at all. The best and easiest way to create and maintain an accurate and current inventory is to use analysis and automation tools. 3. Create a single governance focal point IBM s consolidation efforts only became possible after the selection of a single point of governance (the office of the CIO). When decisions about location and technology requirements were shifted from application developers and business units to the office of the CIO, consistent processes, tools and techniques could be applied resulting in far greater efficiencies and cost savings than would otherwise have been possible. 4. Keep your eye on floor space Traditional metrics for transformation programs do not always ensure optimization of data centers and assets. Along with improvement measurements for items such as availability and security, all transformation efforts should include reclamation of data center floor space as an indication of success. 5. Design for application and workload mobility Mobility of workloads is essential for the way work gets done today. Without it, high availability, business continuity and technology currency are all difficult to achieve. At IBM, all future work and investments are being designed and evaluated with application mobility as a key requirement to avoid coding applications in a way that ties them to a specific infrastructure location or platform.

IBM Global Technology Services 11 Just as interesting as the best practices are the lessons learned during this period, and how to apply them as you plan and execute your own data center consolidation. A migration strategy of going after low-hanging workload fruit is only as good as the fruit itself. Initially, IBM considered an application-focused view of our data centers and other internal servers to select candidates for virtualization and migration. But this approach did not lead to the desired reclamation of floor space (see learning curve highlight #4) or reduction in TCO. By executing consolidation efforts using a location-led view, IBM was able to get a better understanding of all our internal data center assets, the dependencies between the assets and the opportunities for optimization resulting in significant floor space reclamation and a healthy reduction in TCO. Including the business case in the decision process increased the options and the opportunities. Using the business case, data center capacity that had been used for revenue-generating workload but had capabilities that made it better-suited for internal workload could be reallocated, resulting in a more efficient and cost-effective use of resources for all parts of the business. Virtualization is good, but not having to virtualize is even better. Making the first decision point for every application an either/or keep or retire IBM was able to sunset a healthy percentage of its application portfolio, avoiding the costs associated with migration. End rewards for the CIO With over 50 percent of CIOs surveyed in the 2011 IBM Global CIO Study indicating that they plan to participate in reengineering their business, and are looking for new expertise and capabilities to help, 1 it comes as no surprise that many CIOs view consolidation of their technology infrastructure and organization as the future model for data center operations. Centralized infrastructures and processes enable optimization of shared services that, in turn, provides economies of scale to cut costs and increase return on IT investment. More and more, CIOs level of success and influence within their organizations is being measured by how well they manage their data centers to raise the return on IT infrastructure investment, expand the business impact of the data centers and make innovation opportunities real. IBM hopes that this white paper, based on a real-world execution of a data center consolidation strategy, provides a framework that CIOs and other IT executives can leverage to deliver cost efficiencies, savings and opportunities for breakthrough thinking to your own organization s efforts. For more information If you would like a more detailed exploration of IBM s internal data center story, please contact your IBM marketing representative or IBM Business Partner to schedule an in-person presentation by one of our experts. You can also request information on the IBM offerings, services and tools designed to make data center consolidation more efficient and effective. Learn more about these offerings by visiting the following websites: ibm.com/services/smarterdatacenter ibm.com/services/siteandfacilities

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