vmware cost savings through virtualization
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Cost Savings through Virtualization
Paul JacobsenChannel Sales ManagerVMware June 2009
Agenda
Economic Environment in 2009Why VMware is a Strategic InvestmentProven Customer Success
The Rough Road Ahead….
Source: Goldman Sachs IT Spending Survey, March 9th, 2009Source: IMF World Economic Outlook Report, Nov 6th 2008
“Our IT spending indices dipped further to new lows in our latest survey, deep in contraction territory.”
- Goldman Sachs
A global economic recession is forecasted for 2009
The economic environment is a leading indicator of tech spending
71% of CIOs anticipate flat or decreasing IT spending budgets
IT budgets in developed countries set to decline by 12% in 2009 and 9% globally
The IT Dilemma
I am supposed to do the same job, but with less budget and headcount?!?
Agenda
Economic Environment in 2009Why VMware is a Strategic InvestmentProven Customer Success
Recent CIO Surveys Agree: Virtualization is the Top CIO Priority in a Tough Economic Environment
Source: Merrill Lynch CIO Survey, Oct 28th, 2008Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
“The current environment has moved virtualization toward the top of the priority list for CIOs.”
“Total cost of ownership (TCO) reductions will be a key driver of the acceleration in server virtualization deployments as CIOs are forced to cut capital spending and reign in management, administrative and power/ cooling costs.”
Customers Are Still Moving Ahead with Virtualization in 2009
CIOs expect to double the percentage of servers virtualized in 2009Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
Which software providers are gaining share of your IT spending dollars?
113 Quarters#
Source: Goldman Sachs IT Spending Survey, March 9th, 2009
VMware Continues to be the #1 Software Investment for CIOs in a Tough Economy
Gaining
1. VMware2. Citrix
Systems3. Cisco
Software/ Security
4. Oracle5. Symantec
VMware
Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
“VMware’s incumbent position at the top of the rankings demonstrates that server virtualization momentum remains alive and well with a strong ROI case for a declining budget environment.”
- Goldman Sachs
Which software providers are gaining share of your IT spending dollars?
VMware is the Proven, Trusted Leader Providing the Highest ROI and Lowest TCO
Top 3 Reasons Why VMware is the Right IT Investment in a Tough Economic Environment
Minimize Lost Revenue Due to Downtime3
Reduce Datacenter Operating Cost (e.g. Power & Cooling)2
Reduce Physical Infrastructure Cost1
Before AfterBusiness Loss Due to Datacenter Outage**Sys Admin per 100 Apps*
* Source: IDC and VMware TAM program** Source: VMware customer – a $2bn insurance company. Estimates based on 40 hrs needed to recover before virtualizing and 4.5 hrs needed for the same recovery after virtualization.
Infrastructure Cost per App
Before After
Reduction in Datacenter Capital Expense
2.0-3.0
Before After
$14,235
$5,6940.3 – 1.0
Reduction in Datacenter Operating Expense
$30 MM
$4 MM
Reduction in Risk
VMware Delivers Tangible Business Outcomes
12
Reduce Server Spend Through Consolidation
VMware…Decouples software from hardware
Encapsulates Operating Systems and applications into “Virtual Machines”
A Server or Desktop Virtual Machine
Typical Consolidation: 15:1
Typical Excess Hardware Capacity: 3
Years!
Total Savings Per Workload
Servers 1000 80 $5,816Network Switches
84 10 $296
Real Estate (Sq ft) 2053 257 $431Power (kWh) 407 52 $759Cooling (kWh) 509 64 $949Savings per Workload(Over 3 years)
$8,251*
BEFORE AFTER SAVINGS
• Actual customer savings per application; represents typical savings• Includes estimated cost of VMware licenses, Support and Subscription
VMware consolidates servers, storage and networking infrastructure to safely achieve higher utilization
Reducing Capital Cost1
Reducing Operating Cost
2
Copyright © 2005 VMware, Inc. All rights reserved.
Reduce Energy Consumption
Copyright © 2005 VMware, Inc. All rights reserved.
Highest consolidation rates on most secure and reliable virtualization platform
Safely improve utilization rates
80% energy reduction
Dynamic server and storage migration
Power off unneeded servers in real-time
Migrate storage dynamically
25% energy reduction
Host desktop PCs in the datacenter
Use thin clients, double refresh cycle
Reduce storage for similar desktop images
70% energy reduction
Improving Operational Efficiency
Source: IDC and VMware TAM program
Do more work with the same number of people = operating cost savings
Free up resources and budgets from day-to-day maintenance to focus on future innovation and strategic projects
Drivers of productivity improvements:
Instant provisioning
Dynamic patching
Zero downtime maintenance
Reducing Operating Cost2
Value of Zero Downtime Server Maintenance
Server Maintenance is required forUpdates to component hardwareUpdates / patches to the hypervisorMigration to newer servers
Cost savings from zero downtime server maintenance with VMotionAvoid overtime cost to perform maintenanceAvoid administrative time in scheduling downtime
Business costs of downtime is specific to each industry and not included here
For a 10 physical server, 150 VM environment, assuming:
2 hardware/ BIOS upgrades per server + 4 hypervisor patches = 6 maintenance activities per server per year
10 X 6 X +X $150/hr2 hrs
Overtime Cost
Time to performupgrade
Overtime$/hr
0.75 hr15
Scheduling Downtime
# ofapps perserver
Time spentscheduling
downtime per app
$60/hr
$/hr
X X = $ 58,500
VMware VMotion
# of servers
# of updates
( )
Value of Zero Downtime Storage Moves Maintenance
Storage Maintenance is usually required forLUN optimizationUpgrades to better hardware
Cost savings from zero downtime storage maintenance with Storage VMotionAvoid overtime cost to perform maintenanceAvoid administrative time in scheduling downtime and planning the moveAvoid cost of buying an alternate data mover tool
For a 10 physical server, 150 VM environment (50GB per VM of storage), assuming:
Storage is moved once in 3 yrs, annualize 1/3 of the 7.5TB environment every year (2.5TB). ~20GB can be moved an hour.
X $150/hr124 hrs
Overtime Cost
Time to move 2.5TB
each yr
Overtime$/hr
X $60/hr248 hrs
Scheduling Downtime
Time spentschedulingdowntime
Admin$/hr
X $60/hr500 hrs
Planning Move
Time spent planningthe move
Admin $/hr
$5000
Alternate Tool Cost
+ + + = $ 68,113
VMware Storage VMotion
Value of Dynamic Load Balancing
Customers report that without DRS automatically balancing their environments, they would either
Decrease their consolidation ratio – this means that the full HW cost savings are not realized. Customers report up to 30% decrease in consolidation ratios.Have to manually monitor VMs to place them appropriately.
For a 10 physical server, 150 VM environment, assume that the consolidation ratio decreases by 30% from 15:1 to 10. Alternatively, administrators would have to spend time monitoring the cluster or responding to customer calls every day
Cost of increased
monitoring time
Decreased consolidation ratio means
OR
X $8,0005 servers
Increased Hardware Cost
More servers needed
Hardware, license, power/ cooling, space costs per server
2602.5 hrs.
Cost of Extra Admin Time
Hours per day Days in a year
$60/hr
Admincosts/hr
X X
= $ 40,000
= $ 39,000
OR
VMware DRS
Offline machine patchingReduces exposure from non-compliant offline/suspended virtual machinesSystems have NICs disabled during patching to reduce risk
Value of Automated Patching
Guest PatchingAdministrative time – 2448 hrs, $147,744 saved annually
Calculated for 150 virtual machines, assuming 40 patches per machine
> Scan machines> Assess patch
requirements
> Remediate systems> Troubleshoot> Rollback – 10%
Manual24 min
Automated15 min
Annual Savings for 150 VMs900 hrs, $54,000
Manual156 min
Automated21 min
Annual Savings for 150 VMs1548 hrs, $93,744
Manual180 min
Automated36 min
Annual Savings for 150 VMs2448 hrs, $147,744
Per virtual machine Per patch
VMware Update Manager
$147,744
Ensuring Business Continuity
Source: IDC and VMware TAM program
Reduce business risk without increasing costs or complexity
Minimize lost revenue from and avoid costs of business downtime
Drivers of productivity improvements:
Built-in high availability
Automated recovery
Reducing Operating CostMinimize Lost Revenue3
Value of Automated Site RecoverySRM cost savings can have several contributions:
Cost of lower disaster recovery site investmentCost of lower recovery plan planning and management timeCost of less lost business revenueCost of less lost wages
The below only captures a conservative estimate of savings from lost business revenue and lost productive time
Company that does $5M in revenue a year = ~$20k / weekday. Assume a disaster strikes. Assume that SRM can achieve RTO of 24 hours instead of 72 hours compared to traditional DR plan.
= $ 64,000(Per disaster)
X$20,000
Value of Lost Revenue
Days offaster recovery
Lost revenue per day
X + X 40
Value of Lost Time by Workers
Days offaster recovery
Number ofworkers
X X $300/dy
Cost of workerwages
22
VMware SRM
Value of High Availability High Availability cost savings can have several contributions:
Cost of lost business, lost workCost of lost productive time
The sheer simplicity of VMware HA and reduced time & effort compared to other clustering solutions is not capturedThe below only captures a conservative estimate of savings from lost productive time
For a 10 physical server, 150 VM environment, assuming 2 failures a year:
X 104 hrs.
Value of Reduced Lost Productive Time
Hours ofdowntime
Number ofusers per VM
15
Number ofVMs per host
X X $50/hr
Cost of Userproductive time
X 2X = $ 60,000
VMware HA
Failures per year in 10-
host cluster
Value of Fault ToleranceFault Tolerance (FT) cost savings is primarily in preventing lost business revenue from when mission-critical, high-revenue applications go downFault Tolerance prevents lost business revenue by providing zero downtime, zero data loss continuous availability for your applicationsThe simplicity of FT and reduced time & effort compared to other hardware-based solutions is not captured
For a 10 physical server, 150 VM environment, assume ~10% of VMs are protected by FT (15 VMs). 2 host failures in the clusterper year. Lost revenue per minute of high-revenue apps can range from $2000-15000 per minute depending on type of transactions being processed.
X$7000/min4
Value of Lost Revenue
Minutes ofdowntime prevented
Lost revenue per minute
15÷10
Avg. number ofFT-protected VMs
per host
X X X = $ 69,0002
Failures per year in 10-
host cluster
X 1$15000
Extra Hosts for FT
Cost per host
Number of extra hosts
-
VMware FT
Agenda
Economic Environment in 2009Why VMware is a Strategic InvestmentProven Customer Success
25
Meet Service Levels Efficiently
Using VMware virtual infrastructure, we can offer the same levels of service and more flexibility for up to 40 percent lower server and operating costs.”
Rob Jones, Director of Technology, ALSTOM
Reduce Costs“Using VMware software has brought a huge cost benefit to IT - avoiding costs by $1.1 million is fantastic. For every production virtual machine, we estimate a $7,500 cost avoidance per server. We multiply 150 applications by $7,500 and estimate a $1.1 million cost avoidance.
Barry Naber, Technology Manager at International Truck and Engine Corporation
Customer Testimonials
Simplify Management
The net impact of utility computing with VMware Infrastructure 3 for the business is higher service levels, for IT - it is simplified and easier to manage infrastructure.
Fazil Habibulla, Vice President and System Architect, NATIXIS Capital Markets
VMware is Lowest TCO Per VM
VMware VI3Foundation
VMware VI3Enterprise
Other Solutions
2-way server (16GB RAM) $7,000 $7,000 $7,000Cost: Guest Windows licenses1 $5,998 $5,998 $5,998Cost: Virtualization license $995 $5,750 $0Subtotal $13,993 $18,748 $12,998Total VMs2 (2GB each) 15* 15* 7Cost per VM $933 $1,250 $1,857
1 List price for 2-socket Windows 2003 Server Datacenter Edition2 Assumes a 2:1 memory overcommit ratio based on VMware advanced memory mgmt technologies
* Assumes 1GB of memory used by “host virtualization SW” for all vendors
VI3 Enterprise includes advanced functionality such as live server and storage migration, dynamic workload balancing,
built in high availability, data protection, and power management which competitors don’t have.
VMware’s cost-per-VM beats even “free” products…
plus …
Available Resources
Online ROI/ TCO Calculator: Robust and customizable analysis of virtualization’s impact on your IT budget and datacenter costs
www.vmware.com/calculator
Why Choose VMware: Vendor selection checklist to ensure a Complete, Robust, Proven Virtual Infrastructure
www.vmware.com/technology/whyvmware/
Thank You!