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Virtual servers, real savings

Server virtualization helps companies consolidate servers by allowing multiple instances of software to run on the same hardware at the same time.

At Delaware North Companies Inc., "the development servers stashed under programmers' desks were the last straw," Bob Armstrong says.

Armstrong is IT director at Delaware North, a diversified hospitality, food service and retail company that's also one of the largest privately held businesses in the U.S. In early 2002, Delaware North's Buffalo, N.Y., headquarters faced a common problem: Its roster of Windows NT servers had mushroomed to 36; the data center had been designed for 15.

"The software vendors all wanted their application on a separate server," Armstrong says. "We ran out of space" -- hence the development servers shoved under desks -- "and we were exceeding our air conditioning limits." Armstrong and Delaware North's CIO pegged the company's annual cost per server at $2,200, and they set out to thin the herd.

Today, Delaware North has eliminated all but one of its six development servers and has chopped three production servers as well. At the same time, the company has improved availability of a crucial application from 80% to 98%. The key to the consolidation: virtualization.

Server virtualization helps companies consolidate servers by allowing multiple instances of software, including operating systems, to run on the same box at the same time. Like Delaware North, most businesses run one application per server, which makes for lots of unused processing power. "Server sprawl is getting out of hand," says Gartner Inc. analyst John Phelps. "In a mainframe environment, you had one or two big pieces of hardware; in today's Unix or Windows environments, you've got hundreds, even thousands. IT departments want to reduce the number of servers, and virtualization is one way to do that."

Virtual machine software makes productive use of wasted horsepower, which means fewer servers overall. In a cost-conscious era, that's music to many CIOs' ears -- a recent Gartner survey of IT managers found that 92% are mulling server consolidation. "People are looking hard at reducing TCO," Phelps says, "and server consolidation can offer significant savings."

How it works

Virtualization software sits atop the operating system and creates an illusion of partitioned hardware. For example, you might install Windows Server 2003 as your server OS, then install VMware Inc.'s GSX Server atop it. With this done, you can install other Windows variants for testing or migration purposes, and as many other applications as will fit on the hardware. The virtualization software creates a virtual server for each.

The concept of the virtual machine is hardly new; IBM mainframes used the technology extensively in the 1960s. Moreover, the major Unix hardware vendors all offer some form of physical partitioning (which serves much the same purpose as virtual machine software) on their newer machines, according to Gordon Haff, an analyst at Nashua, N.H., research firm Illuminata Inc.

But the buzz around virtualization today centers on Intel processor-based servers. This, after all, is where the low-hanging fruit is found -- application vendors often insist on a dedicated box, and until recently, IT departments tended to go along. Why? Simplicity was one reason. Before trying VMware, Delaware North tried to simply physically install multiple applications on a single server. "That blew up in our faces," Armstrong says. All too often, the applications interfered with one another and crashed for reasons that remain unclear.

In the Wintel virtualization-software arena, Microsoft and Palo Alto, Calif.-based VMware are the preeminent vendors. Microsoft entered the fray in February by purchasing virtual machine technology from former VMware rival Connectix Corp. Now named Microsoft Virtual Server, the software is in beta and will be available this year.


Reduction of total cost of ownership (TCO) is the big driver at companies that are virtualizing their servers, but there are other benefits as well. Flexibility is one. As businesses reduce server sprawl, "they can manage their environment in real time," Gartner's Phelps says. "Without this huge farm of servers, all configured for peak demand, they can ebb and flow, shifting resources where they're needed. It all makes a company more agile."

Enterprises can also improve the performance of software, which is especially important for customer-facing Web applications. One of Delaware North's companies manages reservations at various National Parks, including Yosemite and Sequoia. "We had seen a lot of growth in the use of that [online reservation] system and were running 80% availability because of the load," Armstrong says.

Three months ago, in one of the first modifications to a production server, Delaware North used VMware to divide one powerful box into two virtual servers. "We've gone to 98% availability," Armstrong says, "and in that time, reservations have increased another 15%."


Nothing comes free; in the case of virtualization, part of the cost is new risk, which CIOs need to weigh carefully. One major risk is that a CPU crash will bring down multiple programs. "Let's say you've got a typical four-processor Intel server running VMware," Haff says. "If there's some sort of nasty CPU failure, everything's going to crash." By contrast, traditional "one server, one function" setups are compartmentalized by nature; an overheated processor or a bad host bus adapter card in your patch server brings down that server alone. Before going virtual, you need to decide whether you're comfortable ganging several services on one box.

Note that this risk applies to hardware failures only; virtualization-software vendors are quick to point out that an operating system failure won't affect other virtual servers sharing the CPU because the physical memory for each is isolated below the operating system level.


Another factor to study before committing to server virtualization is software pricing. Why? Many applications are priced by server capacity; if the application price on a two-way server is $X, for example, the price on a four-way server is $2X. (At some point, of course, volume discounts kick in -- the price on a six-way server may be less than $3X).

This capacity pricing makes sense as long as an application runs on a dedicated server, but virtualization can quickly knock it out of whack. For example, say you partition a single box into 12 virtual servers and run multiple applications on it. You may find yourself paying 12-way server prices for each application, even though each is using no more CPU resources than it did before. So be wary; before moving to virtual servers, negotiate new pricing schemes with vendors if necessary.

Armstrong says Delaware North also feared that application vendors would refuse to support their products unless each got its own hardware. However, he adds, the problem hasn't arisen because those vendors "have no idea they're sitting on a virtualized server."

The company's goal is to eliminate another dozen servers in the next 12 months, Armstrong says. In addition to saving $2,200 a year every time a box vanishes, Delaware North has cut the time required to create a new environment for an application from 10 hours to one.

The servers may be virtual, but the savings are tangible.

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