Two Quick Takes on the Business Case for Virtualization

CFOs love virtualization! “Replace ten servers with one”, how easy can a business case be? CFOs have seen too many IT business cases that do not make any sense. They appreciate one that can be summarized in five words.

But virtualization is really not primarily about hardware cost. Looking at VMware’s standard business case, two things stand out. On the benefits side, it is the huge impact of improved availability. With virtualized servers, you do not have to bring down the application to replace a fan in the server. You move the application to another server (with VMotion, availability remains at 100%). Without virtualization you have to schedule downtime and find out who the users are in order to inform them. Big impact, but most would consider it “funny money”. Unlike the hard green dollars of a server that is purchased, the savings may never make it to the bottom line.

The second big impact factor is on the cost side. The biggest drive is not that pricey VMware licensing, but setup and management. It’s not only interesting because it’s a big dollar amount, but also because it has a large fixed cost component. Getting a virtualized environment up and running and operating it costs money. And running a pool of 10 ESX servers is not significantly cheaper than running a pool of 50.

Digging deeper into VMware’s standard business case is very instructive. I really like a sensitivity analysis. The point is to find out which of the dozens of parameters that go into the case have the biggest outcome regarding what I care about (typically the return on investment, ROI). So I individually change every input parameter by 10% and see how it impacts R0I. Some parameters are more “sensitive” than others; you guessed correctly, that’s why it’s called sensitivity analysis. But that is for the next post ..

IDC Virtualization Forum, Part III

Part I of this post was about the virtualization market, part II about technical vision, part III is about an upcoming product. HP presented Insight Dynamics as their multi-hypervisor virtualization solution. A vendor specific management solution is not inherently exciting, what makes it interesting is how HP tries to counter the threat that VMware might further commoditize server hardware.

In terms of features, many starups have more to offer, but this is about the fight over control of the data center. Here are the differentiators that I could see.

1. Multi-hypervisor support: HP-ID manages VMware, Xen and Hyper-V. Today it is only VMware that really matters, but the differentiation vs. VMware is evident. No differentiation vs. most startups.
2. Hybrid management: HP-ID manages both VMs and physical servers and can handle V2P and P2V migration on the fly. This is actually fairly unique, and has created a huge draw among attendants of the forum.
3. Deep hardware support: HP-ID supports HP blades and various server models at a level that vendor-neutral products will never reach.

From a technology perspective, it’s nothing too great, but operations people loved it for good reasons. While nobody is actually using Xen or Hyper-V, at least the latter is considered pretty much unavoidable. The HP lunch table on hybrid management was clearly beating all other topics. Next to nobody even dreams of a fully virtualized environment and there is clearly unmet demand for management software that crosses between virtual and physical. Practitioners uniformly praise the role of blade technology for dynamic data centers. One friendly user spoke about a standard rack that had only 12 cables running to the LAN and SAN switches; using standard 2U rack mounts the equivalent would be 120 cables. A factor ten is always cool and cabling is extremely manual and can be error prone depending on your setup.

The bottom-line: while technically a mostly unimpressive, hardware specific solution, HP-ID addresses the practical pain points.