This document discusses how virtualization with VMware can help organizations reduce IT costs and improve efficiency during an economic downtime. It outlines the challenges facing CIOs with decreasing budgets while still needing to do more. Survey results are presented showing virtualization is a top priority and VMware is gaining share of IT spending. The document then provides examples of how VMware has helped customers consolidate servers, reduce data center costs, improve operational efficiency through features like automated patching and migration. It estimates the tangible savings customers have achieved in areas like infrastructure, support staff, energy usage and avoided downtime through high availability and disaster recovery. Overall it aims to demonstrate how VMware delivers the highest ROI and lowest TCO among virtualization solutions.
3. The Rough Road Ahead….
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
“Our IT spending indices
dipped further to new lows
in our latest survey, deep
in contraction territory.”
- Goldman Sachs
Source: Goldman Sachs IT Spending Survey, March 9th, 2009
Source: IMF World Economic Outlook Report, Nov 6th 2008
4. The IT Dilemma
I am supposed to do
the same job, but
with less budget and
headcount?!?
6. Recent CIO Surveys Agree: Virtualization is the
Top CIO Priority in a Tough Economic Environment
“The current “Total cost of ownership (TCO)
environment has reductions will be a key driver of
moved virtualization the acceleration in server
toward the top of the virtualization deployments as
priority list for CIOs.” CIOs are forced to cut capital
spending and reign in
management, administrative and
power/ cooling costs.”
Source: Merrill Lynch CIO Survey, Oct 28th, 2008
Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
7. Customers Are Still Moving Ahead with
Virtualization in 2009
CIOs expect to double the percentage of servers virtualized in 2009
Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
8. VMware Continues to be the #1 Software
Investment for CIOs in a Tough Economy
1
VMware
Gaining
1.
2.
VMware
Citrix
Systems
#
3.
4.
Cisco
Software/
Security
Oracle
13 Quarters
5. Symantec
Which software providers are gaining
share of your IT spending dollars?
Source: Goldman Sachs IT Spending Survey, March 9th, 2009
9. VMware is the Proven, Trusted Leader
Providing the Highest ROI and Lowest TCO
“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?
Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008
10. Top 3 Reasons Why VMware is the Right IT
Investment in a Tough Economic Environment
1 Reduce Physical Infrastructure Cost
Reduce Datacenter Operating Cost
2
(e.g. Power & Cooling)
Minimize Lost Revenue Due to
3 Downtime
11. VMware Delivers Tangible Business Outcomes
Reduction in Datacenter Reduction in Datacenter Reduction in Risk
Capital Expense Operating Expense
$14,235 2.0-3.0 $30 MM
$5,694
0.3 – 1.0
$4 MM
Before After Before After Before After
Business Loss Due to
Infrastructure Cost per App Sys Admin per 100 Apps*
Datacenter Outage**
* 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.
12. Reduce Server Spend Through Consolidation
Typical
VMware… Consolidation: 15:1
Decouples software from
hardware
Encapsulates Operating
Systems and applications into
“Virtual Machines”
Typical Excess
A Server or Desktop Hardware Capacity: 3
Virtual Machine Years!
12
13. Total Savings Per Workload
VMware consolidates servers, storage and networking
infrastructure to safely achieve higher utilization
BEFORE AFTER SAVINGS
Servers 1000 80 $5,816
Reducing Network 84 10 $296
1
Capital Cost Switches
Real Estate (Sq ft) 2053 257 $431
Reducing Power (kWh) 407 52 $759
2 Operating
Cooling (kWh) 509 64 $949
Cost
Savings per $8,251*
Workload
(Over 3 years)
• Actual customer savings per application; represents typical savings
• Includes estimated cost of VMware licenses, Support and Subscription
15. Improving Operational Efficiency
Reducing Do more work with the same number of
2 Operating Cost 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
Source: IDC and VMware TAM program
16. Value of Zero Downtime Server VMware VMotion
Maintenance
Server Maintenance is required for
Updates to component hardware
Updates / patches to the hypervisor
Migration to newer servers
Cost savings from zero downtime server maintenance with VMotion
Avoid overtime cost to perform maintenance
Avoid 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
Overtime Cost Scheduling Downtime
10
# of
X 6
# of
X ( 2 hrs
Time to
X $150/hr + 15
# of
X 0.75 hr
Time spent
X $60/hr
) = $ 58,500
Overtime
servers updates perform apps per scheduling $/hr
$/hr
upgrade server downtime per app
17. Value of Zero Downtime Storage VMware
Moves Maintenance Storage VMotion
Storage Maintenance is usually required for
LUN optimization
Upgrades to better hardware
Cost savings from zero downtime storage maintenance with Storage VMotion
Avoid overtime cost to perform maintenance
Avoid administrative time in scheduling downtime and planning the move
Avoid 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.
Overtime Cost Scheduling Downtime Planning Move Alternate
Tool Cost
124 hrs X $150/hr
+ 248 hrs X $60/hr + 500 hrs X $60/hr + $5000
= $ 68,113
Time to Time spent Time spent
Overtime Admin Admin
move 2.5TB scheduling planning
$/hr $/hr $/hr
each yr downtime the move
18. Value of Dynamic Load Balancing VMware DRS
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
Increased Hardware Cost
Decreased
consolidation 5 servers X $8,000
= $ 40,000
ratio means More servers Hardware, license, power/
needed cooling, space costs per server
OR OR
Cost of Extra Admin Time
Cost of
increased 2.5 hrs. X 260 X $60/hr
= $ 39,000
monitoring time Admin
Hours per day Days in a year
costs/hr
19. VMware
Value of Automated Patching Update Manager
Guest Patching
Administrative time – 2448 hrs, $147,744 saved annually
Calculated for 150 virtual machines, assuming 40 patches per machine
> Scan machines > Remediate systems
> Troubleshoot
> Assess patch $147,744
requirements > Rollback – 10%
Per virtual Manual Automated Manual Automated Manual Automated
machine 24 min 15 min 156 min 21 min 180 min 36 min
Per patch
Annual Savings for 150 VMs Annual Savings for 150 VMs Annual Savings for 150 VMs
900 hrs, $54,000 1548 hrs, $93,744 2448 hrs, $147,744
Offline machine patching
Reduces exposure from non-compliant offline/suspended virtual machines
Systems have NICs disabled during patching to reduce risk
20. Ensuring Business Continuity
Reducing Lost
Minimize
3 Operating Cost
Revenue 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
Source: IDC and VMware TAM program
21. Value of Automated Site Recovery VMware SRM
SRM cost savings can have several contributions:
Cost of lower disaster recovery site investment
Cost of lower recovery plan planning and management time
Cost of less lost business revenue
Cost 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.
Value of Lost Revenue Value of Lost Time by Workers
2 X $20,000 X
X + 2
X
40 X $300/dy
= $ 64,000
Days of Lost revenue Days of Number of Cost of worker
faster recovery per day faster recovery workers wages
(Per disaster)
22. Value of High Availability VMware HA
High Availability cost savings can have several contributions:
Cost of lost business, lost work
Cost of lost productive time
The sheer simplicity of VMware HA and reduced time & effort compared to other
clustering solutions is not captured
The 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:
Value of Reduced Lost Productive Time
4 hrs. X
X
10 X 15 X $50/hr X 2
= $ 60,000
Hours of Number of Number of Cost of User Failures
downtime users per VM VMs per host productive time per year in 10-
host cluster
23. Value of Fault Tolerance VMware FT
Fault Tolerance (FT) cost savings is primarily in preventing lost business revenue
from when mission-critical, high-revenue applications go down
Fault Tolerance prevents lost business revenue by providing zero downtime, zero
data loss continuous availability for your applications
The 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 cluster
per year. Lost revenue per minute of high-revenue apps can range from $2000-15000 per minute depending on type of
transactions being processed.
Value of Lost Revenue Extra Hosts for FT
4 X $7000/min
X X 15÷10 X 2
- $15000
Cost per
X 1
Number of
=
$ 69,000
Minutes of Lost revenue Avg. number of Failures
downtime per minute FT-protected VMs per year in 10- host extra hosts
prevented per host host cluster
25. Customer Testimonials
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
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
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
25
26. VMware is Lowest TCO Per VM
VMware’s cost-per-VM beats even “free” products…
VMware VI3 VMware VI3 Other
Foundation Enterprise Solutions
2-way server (16GB RAM) $7,000 $7,000 $7,000
Cost: Guest Windows licenses1 $5,998 $5,998 $5,998
Cost: Virtualization license $995 $5,750 $0
Subtotal $13,993 $18,748 $12,998
Total VMs2 (2GB each) 15* 15* 7
Cost per VM $933 $1,250 $1,857
plus …
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.
1 List price for 2-socket Windows 2003 Server Datacenter Edition
2 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
27. 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/why
vmware/
