We all have reasons for doing things in a certain way. Likewise, in business, decisions are made to achieve set targets. A check with several business managers at major enterprises in Asia reveals that containing costs remains a top priority.
What is surprising is that analysts are telling business managers to get their heads out of the ground and start looking to the future. With economists cautiously optimistic about the future, perhaps it is time to get out of the "cost control" mentality and swing into the mode of innovation to achieve profitability and market share.
In 1999, companies began throwing out legacy systems to avoid the Y2K bug. Five years later, those investments have close to zero value on corporate books, draining IT budgets with their high maintenance charges, and failing to performance requirements as business expands.
So while IT managers are making the appropriate requisition for new computing hardware, perhaps it is time to think strategic.
At Gartner's 23rd annual Data Center Conference, a polling of 175 participants showed that server consolidation remains a major goal for many CIOs. The strategy is the same but the reasons for doing it have changed.
According to John Phelps, Vice President of Gartner Research, "Server consolidation is still a major goal, but not just for cost cutting. Interest in server consolidation continues, although reducing the total cost of ownership now concerns only 45 percent of polled participants. Thirty-six percent of respondents believe that gaining control in order to manage the systems better is also very critical."
The right time to do a server refresh
Nobody wants to waste money -- be it as a result of under utilized resources, overpriced charges for keeping old equipment running, or missed business opportunities because current resources are not delivering the services expected of them. Advances in computing now make it possible for companies to do more with less using the latest in hardware and software technologies. So when should you consider replacing your old servers?
The only reasons why you would consider replacing your servers are:
You have many servers scattered around your departments each under utilized and costing you money to maintain, support and manage. By consolidating into fewer, higher performance servers, you will save on floor space, power, and management/support costs. Of course, you will need to understand the workload requirements, design proper partitioning and use appropriate virtualization technologies to gain higher utilization.
The cost of upgrading existing servers will be higher than outright replacement. Very old servers may not altogether be upgradeable particularly if the components are discontinued. You also need to consider the business cost of the disruption of service as upgrades are performed. Incidentally, it is a good time to question how much performance enhancement can be achieved with the upgrade.
Compare the cost of lifecycle ownership of your existing infrastructure versus the proposed new architecture. Include the benefits to be gained from higher productivity. You do the math.
Counting the cost
The cost-saving opportunities of a server consolidation project come from running fewer servers, collapsing multiple operating systems (OS) and application (including database and middleware) instances, and reducing IT support and operational costs. However, initiating a server consolidation project will incur costs as well. It is important to understand the potential additional costs in server consolidation before assessing the estimated cost-savings outcome.
Replace or upgrade existing hardware. Most business managers in Asia have realized that initial purchase prices can be very attractive. But upgrade costs -- be in CPU, memory and additional ports -- can sometimes bite back. Check your vendor's upgrade offerings and factor these into the equation.
Software licensing and upgrades. While hardware prices continue to drop, software prices tend to rise as new versions with additional features are released. Additional cost may come if you need to upgrade to a new version. Check if the existing software is machine transferable without paying a fee. Also, license fees may vary by platform and the model of server hardware.
Pilot-testing or prototyping. Stage a prototype (perform a pilot test). This will help you determine first hand if the solution really works for your business. This may involve additional cost. Negotiate with your vendor on the terms.
Consulting fee. A consolidation exercise should involve a detailed analysis of the existing infrastructure. You may also need to assign someone in your team to be involved in the process. These costs should be factored in.
Disruption costs of incremental change. Consolidation will involve a disruption in the service delivered to your customers. You need to know how long the consolidation project will tie up various business units and departments within the organization and factor in the risks of loss business that the disruption could cause.
System retention costs. A fall back plan is always important in a consolidation project. Don't discard existing equipment as soon as the new infrastructure comes into place. It is best to keep these as backup for up to six months to support mission critical applications in case anything goes wrong with the server consolidation. There will be some retention cost for keeping legacy system operational.
A three-stage approach to consolidation
According to Annie Chung, Principal Analyst for Enterprise Systems at Gartner, organizations in Asia Pacific tend to take a three-stage approach to server consolidation:
Logical consolidation: the different departments and business units place logistical control of all servers under one group.
Physical consolidation: all servers are physically relocated to one or fewer sites.
Rationalization: the reduction in the number of physical server boxes supporting all the applications within the organization.
Learn from the success and failure of others
Just as you should ask to see a demonstration or perform a benchmark test of the proposed solution, it is always a best practice to ask your vendor to let you talk to customers in your industry who have gone through the consolidation exercise themselves. Someone who has taken the plunge can share with you the challenges they faced, tell you the mistakes you should avoid, and recommend some tactics or a strategy to make the exercise as painless and quick as possible.
7-Eleven is the world's largest operator, franchisor and licensor of convenience stores with more than 27,900 units worldwide. In 2003, 7-Eleven's consolidation project started with a demonstration copy of VMware GSX Server. The Deployment of virtual servers now takes one day compared to 8 weeks. Server utilization is up by 60 percent. Development and testing cycles have been compressed dramatically and the company reports that it has achieved mainframe levels of reliability and data security without the associated cost.
