vmware virtualization: the right investment for a tough economy vmware june 2009
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VMware Virtualization:The Right Investment For a Tough Economy
VMware June 2009VMware June 2009
Agenda
Economic Environment in 2009
Why VMware is a Strategic Investment
Additional Cost Savings with vSphere 4.0
Proven 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 2009
Why VMware is a Strategic Investment
Additional Cost Savings with vSphere 4.0
Proven 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 2009
Source: 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 After
Business 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
2.0-3.02.0-3.0
Before After
$14,235$14,235
$5,694$5,6940.3 – 1.00.3 – 1.0
Reduction in Datacenter Operating Expense
$30 MM$30 MM
$4 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: 10:1
Typical Excess Hardware Capacity: 3
Years!
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
Total Savings Per Workload
Servers 1000 80 $5,816
Network Switches 84 10 $296
Real Estate (Sq ft) 2053 257 $431
Power (kWh) 407 52 $759
Cooling (kWh) 509 64 $949
Savings 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
• 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 Cost
1
Reducing Operating Cost
2
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
Double the time for innovation: from 28% to 55%!
Achieve OpEx Savings of $40k per Admin Annually
-5.4% -2.7% -5.4% -2.7% -2.8%
-13.9%-8.1%
0.0% 0.0% 0.0% -2.8% -5.6% -2.9%
8.1%
59.5%
45.9%
13.5% 11.1%19.4%
56.8% 56.8%
37.8%
61.8%
16.7%
41.7%
11.4%5.4%
8.1%
13.5%
16.2% 16.7%5.6%
8.1%13.5%
5.4%
8.8%
5.6%
19.4%
20.0%10.8%
8.1%
5.4%
2.7% 2.8% 11.1%
5.4%
8.1%
27.0%
8.8%
33.3%
8.3%
37.1%
18.9%
13.5%
16.2%
13.5% 16.7%
19.4%
13.5%
13.5%
8.1%
8.8%
16.7%
11.1% 14.3%
51.4%
8.1%13.5%
51.4% 50.0% 30.6%
8.1%
8.1%
21.6%11.8%
25.0%13.9%
14.3%
-20%
0%
20%
40%
60%
80%
100%
VMs take >75% less time
VMs take 51 - 75% less time
VMs take 26 - 50% less time
VMs take 0 - 25% less time
SameMore Time
66%
Over 66% of VMware customers state their Admin staff is 25%+ more efficient. This is equivalent to 1.25 days saved per week or 65 workdays per year per Admin.
Source: VMware TAM program survey, January 2009
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 Cost
Minimize Lost Revenue3
A Typical VMware Customer…
VMotion – Avoided downtime due to planned server maintenance
Storage VMotion – Avoided planned storage downtime
DRS – Automated monitoring and load balancing
Update Manager – Automated host and guest patching
= $ 450,000
= $ 430,000
= $ 390,000
= $ 360,540HA – Simple, cost effective high availability
SRM – Automated site recovery
= $ 480,000
= $ 615,385
A typical VMware customer has 1000 VMs, realizing over $2,725,925 of savings annually, or $8,177,774 over 3 years
See Appendix and ROI/ TCO calculator for detailed models
Agenda
Economic Environment in 2009
Why VMware is a Strategic Investment
Additional Cost Savings with vSphere 4.0
Proven Customer Success
Introducing VMware vSphere 4.0
EFFICIENCY
CONTROL
CHOICE
CapEx reductions• 100% greater consolidation ratios• Up to 50% in storage savings OpEx Reductions• Up to 20% additional energy savings• Saves more than half person/year in sys admin time
Business Risk Mitigation• One-mouse-click control over application service
levels• Continuous availability with Fault Tolerance• Security with vShield Zones
Freedom of choice• Any server• Any storage• Any OS• Numerous partners products• And soon – on- and off-premise
100% Higher Consolidation Ratios
Unparallel performance improvements:
Over 100% greater consolidation ratio with new hardware*
For our customer example:
Consolidation ratio of 20:1 instead of 10:1 with new hardware. This eliminates an additional 50 servers
… representing approximately $66,667 in annual hardware savings
… and $61,578 annual power and cooling savings
Based on VMmark benchmark studies
Additional 20% Reduction in Power Costs
Assumptions: 50% of 50 servers can be powered down for 8 hrs/d ay on weekdays and 16 hrs/day on weekends.Total power consumption per server ( operating power + cooling power) = 1424 watts/hrCost of energy = $ 0.11 per kWH (source: Energy Information Administration)
$48, 048
$37,752
Before DPM After DPM
DPM Savings for 50 Hosts For our customer example:
Additional power and cooling savings of $10,296
NOTE: vSphere 4.0 model is based off 50 servers due to the 100% better consolidation achieved
Up to 50% Storage Savings
Assumptions:50% storage deferred due to thin provisioning
Storage costs are $3/GB and RAID5 is used
Storage savings with Thin Provisioning:
Reduced storage purchases due to less over provisioning
50% reduction in storage costs: $99,750 (over 3 years)
Upgrading to vSphere 4.0
Higher Consolidation Ratio
Distributed Power Management
Storage Savings
Avoided downtime
Configuration Efficiency
= $ 128,245
= $ 10,296
= $ 99,750
= $180,000
= $ 56,338
By upgrading to VMware vSphere 4 this customer will:•Save additional $575,599 annually or $1,726,678 over 3 years•Free up more than half person/year in sys admin time•Reduce business downtime by additional 30 min a year
By upgrading to VMware vSphere 4, this customer will:Save an additional $408,129 annually or $1,224,386 over 3 years
See Appendix and ROI/ TCO calculator for detailed models
Agenda
Economic Environment in 2009
Why VMware is a Strategic Investment
Additional Cost Savings with vSphere 4.0
Proven Customer Success
26
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
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!
Appendix
Detailed CapEx and OpEx models
Value of Zero Downtime Server Maintenance
Server Maintenance is required forUpdates to component hardware
Updates / patches to the hypervisor
Migration to newer servers
Cost savings from zero downtime server maintenance with VMotionAvoid 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 100 physical server, 1000 VM environment, assuming:
2 hardware/ BIOS upgrades per server + 4 hypervisor patches = 6 maintenance activities per server per year
100 X 6 X + X $150/hr2 hrs
Overtime Cost
Time to performupgrade
Overtime$/hr
0.75 hr10
Scheduling Downtime
# ofapps perserver
Time spentscheduling
downtime per app
$60/hr
Admin $/hr
X X = $ 450,000
VMware VMotionVMware VMotion
# of servers
# of updates
( )
Value of Zero Downtime Storage Moves Maintenance
Storage Maintenance is usually required forLUN optimization
Upgrades to better hardware
Cost savings from zero downtime storage maintenance with Storage VMotionAvoid 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 100 physical server, 1000 VM environment (50GB per VM of storage), assuming:
~20GB can be moved an hour. Storage is moved once in 3 yrs, annualize 1/3 of the 50TB environment every year (16.67TB).
X $150/hr833 hrs
Overtime Cost
Time to move 16.67 TB each yr
Overtime$/hr
X $60/hr1667 hrs
Scheduling Downtime
Time spentschedulingdowntime
Admin$/hr
X $60/hr3333
hrs
Planning Move
Time spent planningthe move
Admin $/hr
$5000
Alternate Tool Cost
+ + + = $ 430,000
VMware Storage VMotion
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.
Spend more time to manually monitor and manage VMs.
For a 100 physical server, 1000 VM environment, assume that the consolidation ratio decreases by 30% from 10:1 to 7:1. Alternatively, administrators would have to spend time monitoring the cluster or responding to customer calls every day
Cost of monitoring time
Decreased consolidation ratio means
OR
X $8,00043 servers
Increased Hardware Cost
Additional servers needed
Hardware, license, power/ cooling, space costs per server
2602.5 hrs
Cost of Extra Admin Time
$60/hr
Admin$/hr
X X
= $ 342,857
$ 390,000
OR
VMware DRSVMware DRS
Hours per day
Workdays in a year
=
10X
Number of 10-host clusters
Offline machine patchingReduces exposure from non-compliant offline/suspended virtual machines
Systems have NICs disabled during patching to reduce risk
Value of Automated Patching
Guest PatchingAdministrative time – 6,009 hrs, $360,450 saved annually
Calculated for 1000 virtual machines, assuming 40 patches per machine
> Scan machines> Assess patch
requirements> Remediate
> Troubleshoot> Rollback – 10%
Manual
24 min
Automated
15 min
Annual Savings for 1000 VMs
6000 hrs, $360,000
Manual
156 min
Automated
21 min
Annual Savings for 1000 VMs
8.6 hrs, $540
Manual
180 min
Automated
36 min
Annual Savings for 1000 VMs
6,009 hrs, $360,540
Per virtual machine Per patch
VMware Update Manager
VMware Update Manager
$360,540$360,540
Value of Automated Site Recovery VMware SRMVMware SRM
VMware Site Recovery Manager provides cost savings from:Reduced recovery infrastructure requirementsFewer hours spent creating and maintaining DR plans and processesSignificantly reduced cost of DR tests; eliminates IT staff overtime and application impactRecovery in a matter of hours, not days or weeks – greatly reducing the financial exposure a company faces during a major outage
The below captures an estimate of the cost savings provided by SRM when used to recover from a major outage or disaster
Company that does $25M in revenue a year = ~$96k/weekday. Assume that SRM can achieve RTO of 12 hours instead of 72 hours compared to traditional DR plan.
= $ 615,385(per disaster)
X $96,153
Value of Lost Revenue
Days offaster recovery
Lost revenue per workday
X + X 500
Value of Lost Time by Workers
Days offaster recovery
Number ofworkers
X X $300/day
Cost of workerwages
2.52.5
Value of High Availability
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 100 physical server, 1000 VM environment, assuming 2 failures a year:
X 104 hrs
Value of Reduced Lost Productive Time
Hours ofdowntime
Number ofusers per VM
10
Number ofVMs per host
X X $60/hr
Cost of productive
time
X 2X = $ 480,000
VMware HAVMware HA
Failures per year
10X
Number of 10-host cluster
Value of Zero Downtime, Zero Data Loss Application Availability
VMware Fault Tolerance prevents lost business revenue from mission-critical, high-revenue applications outages
Simplicity of FT reduces the time and effort required to implement complex hardware and software solutions for continuous availability
For a 77 physical server, 1000 VM environment, assume:- approximately10% of VMs are protected by FT (100 VMs). On average, number of VMs protected is 100 / 77 hosts = 1.3 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.
OpEx SavingsOpEx Savings
4
Cost of Lost Revenue
Minutes of downtime prevented
$6000
Lost revenue/ minute
X X = $ 188,0621.3
Avg number of FT protected
VM/ host
X 8$8,000
Extra Hosts for FT
Costs of hardware
Number of extra Hosts
X 1
Failures per year in 10-host
cluster
-
NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved
X 77/ 10
Number of 10-host clusters
Value of Thin Provisioning
For a 77 physical server, 1000 VM environment of 50GB average size (mix of web, print, email and database), assuming:
- Entire storage is RAID 5 with 4 disk and is replicated to secondary site
- Average cost for storage according to IDC in price band 3-4 is $3 per TB
1000 x X
Production Site
$3/GB
= $99,750Reduction in storage
vStorage Thin Provisioning cost savings can have several contributions:Reduce up to 50% of storage costs
Reduce time for planning and scoping
Faster deployment and higher application uptime
Thin Provisioning saving comes from:Reducing power, cooling and floor space costs
Reducing application downtime for future growth
1.33X $350 GB
RAID 5Number of VMs
CapEx savingsCapEx savings
50% xCapacity per VM
NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved
OpEx SavingsOpEx SavingsValue of Built-in Configuration Management
VMware Host Profiles and vNetwork Distributed Switch simplifies the provisioning, configuration and administration of Hosts and virtual machines, through centralized management.
VMware vDS and Host Profiles cost savings come from:Simplify initial setup, change management and easy auditing
Avoiding costly errors and time consuming troubleshooting and debugging
For a 77 physical server, 1000 VM environment, assuming:
- On average, 5% error rate for each change. For a 77 host environment, this is equal to 12 errors per year to troubleshoot
> Setup> Change> Audit
VI 3
10hr 20min
vSphere 4
1hr
Annual Savings
709 hrs, $53,175
VI 3
40hr
vSphere 4
30min
Annual Savings
456 hrs, $34,118
Manual
50hr 20min
Automated
1hr 30min
Annual Savings
1165 hrs, $87,293
Avg per Host or virtual machine
$87,293$87,293> Troubleshoot
NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved