Visualization & Cloud Computing

I was presented with this business case: I am a CTA of a small, but quickly growing manufacturing company. I manage a data center that contains 1,000 physical servers. However, housing physical servers is expensive. I think utilizing virtual server technology will significantly decrease the cost to run my current data center. After researching the costs and benefits of virtualization, I came to the following conclusion:

 

Virtualization in the Modern Company

We could earn a net benefit of $9.2 million over the next 3 years if we switch to virtual servers, specifically VMware. Moving to VMware would consolidate our data center, which would increase server utilization. Overall, it will cost $4.8 million to adopt a virtual server infrastructure.

Virtual servers run operating systems. A benefit of using virtual servers like VMware is that one virtual server can run multiple operating systems, whereas one physical server can only run one operating system. We would be able to consolidate 80% of our physical servers onto virtual machines using VMware. Doing so would increase server utilization from around 5% to between 50% and 80% of total computing capacity.

Transitioning to VMware would cost $4.8 million over the next 3 years. That cost includes installation, hardware maintenance, software maintenance, technical support, power, and cooling. Implementing a virtual server architecture would create a total benefit of $14 million over 3 years. Overall, we would earn a net benefit of $9.2 million over 3 years if we switch to virtual server technology

 

Given
Current Data Center – All Physical Servers
Physical servers             1,000
Cost of purchase  $         8,000 each
Cost of maitenance  $         2,000 per year
Future Data Center – Virtual Servers & Physical
%age virualized servers 80%
Physical:Virtual 10 to 1
Cost of purchase  $      16,000 each
Cost of maitenance  $         3,000 per year

 

Cost of Server Virtualization
n Year 1 Year 2 Year 3 Total
Virtual servers 80
Purchase  $       1,280,000  $                     –  $                     –  $    1,280,000
Maitenance  $          240,000  $          240,000  $          240,000  $       720,000
Physical servers 200
Purchase  $       1,600,000  $                     –  $                     –  $    1,600,000
Maitenance  $          400,000  $          400,000  $          400,000  $    1,200,000
Total Cost  $   4,800,000

 

Benefits of Consolidation
Current Data Center n Year 1 Year 2 Year 3 Total
Physical servers 1000
Purchase  $       8,000,000  $                     –  $                     –  $    8,000,000
Maitenance  $       2,000,000  $       2,000,000  $       2,000,000  $    6,000,000
Total Cost to build / Total Benefit of not building  $ 14,000,000

 

Total Benefits  $   9,200,000

 

Bibliography

Bigelow, Stephen J. “How Server Consolidation Can Benefit Your Data Center.” Server Virtualization. TechTarget, Oct. 2009. Web. 15 Feb. 2016. <http://searchservervirtualization.techtarget.com/tip/How-server-consolidation-can-benefit-your-data-center>.

“What Is VMWare?” EveryMac.com. 22 Mar. 2010. Web. 15 Feb. 2016. <http://www.everymac.com/mac-answers/windows-on-mac-faq/vmware-virtual-appliance-convert-to-parallels.html>.

“What Is a Network Server?” HowStuffWorks. InfoSpace LLC, 2016. Web. 15 Feb. 2016. <http://computer.howstuffworks.com/what-is-network-server.htm>.

Strickland, Jonathan. “How Server Virtualization Works.” HowStuffWorks. InfoSpace LLC, 2016. Web. 15 Feb. 2016. <http://computer.howstuffworks.com/server-virtualization.htm>.

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