Reaping the Rewards of Resource Consolidation
The impact of a sophisticated service level management solution on resource consolidation initiatives

by Christopher Marino

Falling Short of the Million Dollar Promise

Saving millions of dollars from a resource consolidation initiative is not as simple as replacing hundreds of little servers with a few big ones. Failure to implement appropriate management software as part of this type of initiative can limit the expected savings. Worse yet, without sophisticated management software capabilities in place, a decrease in performance and availability can be the price that is paid for saving a few dollars in hardware.

Over-Provisioning: A Thing of the Past

With IT budgets tighter than ever, gone are the days when companies can afford to deploy an overcapacity of servers in anticipation of a stampede of online customers. IT managers are being asked to accomplish more with less — less people, less servers, less software, less consulting.

No longer is it acceptable to utilize servers at 10 — 20 percent, a common paractice in the recent past. Server utilization is now the focus for increasing productivity to reduce costs.

Addressing End-User Needs and Business Expectations

Unfortunately for IT managers, doing more with less does not mean that executives and business units are willing to lower performance and availability expectations for business-critical customer services. In fact, the opposite is true. Executives today expect improvements in the performance and availability of existing IP-based services, while also expecting reductions in operating and capital costs.

Resource Consolidation Options

There are several ways for companies to improve resource utilization and reduce server costs. One is centralization, the moving of servers distributed across an enterprise to large data centers to improve the costs of management. Another is server consolidation, the reduction of many smaller capacity servers into a few high-capacity servers.

The first step in approaching a consolidation project is to evaluate the existing infrastructure. What can be done with current resources to maintain or improve service levels without incurring additional high-cost expenses?

Application stacking and running servers at higher capacities are two such options to consider. Application stacking reduces server costs by stacking, or running, several applications on a few underutilized servers, rather than running the applications on multiple servers. In addition, servers can be run at higher capacities — closer to the red line — for better resource utilization.

None of the above approaches are mutually exclusive, and in fact a combination of solutions are often implemented in a consolidation project.

Improving Service Levels While Consolidating Resources

Essential to the success of any consolidation project is the foresight to implement an appropriate service level management approach.

Deploying a sophisticated and complete service level management (SLM) solution is essential to maintaining a positive end-user experience while reducing operating expenses. The benefits of implementing an SLM solution are more than just financial — benefits may include increased capacity utilization, faster problem diagnosis, greater flexibility for rapid growth, and improved ROI.

Application Stacking to Improve Utilization

Stacking of applications, or running multiple applications on the same server that previously ran a single application, is a way to improve utilization of servers. Financial gains from successful stacking initiatives can look great on paper. For example, if 50 servers are running a customer account management application, and 50 are running a mail application, stacking both on 25 servers can save $500K.

However, management challenges increase dramatically in a stacked application environment, making a more sophisticated management solution a prerequisite for creating success and avoiding disaster. See the table below for business-critical issues to avoid when application stacking (refer to Table 1).

Table 1: Application stacking issues.

Improving Utilization While Managing the Existing Infrastructure

Enterprises can realize tremendous gains from even small improvements in resource utilization levels. For example, running servers at an average capacity utilization of 20 percent is not uncommon. Increasing this to 30 percent, when applied across hundreds of servers, can save millions of dollars. For example, at an average cost of $20,000 per server (including management costs), a 200 server environment can realize savings of $1.3 million by increasing utilization from 20 percent to 30 percent. (Examples of the ROI of such initiatives are given later in this article).

However, in order to ensure that client performance and availability are not sacrificed to achieve these gains, sophisticated management software is required. The issues at hand are summarized below (refer to Table 2).

Table 2: Redline issues.

Provisioning Promises

Recently, announcements have been made by major systems vendors about the concept of automated server and application provisioning. Successful development of such capabilities by vendors could substantially increase the gains from consolidation. These systems (and accompanying software) can dynamically allocate server resources to services experiencing high demand. This in turn enables enterprises to run many applications across a shared pool of server resources, saving time and money.

Several key capabilities, which are required building blocks for more advanced provisioning systems, exist today in several specialized products. These capabilities include the following:

• Traffic management: The ability to instantly and dynamically route client connections to appropriate servers is required in environments where a server may be running one application this hour but another the next hour.

• Quality of Service (QoS): During periods of resource shortages, a policy-based system for allocating resources according to the quality of service desired for different clients is required.

• Real-time service level monitoring: Decisions about when to provision more resources or decrease resources to a particular service or application are based upon accurate measurements of service levels, measured externally for clients as well as internally for infrastructure components.

Implementation of a sophisticated, end-to-end SLM solution will prepare enterprises for future complex provisioning environments.

Returns from Server Consolidation: The Bottom Line

The financial returns from a successful consolidation can be tremendous. In the example below, a 100-server environment is projected to be able to save more than $634 million in the first year by improving server efficiency by 33 percent (from 30 percent utilization to 40 percent). This is based on an assumption of $380,000 of upfront software costs to enable the company to achieve the maximum increases in utilization possible, as well as to protect client performance and availability. It also assumes an average costs per server of $20,000. Higher-end server consolidation projects would have a higher savings.

Example 1: 100 server ROI from 33-percent improvement.

The return on investment (ROI) from such a project can exceed 50 percent in the first year, and the payback of software and implementation costs can be achieved in six to nine months, as shown in the chart below (refer to Figure 1).

Figure 1: Cumulative costs vs. savings.

A complete and sophisticated service level management solution would not only enable savings from server infrastructure consolidations, but would also enable savings in labor and reduced downtimes. Reductions in the time it takes to diagnose problems can translate into cash savings from decreased labor costs for managing the service.

In the above example, if a 20-percent reduction in time to problem resolution, a 10-percent overall improvement in labor efficiency, and a one-percent improvement in uptime are all factored in, the ROI more than doubles to 125 percent in Year 1, and the payback period is reduced to about six months. Those are compelling numbers that can not be ignored by business and IT executives.

Table 3: Additional benefits.

Best of Both Worlds: Financial Savings and Better Utilization

In addition to the financial benefits of deploying a complete and sophisticated SLM solution for server consolidation initiatives, there are many other benefits. These include greater resource utilization, faster problem diagnosis, and improved visibility and reporting. Additional benefits are summarized below (refer to Table 3).

These benefits ensure that a consolidation project achieves goals that are consistent with the business objectives of the company, including financial, customer service, and IT operations goals.

Reaping the Benefits of Consolidation Initiatives

Companies seeking to get the most from large capital investments of recent years can look to consolidation projects for cost savings and capacity utilization improvements.

Valuable benefits — including significantly higher ROI — can be realized through successful deployment of a consolidation initiative. A successful initiative requires deployment of a sophisticated and complete SLM solution for managing performance and availability, enabling maximum returns on resource investments.

Appendix: Resource Consolidation and Related Terms

Server Consolidation: Reducing the number of servers required to run the same number of application(s).

Centralization: Moving distributed servers into data center(s), often resulting in consolidation opportunities.
Application: Stacking Running of several applications, often simultaneously, on a single server/operating system.

Capacity Utilization: Average capacity of server usage, typically represented by CPU load.
Provisioning: Dynamically allocating resources (server, application) to client requests optimizing price/performance levels.

Service Level Management: Managing the performance and availability of service levels including Service Level Objectives (SLOs) reporting to diagnose and resolve problems.

Quality of Service: Allocation of scarce resources to improve and to some extent guarantee the information being requested.

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Christopher Marino brings more than 18 years experience designing, implementing and marketing hardware and software systems to his role as founder, vice president and director at Resonate. Prior to founding Resonate, Mr. Marino was the Director of Product Marketing at nCUBE, a manufacturer of parallel-processing video server systems. Prior to nCUBE, Mr. Marino was product line manager at MIPS Computer Systems where he was responsible for the company's line of high-end multiprocessor server systems. Mr. Marino also held design-engineering positions at Zycad and Bell Laboratories. Mr. Marino holds a BS EE from Columbia University, an MS EE/CS from the University of California at Berkeley and an MBA from Stanford University. Mr. Marino is a member of Resonate's Board of Directors and serves as a Director for several private companies.

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