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Why server virtualization is such a hot topic

Quoting Enterprise Networks & Servers

Server virtualization is considered by many to be the next big thing. However, very few articles explain the reasons for this in terms of the business drivers. Most articles focus on the key technological or business advantages that server virtualization offer, not what is driving organizations to consider adopting it.

THE BIG PICTURE

Butler Group believes that four main business reasons are driving the increased adoption of server virtualization, and are contributing to why it will become the dominant technology in the data centre in the next five years.

Firstly, globalization. Organizations continuously look for ways of reducing the Cost Of Goods Sold (COGS), and are using the global economy as a tool in achieving this by moving production and business operations to low-cost economies. However, as this practice increases, the wealth of these low cost economies will eventually rise, due to increased affluence and expectations, and eventually so will the costs. Therefore, C-level executives are attacking COGS on more than just this one front; they are challenging areas of the business, such as IT, to become more corporate in their perspective. One consequence of this is to consider how to ensure that IT investments yield maximum value for the enterprise. We consider that this cost driver, and the need to use current resources more efficiently, is the prime reason for server virtualization adoption, because of its ability to increase server utilization figures from the current 10% to a healthier 70%.

Another reason is that of increased agility. Hamel and Prahalad (Competing for the Future, 1990, Harvard Business Review) stated that first mover advantage provides organizations with higher margins and increased profits. Therefore, it is important to identify and execute any plan as quickly as possible, as successful 'copycats' can erode any advantage. It is essential that IT does not inhibit the time-to-market of any new initiative. Server virtualization enables IT departments to deploy and implement new solutions as Virtual Machines (VMs), faster than traditional methods. In a virtual world, the organization's entire computing resources can be pooled so that they are targeted to those applications that the organization considers will generate maximum value.

High availability is another driver. Natural and man-made disasters make headline news, but in reality these affect very few organizations, and since 9/11 Disaster Recovery (DR) and Business Continuity (BC) plans for most organizations have been reviewed and updated. However, it is the consistency of service provided that is demanded. Many services used by employees are not considered mission-critical but small problems can affect morale, and hence employee focus. If the company has a bad internal service record then this will be considered acceptable behavior, and if this level of service is then mirrored to the organization's customers, it will have a significant effect on business performance. Server virtualization enables services to be dynamically monitored and moved in order to maintain optimum performance.

The reduction in service costs is a further reason. Most vendors charge support and maintenance fees of 15% - 20%, which is due, in part, to the costs of supporting applications that are installed on users' systems. The advent of Virtual Applications (VAs) will reduce this burden on the vendor, and due to market forces we expect the maintenance fees charged to be reduced. VAs are applications configured and built by the vendor, and the customer copies them to file as to any VM, and simply executes the VA without any need to install or configure.

BUTLER GROUP OPINION

The drivers behind server virtualization are all focused on cost, speed, and availability, which is nothing new. However, the demands now being expected from IT requires a new approach to delivering and supporting the technology. Currently, server virtualization has been used to address server consolidation issues, but recent developments, particularly from VMWare, have begun to address the four business problems discussed above. Butler Group considers server virtualization will continue to gain traction, and over the next five years will become the dominant technology in providing data centre optimization. Butler Group is hosting a one-day Strategy Briefing on Virtualization, in London on Oct. 31.

Read the original, here.

Published Friday, October 13, 2006 6:41 AM by David Marshall
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