18 March 2011
Sustainability. That’s the new watchword. Small and medium-sized businesses (SMBs) in every
sector are looking for operational efficiencies that reduce their expense footprints in order
to sustain profitability. (So much the better if they reduce environmental footprints as well.)
IT certainly supports revenue generation but its contribution to costs is noticeable. That’s why
SMB comptrollers are looking to IT managers to control costs while supporting business expansion.
IT infrastructures sprawl as businesses grow. According to IDC research, corporate data grows
at a rate of 60% each year. Data expansion requires the addition of servers and storage devices.
Servers and storage require space which, in turn, necessitates data center expansion and
additional power and cooling capacity. Disaster recovery plans that rely on system redundancy
and backup procedures also add to new costs. And, IT management overhead takes a hit and
staff grows in terms of headcount or overtime expense as technicians keep up with maintenance
and oversight.
Those increased costs are all occurring inside the data center. Out in the office, new employees
require new laptops that can access the data they need from any location. And, since those
assets carry important company data on hard drives, security, backup and restoration has to
be in place and well managed.
Consider a quick, back of the envelope annual cost estimate driven by a typical SMB that relies
on a physical IT infrastructure.
10 new servers – Assuming that a new server will cost approximately $1,800, 5 new physical
servers (which could be either replacements or new servers to run additional applications)
would cost $18,000.
10 new employee laptops – There are a wide range of business laptops available but assuming
a cost of $1,500/laptop, 10 new employee laptops would cost $15,000.
power and cooling costs – At a cost of $200/server/month, the 10 new servers would add
$24,000 to utility costs.
space costs – These will vary by location but building owners never provide a discount on data
center space. Look at the space currently consumed by a typical server and extend that to accommodate
new servers that will be needed to accommodate growth.
management overhead – Every server, installed application, and installed operating system
requires management in the form of repairs, updates, patch applications, security monitoring, and
upgrades.
Calculate the management cost of a typical server, application, and operating system
and then extend it to cover additional servers and software installations that are anticipated.
The multiplier effect that business growth has on IT budgets has made physical IT infrastructures
unsustainable. SMBs are finding ways to contain costs through virtual environments and
cloud computing. Both strategies offer technology and financial benefits. And, as they reduce
the size of the data center, or at least control growth, they are environmentally beneficial as well.
Choosing the right cost cutting strategy depends on understanding how they are implemented,
how they are managed, and what costs they impose.
What are Virtual Environments and Cloud Computing
Virtual environments and cloud computing have one important similarity. They both reduce the
size of an SMBs IT infrastructure by limiting the number of required servers and storage devices
and “thinning” the capacity requirements of employee laptops. In terms of implementation and
management, they are quite different.
Virtual servers reduce the size of physical IT environments by allowing a single server to
host multiple operating systems and applications. That capability consolidates the number
of servers at rates as high as 15:1. The net effect is a data center with fewer components
and greater capacity.
The multi-core processors inside virtual servers typically run at 80% capacity leaving 20% idle.
That’s far more efficient that single core processors that run at only 5–15% of capacity. Downtime
caused by routine maintenance, system failure or disaster is minimized by migrating an operating
system or application to another virtual server. The ease of migration business-critical systems
from server to server provides a valuable, no-cost, safety net.
While virtualization does not reduce the number of employee computers required (a majority
of employees always require access to their own laptop), the hard drive capacity requirements
of end-user equipment is reduced. Virtual clients log into servers to access secure, individual
identities. Those identities specify the operating systems, applications, and data that are
available to the end-user. By moving operating systems, applications, and data off of hard
drives and onto servers, end-user computing environments are easier to manage and maintain.
Mobility is also enhanced as users gain access to their identities from any networked device.
Cloud computing goes a step further to remove the physical instances of operating systems,
applications, and data storage to an off-premise infrastructure managed by a service provider.
(Large enterprises might deploy their own, private cloud.) The service provider operates a multitenant
system that provides pay-as-you-go service for on-demand use. Pricing is a function of CPU usage, storage, bandwidth, and user accounts.
Cloud computing replaces hard-wired resources with web-connectivity and secure access. A contract
with a service provider can replace all or part of an SMBs data center and associated overhead.
Comparing Costs and Risks
The differences between virtual environments and cloud computing are highlighted by their
associated costs and the risks they introduce. Since savings are realized in both strategies,
it’s a careful consideration of costs and risks that helps SMBs decide which strategy is most
appropriate for their operation.
- Initial and ongoing costs – Virtual environments require upfront investment in virtualization
software and servers with multi-core processors. (End-user computing hardware
does not have to be updated immediately. Client savings come when “thinner” clients are
purchased to outfit new employees or replace old computers.) - Virtualization can reduce the time it takes to reimage a desktop from three hours to a few
minutes. Calculating that savings over the number of deployed desktops and time will
show significant savings — some coming immediately after virtualization is deployed.
Other immediate savings will come from disaster recovery; virtualization reduces downtime
from hours or days to minutes. Downtime costs a lot both in terms of lost revenue opportunity
and IT overhead. - Return on investment will be realized the first time planned maintenance
or an unplanned server outage occurs and then every time simple migration from one virtual
server to another preserves operating system, application, and data access. - Cloud computing does not require an initial investment in hardware or software though
IT managers will have to specify number of users and estimate cloud usage in order to
contract for a service level. Service costs vary according to length of contract, geographic
region, number of reserved instances, hours of baseline use and hours of peak use. Generalized
costs might be around $100 per user per year but that’s for a base level of services.
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