Squaring the Circle

August 6, 2009 by Wolfgang Krips

Virtualization is a natural solution because it makes it possible to combine, share, and manage data-center resources – such as server capacity. (photo: Jupiterimages)

You’ve probably wondered how airlines frequently manage to fill every last seat on their flights. Well, one thing is certain: Full flights are neither a miracle nor a coincidence. They are the result of intellligent capacity use based on yield management, a method that takes account of parameters such as available capacity, reserved and non-reserved seats, and anticipated demand.

Yield management aims to make the most efficient possible use of the resources available. And now that the days of investing in ever-burgeoning server capacities are over, this aim is gaining increasing significance in corporate IT. SAP Managed Services is a prime example: As an in-house IT infrastructure provider, it operates six data centers that house over 28,000 servers and handle a daily data backup volume of 340 terabytes.

The limits to growth in physical computing capacity are becoming ever more apparent. As a result, the focus is shifting to reducing technical operating costs in order to free up resources for innovation within the enterprise. But how can companies strike a balance between the need to curb investments in physical computing capacity, for financial and environmental reasons, and the need to provide sufficient resources for steadily growing requirements?

Don’t expand, utilize!

Virtualization is a natural solution because it makes it possible to combine, share, and manage data-center resources – such as server capacity – without changing how users interact with the systems they operate.

When it comes to capacity management, virtualization offers numerous benefits because use of capacity is tangibly improved. Experience shows that the average CPU use rate is a paltry 10% – so 90% of available capacity is left unused most of the time. In conventional hardware setups, this can scarcely be avoided. SAP has thus made it its goal to significantly increase CPU use rates through virtualization.

Book your own servers

Yet virtual server infrastructures do more than just help maximize CPU use: They also boost efficiency in a number of ways. Automation is the key: Users can, for example, use an employee self-service function to reserve the exact amount of server capacity they need. Instead of entering a ticket, they place an order for the hardware specifications they need on screen.

The ordering and approval process then takes place automatically. So, rather than waiting weeks, users have the computing power they need within just a few hours, no matter where they are located. The associated costs are charged to the appropriate cost center in the same step. This pay per use model takes the pressure off internal IT budgets and gives global enterprises far more flexibility.

At SAP, some of the departments that benefit from virtualization are those with numerous test and demo systems. On request, these high-volume users can obtain a virtual pool of servers that they manage entirely independently. This approach makes sound financial sense, because the payback period for an investment of about 250,000 euros can be as little as six months.

This was the case at SAP in a project for the automated provision of demo systems in the Showroom & Trial Solutions department. Experience shows that consistent virtualization projects can pay off for a company in between six and 18 months. In economically tough times, the earlier that companies strike out on the right path, the sooner they will benefit from cost-savings.

Skill shift

But the trend toward virtualization is not without implications for IT departments. Because server provisioning is largely automated, manual activities are losing importance. And, as time goes on, IT teams will take on increasing responsibility for managing capacity use. As in the example of airline yield management, their goal will be to use machines as efficiently as possible – for example, through budget tariffs to encourage the use of server capacity during times generally considered to be unattractive (such as off-peak power from energy suppliers). Other options could be making last-minute offers to fill usage gaps or proactively overbooking capacity, because a certain percentage of registered users generally cancel their “bookings.” But the real skill lies in advising users on how to reduce their infrastructure effort while calculating models that offer the best possible cost/benefit ratio.

But what happens if a capacity bottleneck occurs? One solution is to simply buy in computer capacity from a partner. So-called “cloud computing” within an alliance allows the dynamic use of computing resources – thus ensuring a high degree of flexibility. It gives companies the option of outsourcing lower-priority services so that they can concentrate on handling projects that are directly relevant to business or security in house.

Good for the environment

As well as being easy on the corporate IT budget, virtualization also protects the environment. When you operate hardware, you consume power. Cooling alone can account for up to 50% of power consumption, and this all adds to global CO2 emissions. And it really makes very little difference whether a server is running at full or at low capacity. The consistent use of available resources removes the need for additional computers and cuts power consumption. SAP has already taken action in this area: In 2008, 80% of SAP’s new servers were virtual machines – a key contribution to achieving the targets the company has set itself for reducing its CO2 footprint.

Everyone’s a winner

This all goes to prove a very important point: namely, that virtualization brings benefits everybody involved. Usability improves, efficiency increases, costs fall, and hardware operation becomes greener. Such compelling arguments clearly show that the future belongs to virtualization. Moreover, the growing interest in on-demand software has placed virtualization at the top of the agenda for vendors of enterprise solutions. With virtualization preparing for take-off, it’s important that companies don’t miss the connection. And in the area of capacity management, airlines are showing the way.

Wolfgang Krips

Wolfgang Krips is senior vice president of SAP Managed Services, leading the organization that provides IT infrastructure and hosting services to all SAP lines of business. He reports to Erwin Gunst, member of the SAP Executive Board. Krips holds a doctorate in physics from Cologne University, Germany, and studied economics at Germany’s Open University in Hagen.

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