By Andrew McGowan
On the surface, virtualization holds great promise for flattening, if not reversing, the technology spend growth curve. Consolidating 8 physical servers into 1 physical hosting server with 8 virtual servers should significantly reduce hardware costs, facilities and power expenses, right?
The short answer is yes, but nowhere near the 88% reduction a straight line projection would lead us to believe is possible.
The savings on software are not as immediately obvious but there are very good reasons why software asset management (SAM) and license optimization practices are crucial for reducing costs in the virtualized datacenter.
On the hardware front, the hosting platforms typically tend to require more robust servers with higher density CPU and memory configurations. This raises the purchase cost to 3-4x more than the physical equipment they are replacing. Add in higher IO storage and faster network equipment and you can easily consume most of the hardware savings.
While the hosting servers will take less space than the physical servers they are replacing and overall use less power, the savings may not be easily recognized. Facilities and power are often managed by a corporate real-estate function, making it difficult to directly reflect these facility and power savings as IT savings back to the business units.
When you look at the software licensing requirements for these virtualized environments you might initially decide it’s a wash as the software that previously ran on the 8 physical servers will now run on virtual machines on the host server. This is true, but in the virtual environment you actually have 9 servers not 8 (8 virtual and 1 physical host) and the host server will need an operating system and virtual machine management software. This additional software further reduces the expected savings from your vitalization project. However, virtual use rights can significantly reduce the cost of software in this type of environment by allowing more than one instance of the software to run under a single license. And, sub-capacity licensing, such as what IBM allows with PVU based licensing, enables organizations to only license the virtual capacity that is being used by those applications, rather than licensing the full physical capacity of the server. (See this previous blog on Higher Costs for Being out of Compliance with IBM Licensing).
Windows Server illustrates the first scenario where more than one instance of the software is covered by a single license. Windows Server 2012 R2 Standard allows you to run the software on one physical Operating System Environment (OSE) and up to two virtual OSEs (VMs). The Datacenter edition allows you to run Windows Server on an unlimited number of OSEs (VMs). In both cases, all of the physical processors must be licensed and one license covers up to two physical processors. (Learn more about Microsoft server software licensing in virtual environments here).
The variable or burst capacity workloads present a whole new set of challenges as you are dynamically spooling up virtual machines to meet customer demands. The software on all these virtual machines must be licensed even if they are not running 100% of the time. In some cases, this could change the percentage of the IT budget that is spent on software. Software producers are struggling with these new "cloud-like" licensing models and in the absence of good tracking and management software, are asking that peak utilization be the licensing watermark.
In the absence of good software asset management (SAM) practices, their customers have little option but to comply and this can seriously damage the variable workload ROI. Software License Optimization solutions offer help in these situations by allowing you to check license availability prior to spooling up new virtual machines. Depending on your licensing terms, you may also be able to reclaim licenses from virtual machines that have been spooled down. Over time, the visibility that license optimization tools bring to your virtual datacenter software licensing requirements may allow you to renegotiate new licensing watermarks that are significantly lower than peak.
In any case, software costs will likely continue to grow as a percentage of your IT spend. Optimization of the software in your virtualized environment will become increasingly important if you want to manage the overall efficiency of your environment and control costs. It helps to have the ability to perform ‘what if’ analysis to see how changes to your virtual environment will impact your license position before you make those changes. You want to know the cost of any additional software licenses required as a result of the change.
Recent Gartner IT metric data supports these assumptions as it shows IT spend continuing to grow at about 3%, with hardware costs remaining relatively flat while software is growing significantly faster. Tight control of your software assets will become increasingly important as the dynamic nature of the virtual compute environment evolves and software continues to grow as a percentage of your IT budget.
In addition to cost savings, what are some of the other reasons why would you virtualize your physical datacenter environment?
One reason is to future-proof your environment. As virtual machine (VM) densities increase and Moore's law acts on the hosting servers to reduce their cost, then hardware savings should be easier to attain. Getting your staff the appropriate training and experience in operating virtual environments will be key to exploiting any future savings.
Another reason might be to improve the agility of your environment. Virtual machines can be spun up and down in response to changes in customer demands. Around the clock load balancing becomes feasible where customer facing VMs are available during normal business hours and are swapped for back office VMs in off hours. Additionally, VMs offer the ability to burst outside of your physical environment and leverage cloud compute providers to accommodate peak demand. This theoretically means you do not have to build for peak capacity anymore, as you can rent capacity as required.
To learn more about managing software licenses in complex datacenter environments, view our animated video:
Manage Datacenter License Complexity with Flexera Software.