Virtualization Saves Microsoft Customers Nearly a Half-Million Dollars Per Year

REDMOND, Wash. — Feb. 9, 2009 — Microsoft Corp. today announced that some business customers around the world have saved on average $470,000 (U.S.) per year through IT projects using Microsoft virtualization software. Microsoft’s business customers have been able to use virtualization to help reduce operations and capital expenses via reduced electrical power consumption and cooling within datacenters, reduced hardware acquisition costs, automation of desktop and server management, and centralized application deployment.

The cost of running IT systems has increased as electrical power, cooling and physical space has become constrained. In his 2008 refereed journal article, “Worldwide electricity used in data centers,” Jonathan Koomey, Ph.D., of Lawrence Berkeley National Laboratory and Stanford University concluded that total datacenter power was about 1.5 percent of all U.S. electricity use in 2005, with 80 percent of that amount going toward powering and cooling servers. 

A separate report, by Gartner Inc., stated that “the effective use of virtualization can reduce server energy consumption by up to 82 percent and floor space by 85 percent” (Gartner: “Energy Savings via Virtualization: Green IT on a Budget”; Nov. 12, 2008).

“Businesses are looking to reduce and manage computing costs in datacenters and across server and client computing devices,” said David Greschler, director of integrated virtualization at Microsoft. “Virtualization software allows businesses to pool computing resources to drive down IT costs, increase IT efficiency and be more responsive to business needs. Customers are getting a better bang for their buck with the Microsoft platform and virtualization solutions because virtualization is in both the operating system and in the holistic management tools. Customers can manage IT services and a broad set of applications across the datacenter and desktops. There is less of a learning curve for customers, and it eases interoperability with existing systems.”

Savings Through Available Built-In Virtualization and Management Automation

Microsoft’s approach to virtualization, which incorporates server and presentation virtualization into Windows Server 2008 and unlimited virtual machine management with Microsoft System Center suite license, is helping break down barriers to broad virtualization adoption.

“The VMware ESX solution would have cost $30,000 (U.S.) for four servers. With Microsoft, we have a service provider agreement that allows for monthly payments with no capital costs — costing us less than $1,000 over the life of the contract,” said David Straede, president and chief operating officer for Santa Barbara Web Hosting. “Windows Server 2008 Hyper-V has the core features businesses need. It’s the Windows people know, is installed just like other Windows-based applications, and works in a management console that IT staff are already using. The ESX feature set simply doesn’t justify its additional expense.”

If making it easy for customers to implement virtualization is important, making it easy to manage the environment is just as critical for saving time and money. With Microsoft System Center, customers have a single solution for managing the entire IT life cycle, from deployment and provisioning to monitoring and backup. Equally important, customers can manage both server and desktop resources, both virtual and physical assets, and both Microsoft and VMware hypervisors, all with the same platform.

These capabilities helped Banverket ICT choose Microsoft for its virtualization strategy. “We knew we wanted to build a compatible virtualization platform that would encompass server consolidation, Terminal Services and application virtualization that we could manage with a single set of tools,” said Pontus Blomkvist, service design manager, Banverket ICT. “With Microsoft Application Virtualization for Terminal Services, we have been able to reduce the number of terminal servers because we can run many applications on any server at any time, without worrying about conflicts. With Hyper-V, we are now running 50 virtual machines in production, with a utilization rate of 80 percent for some of the servers as opposed to 15 percent before we deployed Hyper-V.”

Savings Through Consolidation, Reductions in Power

By running multiple virtual machines on fewer physical servers, Microsoft customers are drastically cutting hardware requirements and easing server management. For example, Indiana University’s Auxiliary IT Department went from 152 to just 32 servers, which it expects will save $85,000 (U.S.) annually. Saxo Bank had an average physical server utilization of just 20 percent and was deploying nearly 200 new servers per year before using server virtualization. Windows Server 2008 Hyper-V allowed the bank to reduce the number of servers needed by 36 percent and realize savings equivalent to $1 million (U.S.), because of lower server hardware costs and associated reductions in space, power and cooling costs.

Many customers have realized similarly dramatic electrical savings as a result of server consolidation, which is a particularly important benefit in today’s climate of volatile power prices. TALX expects to save approximately 50 percent in annual power and cooling costs by consolidating its server environment with Hyper-V. HotSchedules, which noted that its No. 1 cost in the datacenter is power, spent about $11,000 (U.S.) a month on datacenter power costs, but with Hyper-V it anticipates that this monthly figure will go down to $2,500. Santa Barbara Web Hosting uses Hyper-V to reduce its power consumption costs by $5,220 (U.S.) per month, helping the company provide more cost-effective services to its customers. And Slough Borough Council took advantage of the savings from eliminating 10 physical servers to preserve the electrical power needed to turn on a new storage area network.

“I wouldn’t be surprised to see us virtualize 60 servers once our physical-to-virtual analysis is complete, which represents nearly half our server holdings,” said Chris Wintermute, technical infrastructure manager for Slough Borough Council. “We’ve achieved hardware savings of $148,000 (U.S.), and we expect to reduce server deployment costs by $23,700 (U.S.) annually, based on rolling out 20 servers a year.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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