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Within a year of starting its server virtualization project, Merit Resources Inc. reduced its number of physical servers to four from eight, despite double-digit growth in the number of people the company served in 2008 and expected similar growth this year. The decrease in power needed to run its server network led to an 18 percent decrease in energy costs in the first two months of the year, compared with the same period in 2008.

But despite these environmental impacts, Merit claims the main reason it consolidated its server system was to do business more efficiently and cost-effectively. It estimates a savings of more than $100,000 in hardware and labor costs and doesn’t expect to need more hard servers until 2010.

“I think right now the biggest driver is cost,” said John Notch, information technology infrastructure manager for Merit. “How can IT (information technology) still align itself with the business, still solve the business problems that are presented to it, but yet lower our operating and capital costs?”

Consolidation

Most servers use less than 5 percent of their capacity, said Sean Clark, solutions architect for Alliance Technologies Inc., which has served as a consultant on Merit’s project.

The reason is that applications tend to not work well together, so they need their own server space, or if one application has a problem, someone can take that server down to work on it without having to shut down several applications. Also, businesses install high-capacity servers to handle a rush of activity, but most of the time use a very small fraction of their servers’ total capacity.

Virtualization products such as VMware Inc., a market leader, are able to turn one physical server into many servers so that utilization of the server’s capacity can be increased to up to 80 percent in some cases. “It allows you basically to carve up a pool of resources, whether memory or processing power or network,” Clark said. “VMware is what carves that up and is a traffic cop to make sure that the virtual servers get the performance they need, the memory they need and the storage they need.”

This means a company can run on fewer physical servers, saving money on electricity, cooling power and physical space for data storage. If business ramps up, the company can quickly create another virtual server to handle the increased load rather than having to invest in hardware. And because VMware automates some of the processes, the IT staff is able to “focus on the issues on hand that are affecting the business, as opposed to worrying about did I just lose a hard drive server and have to bring it down in the middle of the day,” Notch said.

Merit Resources completed its server virtualization project last July, adding the VMware program to run about 60 virtual servers within four physical servers. It currently is running 43 virtual servers.

This has allowed Merit’s business to grow without investing in more IT infrastructure right away or adding additional staff beyond its six internal IT employees. Merit currently has about 60 employees.

In the next phase, Merit will look at disaster recovery and business continuity planning. Already VMware offers some backup, where if one physical server goes down, the virtual servers can still run on the three other physical servers. But the next step will be to look at options such as hosting backup data off-site, which can be accessed once people arrive at a designated disaster-recovery location.

Eventually, Merit’s IT network could evolve into what the industry calls “cloud computing,” where some of the management of its data center and infrastructure would be handled by an off-site technology provider, such as Alliance. At first, it might maintain its in-house infrastructure and IT staff, but synchronize its systems with a cloud-computing provider that could handle some server activity if Merit’s system reaches capacity.

Merit also is working on replacing the traditional desktop computer run by a tower with a virtual desktop experience, where basic applications are delivered through the servers. The benefit is fewer movable parts, so Merit’s IT staff has less maintenance to perform, and the company moves to a smaller desktop footprint. Employees also could work anywhere they can access the network and it is a more secure system, where if a computer is stolen, the information remains on the server.

“To the end user, they don’t know the difference, whether it’s physical or virtual,” Notch said.

All of these capabilities, he added, “speak to some of the scalability and flexibly that virtualization offers.”

Though not its initial goal, Jeff Caracci, vice president of information technology, said “the bonus is that we’re doing something great for the environment. We’re not buying 42 pieces of hardware to run what we’re doing today. We’re working out of the same four boxes we invested in.”

Concept takes off

Alliance has been working on server virtualization projects for about three years, Clark said.

Though more small and medium-sized companies are looking at this, Clark warns: “The cost, it’s going to be lower, but not dramatically lower. You still need to have storage, you still need to have servers and you still have to buy software and pay someone to manage it. … What I think is the biggest gain for computing is the agility that it brings to your IT (staff) because now, instead of focusing on something that doesn’t provide value to your business, you can focus directly on things that add value.”

Nonprofit Orchard Place considered VMware’s licensed program too expensive, with costs of about $10,000 to $12,000 per licensed server, and has opted instead to use Microsoft Corp.’s free version. The stripped-down version is not as flexible or useful, said Chris Walters, director of IT, but it has helped cut down on the servers needed to run non-essential applications such as print services. Orchard Place runs about 20 servers at seven locations now.

“It comes down to cost,” Walters said. “Is it worth having features and paying $10,000 per box? I can buy five servers for $10,000, so for us, it’s not worth it.”

Marv Bosch, director of Clive-based Combined Systems Technology Inc.’s (CST) network division, said though the economy has put some clients’ plans on hold, he sees companies moving in this direction not because it’s “green” but because they cannot afford having their server system go down. About 10 to 20 percent of CST’s business comes from helping companies install and manage virtual server programs.

But for a small business, he said, it’s still probably cheaper to continue to buy hardware. VMware claims that a company recoups its costs in 12 months, but Bosch considers those “soft costs,” such as cost savings from having less server downtime.

“I don’t think it’s more reasonable from a cost perspective. … I think it’s by necessity that companies are looking at this,” he said.