Buyers' Guide
Xeon Buyer's Guide: Total Cost of Ownership (TCO)
Published: 25 Nov 2008, 12:01am
Too many IT managers are getting a poor deal from their servers - simply by getting the sums wrong. Sometimes you have to look twice to get the best value out of your data centre's assets - and the obvious approach may not be the best one.
It seems obvious that you save money by extending the life of your servers as long as possible but in fact the opposite is the case. One bank in Sweden, faced with rising costs in its 140-server data centre, took another look at the figures and found a different approach. It replaced all its servers and actually saved £60,000 per year.
All too often users make the assumption that once the capital cost of old hardware has been depreciated, it is free. But it's not. In fact old hardware drains money from the IT department, according to Intel solutions architect William Crowe.
"IT managers assume they need to sweat their assets," says Crowe. "They think they are getting a good deal by running their servers into the ground. But sweating the assets just doesn't make sense."
The server's hardware and operating software may have been depreciated to zero, but it still has energy and maintenance costs and those costs are very high on old hardware.
"Very often we see IT managers running dozens of servers that are five to 10 years old, which are running below five per cent or 10 per cent utilisation," he says. "In fact with any servers more than three years old, it is usually more cost effective to throw them in the bin and get a newer server."
There are several reasons for this. Fundamentally, new hardware has much better performance. It delivers more processing for a given price (see the other Intel Xeon processor Buyer’s Guide article on The need for computing power), with today's servers typically giving six or seven times the performance of those from four years ago.
It also gets more performance for a given number of Watts of electrical power (see the Intel Xeon processor Buyer’s Guide on Power struggles and the Green Agenda), with power consumption falling from 500W to 350W over the same period.
"Replace a seven year old server with a new one, and it will pay for itself in two years on the cost of electricity alone," says Crowe.
That's worth knowing, but the total cost of owning a server is much more than hardware and electricity. New technologies manage the use of hardware better, and can significantly increase the usage of a given set of servers. "The majority of the time, IT managers have very little visibility of what physical assets they have in their current estate," says Crowe. "Before a server upgrade, our first recommendation is to take an environmental survey to identify the number of boxes and their age."
Server consolidation is the goal here. It can mean moving applications from older hardware and operating system environments, such as mainframes, onto new general-purpose servers or it can mean collecting similar applications onto a smaller number of servers.
Virtualisation is the key technology to enable this. In the past, IT managers had to provide every application with a large amount of dedicated spare processing capacity, along with disk storage, memory, electrical power and cooling. Consolidating those servers onto a smaller number of physical machines drastically reduces these hardware-related costs.
“A business with a server count of thirty can typically virtualise them down to three quad-core servers," says Crowe.
Virtualisation also reduces the management and costs. With fewer servers, fewer staff are needed to handle the physical tasks associated with server management and the burden is lowered still further because newer servers and newer versions of operating systems have better management tools that cut the hours of labour.
Newer hardware is also easier and cheaper to maintain. With increased reliability comes a need to carry fewer spares. The servers will also need much less planned and unplanned downtime for upgrades and repairs - and modular architectures mean most operations can be carried out without any downtime at all. All this amounts to direct savings in staff time, and benefits to the company in increased uptime.
Carnegie, a 200-year old Nordic investment bank based in Stockholm which manages around £2bn (SEK 25 billion) in assets, realised the value of making changes now, instead of sweating its assets (see case study here). Even though it has plans for a new data centre in 2009, it got started earlier and carried out a serious consolidation on its existing data centre in 2008.
The data centre had been built up in an ad-hoc manner, reacting to short term needs, until it held 140 legacy servers in two physically close locations. The ever-increasing need for cooling pushed Carnegie to do something before 2009: just to stay where it was, it needed to invest another SEK 10m (£800,000) in new cooling equipment. The bank looked at moving its servers temporarily into a purpose-built data centre - but that would have cost an eye-watering SEK 10m (£800,000).
Instead, Carnegie took another approach, and, instead of paying out more, actually saved the company £60,000 over the year: £40,000 in staff and hardware costs and a further £20,000 in electricity usage.
What did it do? It simply replaced its entire legacy HP ProLiant servers with just 16 new HP servers based on Intel Xeon processor 5300 series. The servers easily support 140 virtual machines on VMware ESX Server, so management time and expense is also vastly reduced.
As well as amply paying for itself, the arrangement brings further benefits. The back-up strategy is improved, with application restoration as well as simple file replacement.
The astonishing thing is that these cost savings are not unusual. They are available to any business relying on ageing servers. Working out a trustworthy figure for return on investment (ROI) can be tricky, but there's an online calculator that will help get the ball rolling by showing how much consolidation should save you.
Enter the age of your servers, how many servers you have, and the ratio you wish to consolidate by, and the ROI calculator gives you a figure for the savings you can expect by moving to quad-core systems.
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