Virtualization ROI Grows — Second ROI Wave Coming

Virtualization ROI Grows — Second ROI Wave Coming

When it comes to virtualization ROI, the traditional focus is on consolidation (run 15 servers on one box).  This is indeed the initial source of ROI for virtualization projects, but is there a second ROI wave?

First let’s look at the first wave – consolidation.  As CIO Magazine explained this month, virtualization ROIs based on consolidation are actually increasing as a result of hardware advances.  For example:

“We had one client that was able to justify a complete server hardware refresh because it could upgrade without having to buy any additional VMware server licenses,” according to Chris Wolf, infrastructure analyst for Gartner Group. “They moved from servers with four cores to servers with 12 cores and were able to run more VMs on fewer servers at a significant cost savings.”

This is a good example of an additional first-wave (consolidation) ROI benefit that was almost certainly not anticipated when the original ROI justification was done.  Continued advanced in both hardware and software (vSphere 4.1) are driving even better consolidation ratios (as well as overall performance).

As significant as first-wave (consolidation) ROI’s may be, I believe that for most datacenters there is a second ROI wave which in many cases is even more financially rewarding.  This second wave taps into the concept of the private cloud.  The private could is all about operational efficiency, flexibility and technology working as a business enabler.   

IDC estimates that by 2014 12% of all IT spending will be for “cloud” services, but I suspect this number will be much higher if one includes the private cloud concept.

What’s a Private Cloud?

The Wikipedia definition for cloud computing is enough to make your head spin.  My definition of the private cloud parallels what I’ve been referring to as the second ROI wave, but first we have to try to better define what the private cloud is.

Examples of the public cloud would include Amazon’s EC2, Google AppEngine and Microsoft Azure.  The difference between a public and private cloud is ownership and control.  Who is in control of the following? 

  • App selection and design
  • Deployment process and model
  • Service Level Management
  • Security

If you are in control of these elements, then you have a private cloud, regardless of where datacenters and firewalls may exist.

So how does an IT shop get to the private cloud?  The private cloud model I’ve been describing so far largely comes from EMC and this slide illustrates their vision of the private cloud:

Note:  the above slide uses Microsoft’s new technology.  Press the plus button to zoom into the slide with more detail.


So how does an IT datacenter get from the legacy cost-center model to a private cloud?  The basic premises are on the slide above.  When the above model is successfully implemented business becomes extremely flexible, getting closer to the “ Business At the Speed of Thought ” concept which Bill Gates made popular.

VMware and other 3rd party developers have a small army of products designed to help IT shops get to this private cloud model and reap the benefits of the 2nd ROI wave of virtualization.  For example, VMware offers the following products:

  • Site Recovery Manager (DR)
  • AppSpeed (ITIL , SLA management and root cause analysis)
  • Service Manager
  • Configuration Manager

 And that’s just a few.  These solutions enable the business to become more flexible,  enforce consistency , manage SLA’s and adhere to the ITIL model.  The other part of the equation of course is virtualization of the networking and storage components to complete the private cloud model, and reap the second wave ROI benefits.

Blue Shift will continue to cover these “second wave” ROI benefits in more detail in future posts.

One Response to Virtualization ROI Grows — Second ROI Wave Coming

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