Consolidation hits the time - Survey

Rethink IT, March, 2004

Most organizations have run into a situation where they have more physical boxes sitting around than they need. The ones they do have they also use at a very small rate, translating to them possibly sitting around not being used for 90% of the time. Techniques and service contracts are easily available to rationalize the portfolio and crush the number of servers down by half or even 10 times, saving the company cash, space, running and staff cost, and many other fiscal goodies.

Rethink IT researchers conducted an exclusive survey of 100 Europe-based CIOs to establish their plans and opinions concerning server consolidation. Highlights are summarized here, but for information about the full report, priced at 600 [pounds sterling], please contact Peter White on peter@rethinkresearch.biz.

The context for server consolidation is usually:

* Mergers and acquisitions often necessitate consolidation, though when the merging companies' IT infrastructures are very different this can also he a barrier to the success of the deal.

* Need to save costs and derive more value from investment in IT.

* Need to introduce new applications and services while still remaining under recessionary budget restrictions.

* Need to improve knowledge of software and staffing across file organization, and to increase control and accountability of those resources.

* Pressure to eliminate wasted hardware without massive upgrade/replacement programs.

Companies with one or more of these requirements are likely to consider a measure of consolidation, with the drive for cost savings by far the most significant reason actually to give the green light to a project and gain board support. The key approaches taken are:

* Outsource, replacing inhouse servers with a more compact installation at a hosting company's site.

* Replace a collection of servers that has built up haphazardly over the years with a smaller set of new machines, standardizing the operating system. This is gaining vogue with the advent of low cost blade servers and the ability to pool resources using grid techniques and storage virtualization.

* Rationalize applications and processes on existing machines, keeping the original operating systems.

Consolidation must always be thought of as comprising physical, logical, and application components.

Physical consolidation can often simply mean geography: concentrate your physical plant back from around the organization into a small number of locations which will make it easier for you to see what you have and manage it, starting probably with a bit of judicious pruning.

Logical consolidation is a bit more complex. Here, one or more existing servers are compressed into a bigger box, usually involving some kind of virtualization technique.

Finally, there is application consolidation--more complex still, as it involves unstitching applications A and B from their servers and perhaps joining them, or part of them, or even a merged application C from them, with other applications, D and higher, on a new, probably bigger, box. A common scenario might be that yon should at least identify a common database or application server layer that could more efficiently serve a number of apps that hit the database in a less coordinated fashion at present.

This inevitably involves consolidation of data, through a SAN or other type of approach, which is being done at many sites now, hut not necessarily as part of a top-down consolidation project.

For all the reasons outlined, server consolidation is a major issue exercising the minds of IT executives across Europe. The need to remain cost efficient but, at the same time, to build new applications and services to support the business' objectives, makes rationalization of the portfolio very attractive.

But while there have been many reports of huge savings from large scale, big bang consolidation projects, reducing server numbers and IT costs by as much as 10 times, there have also been many disappointments as companies find how complex the process can be, and how much upfront investment in audits, consultancy and integration may be required.

In our survey of Europe's most senior IT executives, we sought their views on:

* Levels of uptake of consolidation.

* How the willingness to consolidate, and the success of projects, relates to organization size and objectives.

* What cost savings were expected and achieved.

* What other key drivers led the company to choose a consolidation strategy.

* The key operating systems and server approaches adopted.

Some striking findings emerged front the research. One was the sheer level of interest in consolidation of servers among large European IT sites. Only 20% of the respondents had no plans to consolidate at all, and a similar percentage had already completed the exercise, and in some cases were moving on to phase two.

While many of those interviewed stressed the importance of approaching consolidation in a step-by-step fashion, rather than with a big bang exercise--unless a company was outsourcing for the first time--they did not have modest goals. Among the key targets set, about 70% of sites aimed to reduce their server population by at least 15% and most believed they would achieve cost savings of over $250,000 per year. At the high end, some sites were looking for a tenfold reduction in server numbers and savings of over $5m a year.