The High Cost of IT Operations

A typical IT organization allocates 70 to 80 percent of its budget simply to managing existing systems and applications. One source of these costs is the large number of underutilized servers in the average datacenter. In the past, IT organizations have tended to host just one application per server. Given the affordability of industry-standard servers, this was a cost- effective strategy that simplified deployment and reduced potential software conflicts. Yet server numbers have increased worldwide by nearly 150 times in the past decade, and so have the costs associated with maintaining these systems.

Average server performance has also increased. Today’s servers are ten times more powerful than those of a decade ago. Virtualization helps IT organizations take advantage of this extra power by consolidating multiple applications and operating systems onto a single platform, to increase server utilization and reduce management, power and cooling requirements.4 Today’s solutions also enable flexible allocation of resources to handle unexpected workloads. With these tools, many IT organizations will find they can reduce their server-related costs (both capital and operational), while simultaneously improving datacenter agility (Figure 1).

VMware, a leading developer of server virtualization software, cites dramatic customer savings in server Total Cost of Ownership (TCO) via virtualizationand consolidation:

• Hardware cost reductions: 28-53%
• Operations cost reductions: 72-79%
• Overall cost reductions: 29-64%

VMware also cites up to 20 percent savings in software licensing costs.6 With benefits of this magnitude, it is little wonder that server virtualization technologies are expected to be widely adopted over the next few years.

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