ROIThe stock market is tanking. AIG executives are spending almost a half million dollars for a luxury spa retreat right after they got a chunk of change from the $700 billion bailout. Companies around the country are tightening their belts and cutting back on expenditures. All across America, budgets for new IT purchases is getting reevaluated.

So why is this a great time for virtualization projects? Simply because the ROI on virtualizing your datacenter can be less than a year, saving you money on your bottom line THIS budget year! Depending on the size of your datacenter, and your new server refresh cycle, you may be able to repurpose this year’s budget to a virtualization project and actually decrease your bottom line.

I know, that sounds almost impossible, but let me show you how it works. Assuming that you have a datacenter that is populated with … say 50 servers. They can be a mix of Windows, Linux, or other x86-based hosts. Another assumption is that of the 50 servers, you are retaining them 4 years, and replacing them on a regular cycle, at probably 12 new servers per year. After memory, drives, etc, you are looking at probably $5,000 each for a ballpark number of $60k per year for new server purchases.

If you were to virtualize your datacenter with VMware, you should be able to migrate 40 of your existing servers to VMs as part of the project. In an ideal world, we could virtualize them all. However there may be a few servers that require unsupported expansion cards, are being outsourced, or are true ‘high performers’ that are not suitable virtualization candidates. A conservative estimate would be that we could support 40 virtual machines within a 3 host ESX infrastructure. It would be very feasible to re-purpose an existing server as your Virtual Center management server. Therefore, rather than purchase 12 new servers for this year, you would only require 3 new servers.

VMware’s VI3 infrastructure requires shared network storage to fully utilize the feature set. Assuming that you don’t have a SAN in your datacenter, you would need to purchase one for this solution. You can purchase a 4TB Dell EqualLogic iSCSI SAN for less than $25,000. Also, the VMware software itself can be purchased as a bundle for around $20,000 as well for 3 ESX hosts and Virtual Center. Now you have all of the pieces you need to virtualize your datacenter.

OK, strap in tight because here comes the math that you are all waiting to see.

New Servers $15,000
EqualLogic SAN $20,000
VI3 SMB Bundle $25,000
Total $60,000
Projected Cost $60,000

So you are asking yourself “You said I could SAVE money, not break even. I don’t see any difference between this project and what I am already spending.” Here are a few points that allow you to save money that aren’t shown above.

1) You will now be supporting 14 servers and an iSCSI SAN in your datacenter instead of 50 servers. There is a significant drop in Power, cooling, rack space, KVM and network ports required in your datacenter now. You will see direct savings on your datacenter operational budget over the course of the year, somewhere in the area of 10%-30% reduction in utility bills. There may also be ‘green initiatives’ in your state that will pay you rebates for reducing your electrical footprint in the datacenter.

2) Server maintenance and upkeep costs will drop. As you no longer need to support your physical servers after they come off warranty, you will save on hardware maintenance both this year and in future budget cycles.

3) Server and Service downtime. Once your datacenter is virtualized, you will see a dramatic increase in server uptime and performance based on VMware’s HA and DRS clustering features. By optimizing VM performance and load across the cluster, you will see better uptime by proactively migrating hosts to available hosts in the event of both planned and unplanned downtime for your ESX hosts.

4) Administrative costs reduced. By virtualizing your datacenter, you significantly reduce the need for overtime or on-call expenses. Virtual Servers and host management can be done remotely, reducing administrative overhead. Additionally, as you decrease hardware dependencies, you reduce the number of outages due to failed memory, hard drives, network cards, etc.

5) Backup, recovery, and Disaster Recovery costs reduced. By virtualizing with VMware and EqualLogic, you are able to use your existing backup server infrastructure to backup the VMs. However, you will save costs on the number of backup agents that you need. Using EqualLogic’s Snapshot Manager for VMware feature, you can perform snapshots of all of your virtual machines from the SAN snapshot directly from your backup server. This reduces the number of agents from 40 to only 1 on the backup server. Additionally, since VM backups are simply 2-3 files, it is easy to recover an entire VM in event of a disaster. Since ESX can be installed on most industry standard hardware, a VM configured for a Dell server can run on a HP host in a DR location.

In conclusion, if you look at simply the cost layout of virtualizing as opposed to continuing down the rack-mounted individual server route in your datacenter, there is comparable costs involved. However, if you factor in the ancillary costs of doing business in the datacenter, you will see direct savings to your bottom line as soon as you make the switch to a VI3 Virtual Datacenter. Costs such as utilities, network support, server maintenance, administrative resources, downtime, backup agents, and DR projections can be significantly reduced in the Virtual Datacenter. While these are not directly associated with a virtualization project, they are realized within the datacenter as a whole. These cost reductions are also not a one-time reduction to the bottom line. They persist across budget cycles and ongoing savings to the overall datacenter operation for years to come.