12 May

Performing Server Virtualization Cost-Benefit Analysis

In my past two blogs, I’ve covered some of the benefits of implementing server virtualization and a SAN (Storage Area Network). A common question that is raised is, “How can I determine if server virtualization makes sense for my organization?” I’d suggest that you perform a cost-benefit analysis to determine your potential savings.

In order to do this analysis, I’d suggest creating a spreadsheet to contain all your data. If you are uncomfortable creating this on your own, you can download a sophisticated spreadsheet here: http://bit.ly/1iEOC8i With a simple Google search, others can be found as well.

First, you need to determine your current costs which can be broken into two categories: hard and soft costs. Your hard costs are easier to determine and include anything that you currently pay money for, such as power, server maintenance contracts, and outside services. Electrical costs can be determined by researching power draws for each of your current servers or in the worst case, use a power meter to measure the kilowatt usage over a typical day. Soft costs are the second category of costs to determine and are more difficult to obtain. You will need to ascertain personnel time directly involved with the servers in question for machine administration. Part of this administration is the time spent backing up the servers (such as manually changing tapes).

The next step in the analysis is identifying the costs for implementing the virtual server solution, which typically will involve new hardware and some additional software costs (such as VMWare or Hyper-V). You will also need to factor in the expected hardware costs for replacing aging servers you currently own and deduct this figure. There will be soft costs associated with the new virtual solution. A good “rule of thumb” is that the time spent will be 30-40% less than separate servers (something you already calculated in determining your current costs).

The last step is identifying the financial benefits of server virtualization in the two areas: cost savings through not having to spend money that you you’re currently spending on your existing infrastructure AND cost savings through more efficient operations. This can be factored over a 5 or 7-year period using the total cost savings to determine the ROI (return on investment) for the money potentially spent on the virtualization project.

Telcion would love to help you determine if server virtualization has cost-benefits for your organization. Please contact me at drodrigues@telcion.com to help you make this evaluation.

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