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aandy20's review
Investment Sector: IPO / Secondary Offering Submitted by Aandy20 
, Director of Engineering
at Market Research Firm - IAG
over 2 years ago Add Tag |
VMware IPO - Great long term investment value
For many who don't necessarily have a technology background, this post will offer some insight into the business value of the VMware product space from a working experience perspective. Being involved on the business development side & the vice versa side of a client, I will offer my take on this partial IPO and why I think it makes a killer investment value.
This post will get somewhat technical - to truly understand why this technology is of great value we must dig deep into its ability.
The challenge that IT departments have is how to keep IT cost down while business and service level requirements continue to increase? The computing infrastructure plays a foundational role in most business processes. Industry surveys indicate that 70%-80% of TCO is consumed by the people and processes used to maintain existing systems and applications.
Traditionally, companies have deployed applications with separate development teams from different business units. But to serve customers, the business requires cross-organizational communication from different business units. So there exist two directions of views: horizontal view from business and vertical view from IT.
The tiered silo infrastructure complexity brings the following problems:
- Lack of consistency among platforms, configurations, architectures, management tools and processes
- Inefficient resource utilization (infrastructure & staff)
- Inefficient to reclaiming and re-purposing hardware and software that is underutilized
- Inefficient to provision new services
Virtualization is often integrated with automated infrastructure management software (Like OpsWare, or many others) to provide the following benefits:
- Improve IT resource utilization and ROI by reducing idling computer power
- Improve business agility through quicker time-to-market for new service and capacity due to more efficient resource provisioning (dynamically performed by automated management software)
- Improve operational efficiency due to simplified, automated management for server and application provisioning, change management- Improve IT service due to IT staff being able to focus on value-added business processes while complicated infrastructure administration is managed by automated software
- Improved SLA due to reduced frequency and downtime for applications with the advantage of data and application mobility in the virtualized environment- Provide better cost-effective high availability and disaster recoverability with dynamic resource allocation and application mobility due to eliminating dedicated stand-by system for fail-over
- Facilitate IT audit for regulatory compliance due to centralized management system for change management as well as policy-based automated provisioningThe competitive advantage for enterprises is built with dollars spent on business services and applications to efficiently and effectively satisfy customer needs. With a fixed amount of IT budget, any technologies and best practices which can reduce cost on infrastructure operation and maintenance will leave more dollars for business services and applications.
Aggregation and consolidation on standardized infrastructure through server virtualization and automation will reduce hardware and maintenance cost as well as operational cost, hence reduces TCO. Meanwhile, virtualization and automation improves business agility in response to market changes, quicker time-to-market, as well as enhanced application availability and recoverability, hence an improvement in ROI. This helps the business gain competitive advantage.
For customers, the following are excellent questions to ask when looking for a virtualization solution:
Service Level Management
- What & how many applications are being used today?
- Do you have an inventory for those applications?- What are the interdependencies between applications?
- Do you have defined SLA for your applications?
- How do you measure SLA for those applications?- How & when are those applications used?
- Does the usage have a particular pattern?- Does user experience performance degrade during peak usage?
Capacity Management
<u>Service capacity:</u>
- How do you monitor the usage of those applications?- Do you measure the performance of those application?
- How does application usage peak impact your network?
- Do you have scarcely used applications that tie up dedicated server resource?
<u>Resource capacity:</u>
- How do you measure server utilization for applications?
- Are those applications CPU intensive or data intensive?- Are servers experiencing CPU or memory constrains during peak usage?
- Do you measure software licensing usage?- Do you have overlapping of software licenses?
- Are you interested in audit of software license usage to eliminate overlapping and thus reduce cost?
- Are you interested in software license consolidation project?
- Are you interested in aggregating servers for scarcely used applications?- Are you using dedicated servers for develop/test/staging/productions?
- Are you interested in using virtualized servers for application development/testing?- Are you interested in automated system for repurposing, reclaiming servers for different projects?
- Are you interested in policy based on demand infrastructure that enables automatic provisioning during peak usage and automatic decommission after peak?
<u>Scalability:</u>
- How do you plan to address the scalability request? Scale up or scale out?Availability Management
- What is the business criticality of those applications?
- In case of failure, how are they recovered? And how long does the recovery take?
Continuity Management
- How do you recover those applications in the event of disaster?
- Are your current disaster recovery backup infrastructure costly but mostly idling?
- What do you think of server and storage virtualization to help improve recoverability?- Would you like to evaluate and implement cost-effective disaster recovery infrastructure with virtualization technology?
Financial Cost Management
- Do you have a bill/charge-back module for your IT resource utilization?
- Would you like to conduct a proof-of-concept to evaluate the benefits of server virtualization technology on operational efficiency and financial savings?
Compliance
- How do you keep track of change on your server configurations?
- How do you demonstrate compliance to regulatory requirement for those applications?
- Are you interested in a centralized automated system to track compliance for your resources?Now lets look at the competitive vendor space:
Out of these vendors, VMware has proven itself to be the reliable, and most importantly, selected by customers. Strategically, VMware has done excellent moves such as releasing the VMWare server free of charge to allow customers try out the technology. However, to really gain a benefit the ESX line provides the full horsepower of what VMware can offer. I have seen environments that run 2 high end 4U Dell systems that are partitioned with 4 Linux Operating systems each, and each server has a 4 port NIC interface. Each OS has a dedicated NIC. This allowed for load balancing of a website with 1 million+ visitors/day on 2 optimized systems - as opposed to 8 physical machines.
John Premus, CTO of Sumitomo Mitsui Banking Corporation gave a public presentation on how VMware helped his large environment. According to the presentation: 309 servers have been consolidated in the US and more in Europe & Asia.
The summary of his message:
- Reduce IT COST:
- Reduce Server numbers by 82%
- Reduce server rates to 17 to 6
- Provide 3 year TCO calculated to be in Millions
- Increase utilization (CPU, Memory)
- Quarantine Legacy Apps
- Improve Service Delivery
- Improve Business Continuity
Given that IT infrastructure continue to get larger and applications become more complex, and with the information provided here (and research firms like Gartner have plenty of their own) I think this is a worthwhile investment.
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