Tight IT budgets boost server, data center consolidation

LAS VEGAS -- The rush to consolidate servers and the data center is on. Many companies appear to be squeezing redundant hardware, software, maintenance and service costs out of their data centers -- and the effort is quickly paying off, according to IT managers.

Bayer Corp. in Pittsburgh offers a dramatic example of how much money can be saved: The company last year consolidated 42 data centers into two and cut the number of servers from 1,335 to 615.

Expected savings: $76 million over five years, according to Hobart Moore, an IT manager involved in the project. The initiative was completed in July and delivered $10 million in savings last year alone, said Moore, who spoke proudly of the consolidation at a data center conference held here by Orange, Calif.-based professional association AFCOM this week.

"We showed that we aren't just out there providing services and that we can actually save the company money when it became necessary to do so," said Moore. "We came up with very solid ways of reducing cost without slashing services."

Indeed, many IT managers at the conference said they are involved in data center or server consolidation projects.

Over the past two years, Williams-Sonoma Inc. has purchased five of IBM's high-end Regatta Unix servers at a cost of $1.5 million each. The San Francisco company is halfway through a yearlong plan to reduce 100 stand-alone servers to five. Those servers will be moved to a partitioned environment on IBM because partitioned servers can run multiple applications on the same box.

"You spend a lot of money upfront," said Steve Stewart, the manager of the retailer's data center. But "it was either that or they were going to buy another 50 [stand-alone] servers in the next year."

Stewart expects a return on investment in two or three years and foresees savings coming from just about every aspect of the data center's operation, including power, maintenance, personnel and licensing fees.

Eliminating one stand-alone server often allows companies to get rid of four more servers: the production server, the testing server, the fail-over server and a development server, said Marvin Hamann, director of operations at Supervalu Inc., an Eden Prairie, Minn.-based wholesaler and distributor of food and general merchandise to grocery and discount stores.

Hamann is reducing the number of stand-alone servers at his company from 120 to 60 by moving to partitioned servers. And it's not the end of the consolidation project. "When we get to that goal, we will set a new goal," he said.

Consolidating data centers or servers isn't a new concept, and IT managers at the conference were clearly aware of the potential problems and costs of allowing business units to add server after server to host various applications. But the continuing economic downturn has put pressure on IT departments to cut costs, and as Moore put it, "Costs were just getting out of control."

Mark Levin, an analyst at Meta Group Inc., called consolidation the "hottest thing" and said the most difficult aspect of this effort often is coming to terms with the inventory. Consolidating servers can lead to some management resistance, particularly if a business unit hosts a particular server. But as long as service delivery is unaffected, company buy-in is usually easy to get, IT managers said.

Michael McShane, manager of technical services and operations at Krasdale Food Inc., a White Plains, N.Y.-based food distributor, said getting cooperation from business units for consolidation projects is ultimately not a problem.

"The dollars and cents of it convinces higher-ups, and it's a done deal," said McShane.

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