Japanese Bank Expects Server Consolidation to Save It Millions

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October 10, 2005 (Computerworld) -- Sumitomo Mitsui Banking Corp. has consolidated 149 of its physical servers into 14 blade servers, an effort that IT officials expect will save the company millions of dollars over the next three years.

Sumitomo's IT operation began evaluating options for updating its servers in January of this year, said John Premus, chief technology officer at Japanese Research Institute America, the IT arm of the Tokyo-based bank.

The New York-based IT unit needed to reduce the complexity of its server environment, increase utilization and lower operational costs, Premus said.

In order to determine whether to virtualize the servers, IT personnel calculated the cost of replacing the existing systems.

Premus looked at the cost of new hardware, software and maintenance. "We used our actual cost for floor space and [for] power and cooling, and used a number for labor costs to build a new physical server [network]," he said.

Premus decided to virtualize servers with 30% CPU utilization rates or less. The IT group initially found that 136 of the 222 servers in the U.S. were good candidates to become virtual servers. Since then, that total has grown to 149.

In February, Sumitomo installed an IBM blade server rack and connected it to its back-end storage-area network. Over the next three months, Premus rolled out VMware Inc.'s virtualization software on the blade servers and eventually created 216 virtual servers on 14 physical blade servers. Those systems replaced the 149 servers.

Dan Kusnetzky, an analyst at IDC in Framingham, Mass., said the number of consolidation projects like the one at Sumitomo Mitsui is growing at a rapid clip.

The virtualization market as a whole totaled about $19.2 billion in 2004, Kusnetzky said, with virtual machine software accounting for $330 million of that amount. Sales of such software grew by 62% last year, he said.

Kusnetzky warned that as the demand for virtual servers grows, IT executives should make sure that their virtual environments actually simplify operations.

"The issue is that as you move to a consolidated environment, one must be very careful not to replace physical complexity with virtual complexity," Kusnetzky said.

Premus agreed, saying that virtual "server sprawl"—adding servers whether they are needed or not—is just as much of a problem in a virtual environment as it is in a physical server environment. "It's become too easy to provision servers. I don't know if it's a good problem to have or a bad one. Before, it took us three to five days to provision one server. Now [we] can do 15 to 20 servers in 15 minutes," he said.

Premus said he hasn't increased CPU utilization as much as expected—most systems are topping out at 40%.

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