In March '09, former Intel executive Pat Gelsinger predicted that Nehalem-based Xeon 5500 servers would become "cash machines" for the IT industry, due to unprecedented power-efficient performance gains that can deliver a very short ROI for IT.  Pat's description of the Xeon 5500 was validated during a briefing with Intel CIO Diane Bryant in San Francisco on October 6^th, as reported in TG Daily.

She discussed the ROI achieved and the impact that a proactive serve refresh strategy has had on Intel’s bottom line, as reported in PC World.  Some of her key points:

·         Intel is expecting up to $250M savings over 8 years, saved $45M in 2008 alone.

·         Despite these results, economy forced Intel to re-evaluate capital spending in 2009.  Found that delaying server refresh would cost us $19M more than continuing.  So we continued. 

·         Getting an average of 10:1 server consolidation with Xeon 5500 in design computing environment and 20:1 virtualization server refresh ratios in Office/Enterprise. 

Did you know that Server Refresh is also the #1 driver of Intel’s Carbon Footprint reduction as well, with an initiative to reduce Carbon footprint by 5% per year.  We are projected to reduce by approximately 4K metric tons (2009) and this server refresh strategy is forecasted to be #1 project to help IT reduce Carbon.

Staying on the green IT theme, the newest ally for IT to help drive carbon-reduction and energy cost savings is the energy utilities.  A prime example of this is the Energy Trust of Oregon, who offers cash incentives to motivate Oregon businesses to make energy saving investments.  Intel gained access to a $250K incentive from them as a result of energy savings gained by replacing older servers with newer, more energy-efficient servers in our data centers. If you are replacing older servers with modern energy-efficient Xeon 5500 based servers and you haven’t had this conversation with your utility yet – please do so.  You may be eligible for utility incentives for energy savings that can lower your operating costs and reduce the impact of your business on the environment.  To estimate the energy savings associated with server refresh, go to www.intel.com/go/xeonestimator. 

You’re going to hear more about these “cash machines” in the very near future…stay tuned!

Bryce

BMW automobiles are known for speed, agility, quality, style and probably some other attributes I’m forgetting. Their IT infrastructure requires the same attributes for them to remain competitive in their industry.

Proactive server refresh, now using Xeon 5500 are part of that equation.  This recent case study outlines how BMWs migration to Xeon 5500 series lowers total cost of ownership and increases flexibility for their business.

Server refresh with Xeon 5500 delivers 30% higher IT performance with 75% less hardware, compared to dual core Xeon 5100 technology. 

The case study also says that BMW’s next refresh target are their RISC based servers

Can you gain a competitive edge replacing aging servers in your infrastructure

Estimate your savings today (www.intel.com/go/xeonestimator)

Every morning we hear about the staggering job losses mounting up in businesses around the world. Hundreds of thousands of jobs have been lost so far. Unfortunately, no one seems immune from the impacts of this recession. In fact, the recession is now impacting the data center and a new segment of the work force is at risk – your servers!

Would you keep an employee who worked less than 4 hours per day, over-spent valuable resources and was someone you had to manage constantly – obviously, the answer is NO! That is the situation today with install base single-core servers.  Aging servers are a perfect target for downsizing in this tough economy. Industry analyst IDC estimates that there are approximately 30 million servers installed in businesses around the world and about 40% of those use single-core processors (4 years old or older).

Let’s look at the 2008 performance review of these single core servers.

ð       Excessive Spending Habits: For the performance they deliver, these servers take up too much space and over-consume power and cooling resources.

ð       Lazy Work Habits: A typical non virtualized server runs at only 10-15% utilization – meaning they sit idle a majority of your work day.

ð       Needs Excessive Management: Aging servers require more maintenance. Extended warranties are expensive (estimated $600-1200 per server depending on the type of server) and if you don’t extend the warranty, the risk of downtime is on IT and the business. While the costs to maintain a server vary widely , during a recent discussion with Forrester research, they indicated that an aging server can cost up 3x the costs of an in-warranty server (under standard 3 yr manufacturer support).

Continuing to use these old servers is not a wise business strategy. But if you fire your existing infrastructure, who can you hire to do the work? Simple, you hire fewer new multi-core servers running virtualization to replace a large number of install base servers.

But, is replacing them worth the effort … I mean, why fix what ain’t broke? About 2/3 of IT’s budget is consumed maintaining existing infrastructure (source Gartner), leaving a measly 1/3 for innovation and value add business capability. So in this recession, unless you are focused on reducing OpEx, the IT budget that you are cutting is likely restricting your business competitiveness and new service delivery - the value of innovation.

Replacing old servers with new offers both cost and productivity advantages for IT in addition to improved services and competitiveness for business. Read some of the success stories from businesses in 2008 where proactive IT investment commonly resulted in 30-40% reductions in total costs, enhanced business services, improved competitiveness and rapid financial ROI. In fact, the business ROI on replacing an old server with new is staggering and in many cases can pay for itself in less than 12 months, by reducing power / cooling costs, avoiding new construction, simplifying and reducing maintenance costs, reducing applicaiton and OS licensing costs and more.

What characteristics should you look for in a new server hire? (to maximize this savings and accelerate ROI)

ð       Versatile Performance. Consider a wide range of benchmarks and application usages when evaluating capability of the server you intend to hire.  Servers hired today for a specific task may likely get re-purposed over their lifetime.

               Also ... if your workload is specialized and data demanding (like database / enterprise resource planning / business intelligence) consider a specialized

               server with unique skills, like larger compute, I/O and memory scalability to handle these larger workloads with increased reliability and headroom for peak loads.

ð       Energy Efficiency. Newer multi-core servers feature nearly 10x the performance / watt of single core servers. Use the SPECPower benchmark to assess which servers are the most energy efficient.

ð       Virtualization. When virtualizing servers, hire servers that can support robust consolidation ratios and built for flexibility and versatility. Many new hardware-assist technologies help boost the ability to migrate virtual machines (application/OS combination) from one server to another.

ð       Standardization. Unlike hiring employees where diversity is valued and encouraged, using a smaller number of reference designs in your IT environment, can lower operating and support costs.

A final consideration for hiring new servers is total cost of ownership. Just like hiring people, you must consider the incidental or hidden costs behind the salary and sign-on bonus (do these still exist today?). The average life for a server is 4 years. Buying an inexpensive server for your needs today may optimize today’s budget but may end up costing you over the long run in software licensing, power/cooling. Intel IT recently did an ROI analysis on buying higher end processors and found that using higher end processors reduced TCO significantly – by doing more with less.

Last year, Intel IT fired about 20,000 servers and more are expected to receive pink slips in 2009 - read more about this in the 2008 Intel ITannual perfomance report

If your goals are to lower costs, improve services and boost revenue while increasing business competitiveness, then replacing aging server infrastructure is an Intelligent Investment. Learn more at www.intel.com/go/xeon

Are your single core servers at risk of losing their jobs?  If not, they should be!

So the Question is ... Will You Cut IT Costs and Boost Business Competitiveness by downsizing your Server Infrastructure in 2009?

Chris

In the second comment around the right time for datacenter refresh, I'd like to look at Costs. Power is covered in the comment from Chris and I covered some comments on Space already in the discussion forum. So what it really boils down to is cost of running your existing datacenter versus the costs of throwing the servers out and replacing them. It is clear also from the other comments, that it doesn't make sense to throw out servers which are utilized in average 15% and have them replaced by new servers, which are 5 times faster and utilize the servers 3%... Great achievement hu?... Server Refresh makes therefore most sense to do only when consolidating the environment. How do I consolidate the environment? By using virtualization. See Helmuts blog and the whole theme next week on that topic.

Therefore let's look at the real cost factors, when refreshing the servers:

• Cost of new hardware: That is obviously a significant capital expenditure and starting at about 2000$ for a reasonable DP server. But the trick is also that a lot of server companies offer financing models which make this an operational expenditure. But key is also to understand, that by consolidating your servers at the same time the depreciation costs of the servers may actually decrease, as you have less hardware to depreciate!

• Maintenance costs: Again, reducing the number of servers running given applications, and at the same time unifying the environment helps significantly to reduce the maintenance costs. This can be a significant step in unifying on a given OS or hardware platform.

• Power consumption: Similar to utilization, it doesn't make sense to just look at the power consumption by server, but at the consumption by performance and therefore I can save about 38% in power bills, on a given workload vs. the previous generation hardware and about a 10^th of the power of hardware which is 2-3years old. Again, obviously only, if I do this in combination of consolidating the servers. Trick often is, that those costs are often not taken into consideration, as those are not billed to the IT department but to the facilities group. So it becomes an executive decision to ensure they are looked at!.

• Switching costs. Obviously very hard to measure, as this depends on the environment of the customer. And I talked to the customer who said: "No I will never touch this AS400 system, as it just runs and runs and runs." On the other hand I had a customer who replaced just those AS400 systems and saw huge synergistic effects, because he put the application on a standard based architecture and was able to finally integrate it in the other production system and therefore have one reporting and analytics tool.

I try to make a long story short. This is not something you do very often, but you don't get married every year either. But most of the time it's worth going through the efforts. So thinking about replacing the servers which are older than 2-3years is definitely worth while and often an effort which pays off in the first year!