Increasing Efficiency And Cost Effectiveness Of Virtualization

  • To better understand the benefits, costs, and risks associated with Red Hat Virtualization, Forrester Consulting conducted a Total Economic Impact™ (TEI) study.
  • Readers may want to consider certain criteria during their technology selection process.
  • Organizations can select a technology vendor and set up goals related to the selection criteria.

Technology organizations are rapidly seeking ways to automate operations and dedicate more talent to business-enabling and future-thinking projects. Red Hat Virtualization is a virtualization solution that includes a Kernel-based Virtual Machine (KVM) hypervisor and a web-based virtualization resource manager (Red Hat Virtualization Manager).

The platform suits organizations starting new virtualization initiatives and those that are migrating from proprietary virtualization technologies.

The platform suits organizations starting new virtualization initiatives and those that are migrating from proprietary virtualization technologies. In addition to infrastructure virtualization, Red Hat Virtualization sets the foundation for organizations that are considering deploying future technologies like containers and cloud-enabled workloads.

To better understand the benefits, costs, and risks associated with Red Hat Virtualization, Forrester Consulting conducted a Total Economic Impact™ (TEI) study, based on an interview with a large European transportation manufacturer that has used Red Hat Virtualization for over six months. This summary of the business impact enterprises may realize by deploying Red Hat Virtualization is based on a full TEI study (Forrester Total Economic Impact of Red Hat Virtualization, November 2016), which can be obtained from Red Hat.

Based on the TEI analysis, the interviewed customer has experienced a ROI of 103%, net present value (NPV) of $447,665, and a payback period of 5.6 months. Readers can use this organization’s case to understand the economic impact of choosing Red Hat Virtualization and apply or adapt the model to their own situation and experience.

QUANTIFIED BENEFITS OF RED HAT VIRTUALIZATION

Based on the customer interview, benefits of Red Hat Virtualization include:

  • Faster resource provisioning and deployment. This benefit focuses on reduction in time and effort to set up a virtual machine (VM). The customer highlighted that achievements in automating workflows reduced the five-day process, which included 1 hour of work, to 20 minutes with minimal to no lead time. The customer estimates that 10% to 20% of an infrastructure developer’s time is saved each year by increased virtualization task and process efficiency.
  • Higher virtualization performance. This benefit centers on the ability to get more virtualized performance out of physical hosts. The customer mentioned a higher ratio of overcommit with Red Hat Virtualization over the legacy solution. The ratio of cores to VM was 1 to 1 with the legacy solution and 1 to 1.75 with Red Hat Virtualization. The customer also found that Red Hat Virtualization scaled better and had fewer issues when virtualizing above a certain threshold of cores.
Based on the TEI analysis, the interviewed customer has experienced a ROI of 103%, net present value (NPV) of $447,665, and a payback period of 5.6 months.

TEI Analysis Based On Interview With A Large European Transportation Manufacturer

From the information provided in the interviews, Forrester constructed a TEI framework for those organizations considering implementing Red Hat Virtualization, covered in greater detail in the full study. The TEI methodology includes analysis of benefits and costs with risk-adjustment, as well as consideration of long-term, or “flexibility,” benefits that affect investment decisions, to help organizations understand how to take advantage of specific opportunities, reduce costs, and improve the overall business goals of winning, serving, and retaining customers. Specifically, Forrester:

  • Interviewed Red Hat marketing, sales, and consulting personnel along with Forrester analysts to gather data relative to the Red Hat Virtualization product and marketplace.
  • Interviewed one organization currently using Red Hat Virtualization to obtain data with respect to costs, benefits, risks, and long-term flexibility. Constructed a financial model representative of the interviews.
  • Risk-adjusted the financial model based on issues and concerns from the interviewed organization.

For this study, Forrester interviewed a large European transportation manufacturer with the following characteristics:

  • 6,000 staff in IT services, with 70 in Linux infrastructure operations, 18 on the transition team, and 17 in service design.
  • 3,000 Linux servers, with 80% virtualized, and 10% of the virtualized environment was done with Red Hat Virtualization.
  • Red Hat Virtualization is part of the organization’s larger plan to implement a private cloud with Red Hat Cloud Infrastructure (RHCI).

Prior to engaging Red Hat, the customer used a single virtualization solution for all workloads and operating systems. Through a reorganization effort, application hosting teams were given the flexibility to choose best-of-breed virtualization technologies for their respective applications. This flexibility resulted in three main tracks of virtualization for Java, mainframe, and hosting for a third application framework.

The Java application hosting team decided to investigate further into a new version of KVM for Linux systems. The customer noted KVM’s usability and maintainability were better than the legacy solution. As the customer needed an enterprise solution and did not intend to deploy KVM without a centralized VM tool, Red Hat Virtualization became the leading option for the customer.

The interviewed customer’s prior deployment of RHEL and subsequent vision to deploy RHCI solidified its choice to centralize and adopt Red Hat Virtualization. Although Red Hat Virtualization quickly became the predominant choice for the customer, readers may also want to consider the following criteria during their technology selection process:

  • Capability to automate processes and tasks and how the time and effort compare with the legacy or alternative solution.
  • Asset efficiency, virtualization, or physical server limits, and capability to achieve the same or better performance with the same capital investment in infrastructure.
  • Alignment with the organization’s long-term strategies for virtualization, private cloud, and hybrid cloud deployments.

Based on the criteria above, organizations can select a technology vendor and set up goals related to the selection criteria such as:

  • Improve staff productivity by reducing time and effort dedicated to virtualization tasks and setting up environments.
  • Increase VM density and reduce long-term infrastructure capital expenditures. Create opportunities for natural synergies among solutions from the same vendor.

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