Nationwide works to cut servers by half via virtualization

Nationwide Mutual Insurance Co.'s virtualization story starts with the numbers. The insurer says it is on track to reduce its physical count of x86 servers from about 5,000 machines several years ago to 2,500 or so, through the use of VMware Inc.'s virtualization software.

Nationwide estimates that it has saved a total of about $2.2 million in server hardware costs since launching the consolidation effort. Its ratio of virtual systems per physical server is about 13:1 on average, and some boxes are hosting as many as 20 virtual machines. The company says that by reducing its need for more floor space and electrical power, it has been able to put off a data center expansion for three years.

Many companies have similarly been able to save large sums of money through virtualization. But virtualizing systems also changes the dynamics of how IT departments provide services to their users, and that is helping to set the stage for something much bigger: cloud computing.

Microsoft Corp. CEO Steve Ballmer said in a message to customers this week announcing Windows Azure, the vendor's cloud computing platform, that the IT changes now taking place are "transformational" in nature. Ballmer also made the argument that customers ultimately will want the scalability and flexibility that cloud computing promises.

But convincing end users to adopt both virtualization and the cloud approach poses some challenges for IT managers.

Before Nationwide's IT staff can move an application or service running on a physical server to a virtual system, it first has to sell the concept to its customers on the business side, said Scott Miggo, vice president of infrastructure engineering at Nationwide Services Co., the insurer's IT arm.

The users often raise technical questions about proposed virtualization moves, but Miggo senses a broader underlying concern. "It's almost a sense of ownership," he said. "They feel that they have more control [of physical servers]." There also are worries that problems with another virtual server in a shared environment could bring down the entire machine, according to Miggo.

"What we're trying to do is convince them that with virtualization, there are all kinds of fail-safes," Miggo said. For instance, Nationwide is using VMware's VMotion tool to quickly move virtual machines to new servers as needed. The insurer also is working with VMware to build a "migration factory" to further speed up that process, he said.

In addition, IT points out that business users share in the cost savings generated by virtualization. It can cost a business unit about $1,200 per month to run a physical server, Miggo said. Once a system is moved to a virtual environment, that cost is reduced by half. Nationwide has reduced the number of its physical servers to 3,500 thus far, and it hopes to remove another 800 over the next year.

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