H&R Block points to IT savings with virtualization

As the Monday U.S. deadline for filing taxes quickly approaches, tax preparation firm H&R Block Inc. says it has found a way to cut IT costs.

With the use of virtualization software from EMC Corp. subsidiary VMware Inc., the tax firm estimates it has saved about 1 million dollars on hardware purchases since rolling out the technology in June 2005, said Ron Rosenkoetter, senior systems engineer for H&R Block, in Kansas City, Missouri.

"When I came on board, H&R Block had heard about virtualization and was looking to do server consolidation because like a lot of companies they had big server sprawl. About six years ago they only had 80 servers, now they're up to 600 or 700 servers, so they were adding a hundred servers every year," Rosenkoetter said. With servers dedicated to single applications, many of the machines were underutilized, he said.

Two years ago the tax prep firm started testing VMware's ESX Server virtualization software as a way to consolidate servers, and after a successful test during last year's tax season the company in June 2005 deployed the software.

"After the tax season, in June we found a couple of apps on 27 old physical servers that needed to be upgraded anyway, they were six years old," said Rosenkoetter.

H&R Block now has about 25 percent of its datacenter virtualized, and it has completely virtualized its in-house timesheet application, which gets some heavy usage during the company's busy tax season when seasonal employees come on board and the company's ranks swell to 100,000.

The tax specialist is looking to expand its virtualized environment even further, but not for all components of its IT infrastructure, such as its bigger databases and Exchange servers.

"As this time I don't see a need for it, e-mail servers need a lot of power and they use it. If e-mail is using about 60 or 70 percent, then I'm OK to just leave it on a physical machine," Rosenkoetter said.

One area where Rosenkoetter sees room for improvement is in VMware's monitoring capabilities.

Although VMware issues alerts to IT if there are dramatic spikes in CPU (central processing unit) or memory usage, he would like to have a more holistic awareness of how machines are performing over time.

"I don't care if a machine hits 99 percent for a minute, I'd rather have it take a sample over time, because machines do jump up every once in a while," Rosenkoetter said.

Market research firm IDC estimates that spending around server virtualization will increase to nearly US$15 billion worldwide by 2009, and many businesses are now starting to explore how to extend the use of virtualization beyond servers.

VMware, which has dominated the virtualization software market for years, now faces new competition from products based on the open-source Xen hypervisor project and from Microsoft Corp., which recently said it would provide its Virtual Server 2005 R2 as a free download. The move followed VMware's announcement in February to offer its VMware Server free.

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