February 04, 2009, 8:16 PM — Virtualization has become one of the biggest trends in IT in the last eighteen months, with Gartner predicting it to be the single most important technology for IT Departments by 2010. As more and more organizations hop on the Virtualization bandwagon, the question that should be asked: Does virtualization really lead to significant cost savings? Most IT and finance managers will say yes, but there seems to be a big misunderstanding as to what a virtualized environment means in terms of costs savings – particularly when it comes to software licensing. Because usage on virtual environments is difficult to measure and the premise encourages multiple usages of one license – in the long run – it could actually end up costing more for licenses year over year.
In the new, more consolidated data center – vendors are fighting to protect revenues and have yet to figure out a way to accurately license virtual environments. And, each software vendor treats virtualization and licensing very differently. Microsoft, for example, has faced scrutiny over its licensing schemes and has succumbed to pressure, changing its 90-day rule for re-assigning server applications. On the other hand, VMWare is considered soft partitioning and under Oracle's standard licensing policy, “soft partitions are not an acceptable means to limit licensing requirements.” There are a variety of partitioning scenarios even within this policy, but each has its own challenges and each situation should be viewed separately for licensing compliance.
Consider the traditional methods of software licensing – you buy one license and are given the right to install that license on one computer or server. When one physical computer is divided into multiple virtual computers and can be moved around or destroyed with the click of a button, what happens to the applications running in that environment? Should every instance of the use of that license be charged as a separate license? If so, we are talking exponential fees, particularly for large organizations that could potentially deploy hundreds of virtual computers and/or severs.
Should customers pay for each separate virtual computer and its subsequent application usage? The answer is no, usage may appear to go up, when in fact it doesn't – it has only changed. We must also remember that virtualization hardware itself comes with a hefty price tag. Of course, the issue is to make a distinction between hard and soft partitioning and aligning the environment with licensing compliance rules.
Licensing in a virtualized environment adds to the already complex world of enterprise software licensing. So, let's look at the cost savings that we know.
Hardware
Turning five physical servers into four virtual and one physical will obviously cut down on hardware costs. The caveat – the machines required to run your new virtual environments are much more expensive. Hardware suppliers aren't afraid of virtualization – they know that they will be selling many more high-performing machines in order to manage virtual environments. Think of it as selling 10 KIA sedans to one top of the line Mercedes – the end result is the same for the seller.
Cost savings will come from using as much existing hardware as possible when switching over to a virtualized environment. Proper planning and an evaluation of the hardware needed up front are key to benefiting from hardware cost savings.
Real Estate
When we say real estate, we mean facilities costs – fixed costs – associated with data centers. That extra closet, or sometimes an entire floor dependant on company size, that houses a generator, fans and giant servers. Because virtual environments exist outside of the typical data center, fixed costs of the “real estate” are eliminated.
Having servers exist in a virtual environment also offers the benefit of being able to eliminate problematic systems in seconds without leaving fragments of the faulty applications. Back-up servers can also be replicated several times if necessary without incurring extra hardware costs.
Energy Savings
The Green movement is everywhere, in our supermarkets, in advertising, and now it's the craze in technology. With electric costs skyrocketing and companies wanting to be more environmentally conscious, IT departments are considering virtualization as one method of cutting down on energy costs. By consolidating the functions of several machines into a single machine, processors are running more efficiently and using less energy. With over 540,000 virtual machines deployed in 2007 and upwards of 4 million expected in 2009 (Gartner), cost savings are significant and a reduction of carbon footprints across the board will be the icing on the cake.
The Unknowns
We have addressed the known areas of cost savings, but what about the unknowns, the variables – licensing and software costs.
