Wondering if virtualization is paying off for your B2B company? Here's how to measure your return on investment (ROI):
- Server Usage and Consolidation: Aim for at least a 3:1 VM-to-physical server ratio.
- Cost Savings: Track reductions in energy, cooling, and IT staff time.
- System Performance: Monitor transaction speed, uptime, and frequency of issues.
- Total Ownership Costs: Factor in hardware, software, maintenance, and training.
- Ongoing Management: Use tools to keep tabs on your virtual environment.
Remember: Virtualization ROI isn't just about quick savings. It's about long-term benefits like improved disaster recovery and business flexibility.
For big companies (50+ servers), virtualization is often a no-brainer, with ROI in 8-18 months. Smaller businesses? It's not always cheaper than replacing physical servers.
To boost your virtualization ROI:
- Set clear, measurable goals
- Use vendor ROI calculators
- Compare results to your starting point
- Don't ignore intangible benefits
Keep measuring, keep adjusting, and you'll get the most out of your virtual environment.
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Basics of Virtualization ROI
Virtualization ROI isn't just about quick savings. It's a complex calculation that involves several key factors. Let's break it down.
What Makes Up Virtualization ROI
1. Cost Savings
This includes reduced hardware costs, lower energy bills, and less data center space. One company cut software license costs by 10% just by reducing over-provisioning.
2. System Performance
Better performance can boost productivity. Think faster apps and less downtime.
3. Risk Management
Improved disaster recovery and system reliability help minimize potential losses.
4. Operational Efficiency
Virtualization can streamline IT operations, cutting labor costs and freeing up staff for strategic tasks.
5. Scalability and Flexibility
Quick resource deployment can speed up time-to-market for new products or services.
But here's the kicker: virtualization isn't always a money-saver, especially for smaller businesses. Matt Prigge, a virtualization consultant, says:
"Probably 50% of the small and midsize business virtualization implementations I see are not cheaper than simply replacing the physical servers already there."
For bigger organizations, it's a different story. Chris Wolf, an analyst at Burton Group Inc., puts it bluntly:
"Server virtualization is an absolute no-brainer for organizations with 50 or more servers."
These larger setups often see ROI in 8 to 18 months.
Want to boost your virtualization ROI? Try these:
- Automate manual processes
- Monitor virtual and physical environments
- Manage virtual machine sprawl
- Implement solid backup and recovery
- Validate virtualized app performance
But don't forget ongoing costs. Lisa Crewe, Product Marketing Director for Akorri, nails it:
"There is no free ride when it comes to virtualization."
You've got to factor in the costs of managing your virtual environment. Tools like Akorri's BalancePoint can help by measuring virtualization's impact across your IT setup.
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5 Main ROI Metrics for Virtualization
Measuring the return on investment (ROI) for virtualization in B2B companies isn't just about crunching numbers. It's about understanding how this tech impacts your bottom line. Let's break down the five key metrics you need to watch.
Server Usage and Consolidation
Virtualization's big selling point? Cramming multiple virtual machines (VMs) onto fewer physical servers. It's like playing Tetris with your IT infrastructure.
Chris Wolf from Burton Group Inc. puts it bluntly:
"Server virtualization is an absolute no-brainer for organizations with 50 or more servers."
Big companies often see ROI within 8 to 18 months. But smaller businesses? Not always a slam dunk. Matt Prigge, a virtualization consultant, warns:
"Probably 50 percent of the small- and medium- business virtualization implementations I see are not cheaper than simply replacing the physical servers already there."
To measure this:
- Count your physical servers before and after
- Check how much you're using those virtualized servers
- Figure out your VM-to-physical server ratio
Aim for at least a 3:1 ratio. That's usually where you start seeing real savings.
Cost Savings in Daily Operations
This is about the money you save on power, cooling, and IT staff time. Virtualization can slash your energy bills and shrink your carbon footprint.
How to calculate:
- Compare energy costs before and after
- See how much less cooling you need
- Track changes in IT staff time spent babysitting servers
Fun fact: Old-school servers typically run at about 40% energy efficiency. Virtualization can crank that up, saving you a bundle over time.
System Performance and Uptime
It's not just about saving cash. How's your system actually performing?
Keep an eye on:
- How fast transactions are processed
- Number of transactions per hour
- How often your system's up and running
- How long between system hiccups
Most application management systems can give you these numbers. Compare before and after virtualization to see if you're really getting more bang for your buck.
Total Ownership Costs
This is the big picture stuff. What's virtualization really costing you?
Include:
- Hardware (servers, storage networks)
- Software licenses
- Ongoing maintenance and support
- Training your IT folks
Here's a real-world example:
- Three beefy host servers: $16,000 each
- Storage Area Network (SAN): About $40,000
- Virtualization software: $3,000 to $6,000 per instance
Sounds pricey, right? But here's the kicker: One study found that virtualizing 18 servers onto 3 physical hosts saved over $31,000 compared to keeping each on its own hardware.
How to Measure and Track ROI
Want to know if virtualization is paying off? Here's how:
1. Get a baseline
Document your current costs and performance before you start.
2. Set clear goals
What does success look like for you? Lower costs? Faster performance? Smoother operations?
3. Use ROI calculators
VMware and Microsoft offer tools to estimate potential savings.
4. Keep tabs
Regularly check your metrics against your baseline and goals.
5. Don't forget the intangibles
Some benefits, like better disaster recovery or increased business flexibility, don't have a price tag but still matter.
Conclusion
Virtualization has changed the game for B2B companies. But how do you know if it's working? Let's break down the key points we've covered about measuring virtualization ROI.
The Big Picture
Server Consolidation: This is where the magic happens. Chris Wolf from Burton Group Inc. puts it bluntly:
"Server virtualization is an absolute no-brainer for organizations with 50 or more servers."
Big companies often see ROI in 8-18 months. But smaller businesses? It's not always a slam dunk. Matt Prigge, a virtualization consultant, warns:
"Probably 50 percent of the small- and medium- business virtualization implementations I see are not cheaper than simply replacing the physical servers already there."
Saving More Than Just Hardware: Sure, you'll buy fewer servers. But don't forget about energy bills, cooling costs, and IT staff time. One study found virtualizing 18 servers onto 3 physical hosts saved over $31,000 compared to keeping each server separate.
Performance Matters: It's not just about saving money. How fast are your systems? How often are they up? How many transactions can they handle? These numbers tell you if virtualization is actually making your business run better.
The Real Cost: This is where things get interesting. You've got to factor in hardware, software, maintenance, support, and training. A typical setup might look like this:
- Three host servers: $48,000 ($16,000 each)
- Storage Area Network (SAN): $40,000
- Virtualization software: $3,000 to $6,000 per instance
Sounds expensive, right? But the long-term savings can be huge.
Keeping Things Running: Lisa Crewe from Akorri reminds us:
"There is no free ride when it comes to virtualization."
You need tools to keep an eye on how virtualization affects your whole IT setup. Otherwise, you might get hit with surprise costs.
Remember, ROI isn't just about money. Better disaster recovery, more business flexibility, and getting new products or services to market faster all count too.
Want to get the most out of your virtualization investment? Here's what to do:
1. Set clear goals before you start. Make sure you can measure them.
2. Use ROI calculators from vendors like VMware and Microsoft.
3. Keep comparing your results to where you started.
4. Don't ignore the benefits you can't put a price tag on.
Virtualization can be a game-changer. But like any tool, it's all about how you use it. Keep measuring, keep adjusting, and you'll be on your way to getting the most out of your virtual environment.
FAQs
What is the ROI of virtualization?
Calculating virtualization ROI isn't just about numbers - it's about seeing the big picture of your IT operations. Here's how to break it down:
- Add up all costs (initial and ongoing)
- Calculate your savings
- Compare the two
Sounds easy, right? Well, there's more to it.
Costs to consider:
- Software licenses
- New hardware (if needed)
- IT team training
- Ongoing maintenance
Savings to factor in:
- Reduced hardware needs
- Lower energy bills
- Less data center space
- Decreased maintenance costs
But here's the thing: ROI isn't just about money. You've got to think about the intangibles too.
"Determining the ROI of a project -- especially one that involves virtualization -- can be tricky." - Enterprise Systems
Why? Some benefits are hard to price. Like:
- Improved disaster recovery
- Faster new service deployment
- Increased business agility
These can hugely impact your business, even if they don't show up neatly on a balance sheet.
Pro tip: Don't calculate ROI just once. Keep tabs on it regularly. Your virtualized environment will change, and so should your ROI calculations.
Virtualization ROI can vary a lot based on your situation. Your deployment scale, IT needs, and how well you implement and manage your virtual environment all matter.
The bottom line? Virtualization can transform your IT operations. But to get its true value, look beyond the numbers. Keep measuring, keep adjusting, and you'll make the most of your virtualization investment.
