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					                   The Business Case in Virtualization
                         Summary Document               Impact Research           1

  Mid-market enterprises are in the sweet spot to achieve cost
  savings from virtualization

         Despite being a very powerful technology, virtualization benefits are more readily realized in
          certain types of enterprises.

         Two key factors are leading indicators of greatest success:

                       Size of Enterprise                                 Number of Servers
                            (# of employees)                            (# of Supported Physical Servers)

             • Enterprise size affects the role of IT, the       • Thirty servers or more leads to the
               materiality of expenditure and savings,             greatest and most demonstrable cost
               and comfort with new technologies.                  savings and benefits when taking
                                                                   implementation costs into consideration
             • Very large companies may experience
               more difficulty in implementation due to
               established bureaucracies.
             • Very small companies have trouble
               justifying the investment.

                   Sweet Spot: ~100 to ~5,000                               Sweet Spot: 15+

          If there is organizational fit, virtualization does provide most vendor-stated benefits.                                   Impact Research                                                 2

  The virtualization business case will be rooted in hardware
          Implementation of Virtualization does not affect the number of applications, but rather the
           number of physical boxes in use.

          Thus, the majority of pure cost savings are linked to reduction in physical boxes.

          Cost avoidance and incremental business benefits exist in areas of Disaster Recovery
           (DR)/Business Continuity (BC) and efficiency, but are not always as tangible.

                            Business Case Value
            1. Reduction in one-time and ongoing hardware
                           acquisition costs
                                                                               Acquisition Cost Savings
              2. Reduction in hardware-related maintenance
                                  costs                                        25%-50%
                          3. Efficiency benefits from
                                                                               Monthly Recurring Savings
                           increased manageability
                             4. DR/BC enabled by
                              removing need for
                                  hardware                            Impact Research                                                3
                   Fit Indicators    Impact Research   4
                                                                                        Fit Indicators

  In the context of virtualization, success means achieving all
  three set benefits

                                         TANGIBLE BENEFITS:

                              Achieved the stated business case financial
                              objectives, including one-time and ongoing
                               cost savings and on-time implementation


        INTANGIBLE BENEFITS:                                            STRATEGIC BENEFITS:

                                                                   Recognized value of virtualization
  Recognized feature benefits inherent
                                                                  and have plans in place to leverage
     in virtualization and exhibited
                                                                     technology for future growth.
           improved efficiency.                         Impact Research                                             5
                                                                                                          Fit Indicators

  It’s necessary to look both within and outside of IT to
  accurately assess fit

             Virtualization can be implemented in any enterprise; however, success (as defined on the
              previous page) of that implementation depends on a number of factors, broken down into
              three summary categories.

                  •     IT Autonomy
                  •     Political Complexity
                  •     Size
                                                                                       • Materiality of Power
                  •     Etc.
                      Please see full report for           Company
                      additional Fit indicators and
                                                                                       • Proportion of Servers
                      detail.                            Characteristics                 to Virtualize
                                                                                       • Etc.
                                                                                        Please see full report for
                                                                                        additional Fit indicators and
                                                         IT Department                  detail.
       • Number of Servers
       • Utilization of Existing                              Server
         Servers                                          Infrastructure
       • Etc.
        Please see full report for
        additional Fit indicators and

              Despite being a “cool” technology, perform adequate due diligence in assessing fit.                                      Impact Research                                                   6
                                                                                                                                                         Fit Indicators

       Small and mid-sized companies make the most use of
       virtualization technology

          Virtualization is really an infrastructure                                   90%
           initiative that can bring some level of                                      70%
           benefit to any size of company.

                                                                                        60%                                                                    Not Using
          Although adoption penetration of                                             40%
           virtualization is greater in larger                                                                                                                 Using
           companies, the proportion of their                                           10%
           environment that is virtualized is much                                       0%
                                                                                               1-100   101-500      501-    1001-     2501-      5001+
           less significant.                                                                                        1000    2500      5000
                                                                                                                     # Employees
          The greatest benefit can be seen in
           small and mid-sized organizations.                                            70%               67%


                                                             % of Servers Virtualized    50%




                                                                                                  Small/Medium Enterprise           Large Enterprise                               Impact Research                                                                                                             7
                   Benefit Drivers     Impact Research   8
                                                                                                                        Benefit Drivers

  There are real savings resulting from virtualization
                Virtualization implementations bring benefits that span both
                 tangible and intangible benefit areas:                                                       Many clients
                                                                                                          interviewed realized
                    •      Cost Savings (spending less)                                                    ongoing savings of
                    •      Cost Avoidance (not spending more)                                                    30-50%
                    •      Intangible Benefits (not readily quantifiable)
                                                   DECREASE HARDWARE ACQUISITION COSTS

                                                     by buying and setting up fewer servers

                                                   SHRINK YOUR FOOTPRINT
     Please see full report for                      by decreasing rack space and cutting back on cooling/electrical costs
     additional detail on
     assessing cost savings
                                                   ENABLE AUTOMATIC FAILOVER

                                                     to improve/enable DR and BC operations

                                                   HELP BUSINESS GROW FASTER WHILE KEEPING STAFF CONSTANT
                                                     by making staff more efficient and repurposing/reallocating freed resources

                                                   IMPROVED MANAGEABILITY & FLEXIBILITY

     Please see full report for all                SEPARATION OF HARDWARE/SOFTWARE LAYERS
     7 intangible benefits
                                                   VIRTUALIZATION OF DESKTOPS
                                                   Etc.                                                   Impact Research                                                    9
                   Pitfalls to Avoid      Impact Research   10
                                                                                                                                         Common Pitfalls

  Heed the warnings of your peers
                                                                                                                                     Please see full report for
                                     There are 10 key pitfalls we identified, of which 2 are highlighted below:                     detail of all 10 pitfalls.

                                  Be wary of including FTE headcount reduction
                                 Be Wary of Including FTE Headcount Reduction
                                    Companies we spoke to had found improved efficiency in their maintenance staff, but this is rarely sufficient to
                                    remove resources altogether since, in most cases, the system administrators perform other roles in the IT
                                 Quell Your Expectation of HUGE Consolidation
                                      Quell your expectation of huge consolidation. Consolidation ratios mentioned by the vendors differ from actual
                                      client experiences.

    Number of Virtual Machines

                                                                                                       What vendors report…


                                                                                                       What to expect…

                                               Per Core             Per Processor                                                              Impact Research                                                                     11
                   Making the Virtualization
                        Business Case          Impact Research      12
                                                                                                                                           Business Case Areas

  The business case should be based primarily on hard cost
              Virtualization has the benefit of having real cost savings; use these instead of quantifying
               other intangible benefits or cost avoidance items that may obfuscate the real cost-saving
               benefits which exist.
              The preliminary business case can have a tolerance of +/- 25%, but be sure that all areas are
               addressed, as per the table below:

                                                      One-time                                                                       Ongoing
                 Cost                • Hardware Acquisition                                                   •Facilities: Cooling, Power and Rack Space
              Savings                                                                                         •Incremental Hardware Acquisition

                Cost                                                                                          •Disaster Recovery and Business Continuity
                                                                                                              •Labor and Maintenance Savings

                                     •Host Machine Hardware                                                   •Virtualization Software Maintenance
                                     •Virtualization Software                                                 •Staff Training (Turnover)
                                     •Purchase of the SAN (if required)                                       •Salary Increases (In-demand Skills)
                                     •Staff Training and Consultancy Costs

           Please see full report for detail and rule-of-thumb calculations behind these Cost Saving and Expenditure areas                                                         Impact Research                                                                     13
                   Creating the Plan       Impact Research   14
  Twelve critical planning steps for virtualization implementation
          Based on successful cross-industry implementations, below is a compiled leading-practices
           guide to moving forward with virtualization.

                                      Step 2:                                              Step 4:
      Step 1:                        Developin                          Step 3:           Capacity      Step 5:     Step 6:
  Determining the                      g the                            Gaining          Planning &    Hardware    Software
     Approach                        Business                           Buy-In           Benchmar      Selection   Selection
                                       Case                                                 king

                                     Step 8:                                                                        Step 12:
                                                                                          Step 10:
       Step 7:                      Applicatio                                                                     Monitoring
                                                                        Step 9:          Centralize/   Step 11:
      Resourcin                         n                                                                              &
                                                                        Testing          Consolidat    Migrate
          g                         Sequencin                                                                      Expansion

          Please see full report for details and breakdown of each best-practice step.                                                       Impact Research                                     15

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