Virtualization Cost/Benefit Analysis

CNT 4603: Project Two Page 1 Dr. Mark Llewellyn ©

CNT 4603: System Administration Fall 2019

Project Two

Department of Computer Science University of Central Florida

Instructor : Dr. Mark Llewellyn markl@cs.ucf.edu HEC 236, 407-823-2790 Office Hours: M & W: 2:30-4:30pm

T & Th: 2:00-3:00pm

CNT 4603: Project Two Page 2 Dr. Mark Llewellyn ©

Project Two: Overview • Title: “Project Two: Virtualization Cost/Benefit Analysis” • Points: 100 points • Due Date: Sunday October 6, 2019 by 11:59 pm

(WebCourses time)

• Objectives: 1. To practice conducting a financial feasibility cost benefit analysis for

a server virtualization project. 2. To prepare an executive summary of the feasibility study.

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Project Two: The Current Scenario • What you are going to do in this project is pretend that you are

the system administrator for an organization that is attempting to determine if virtualization of its computing infrastructure would be beneficial to the organization from a financial perspective.

• As the system administrator you are in charge of conducting the cost/benefit analysis for the proposed virtualization project.

• This will include creating financial spreadsheets using a 5 year projection and writing a brief report summarizing your findings.

• The next few pages describe the current infrastructure of the organization and the proposed virtualization project. Let’s call the organization the ITCorp.

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Project Two: The Current Scenario • Currently ITCorp is running 5000 physical servers in its data center

which support various applications and several different operating systems.

• These servers are configured into three different groups:

– Group 1 consists of 3500 mission critical servers. Twenty-five hundred of these servers (call them Group 1A) consume 3200W of power each at full load and the other one thousand (call them Group 1B) consume 3800W of power each at full load. The Group 1A servers average load is 25% and the Group 1B servers average load is 30%

– Group 2 consists of 500 non-mission critical in-house application and file servers, each of which consumes 2800W of power at full load. The servers in this group run with an average load of 10%

– Group 3 consists of a pool of 1000 redundant servers utilized as backup servers. Nine hundred of these servers (call them Group 3A) draw 3800W at full load and are used as backups for Group 1 servers. The other one hundred servers (call them Group 3B) draw 2800W at full load and are used as backups for Group 2 servers. Group 3A and 3B servers run at 2% load.

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Project Two: The Current Scenario • Project Hint #1:

• The power consumed by a server is measured in Watts. Power companies charge for power based on kWH (kilowatt-Hours). The Group1A servers consume 3200W of power at full load. However, they only average a 25% load, so what they actually consume, on average, is 3200W x 0.25 = 800W. A device that consumes 1000W = 1kW for 1 hour will use 1kWH of power. Thus, the Group1A servers are consuming 800W = 0.80kW, so in 1 hour they will use 0.80kWH of power. Servers run 24/7 so in 1 day, 1 Group1A server will use 0.80kWH x 24hr = 19.2kWH of power. There are 2500 servers in Group1A, so collectively they will consume 2500 x 19.2kWH = 48000kWH of power in 1 day. Our assumption (see page 16) is that the power company is charging 15 cents/kwH, so, running Group1A servers for 1 day will cost: 48000kWH x 0.15$/kWH = $7200.00. For year one, the cost to power Group1A servers will be $7200.00 x 365 = $2,628,000.00.

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Project Two: The Current Scenario • The maintenance contracts on the current physical servers are as

follows:

– Group 1A (3200W) servers: $7500.00/server/year

– Group 1B (3800W) servers: $9500.00/server/year

– Group 2 (2800W) servers: $3000.00/server/year

– Group 3A (3800W) servers: $7500.00/server/year

– Group 3B (2800W) servers: $2500.00/server/year

• Assume that server maintenance costs will increase 4%/year over the duration of the study for all server maintenance agreements.

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Project Two: The Current Scenario • Project Hint #2: Use a fine grain breakdown of variables in your

spreadsheet – do not “lump together” various values.

Do it this way!

Do not do it this way!

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Project Two: The Current Scenario • Server administration efforts also vary across the server groups

as follows:

– Group 1A (3200W) servers: 15 administrative weeks/server/year

– Group 1B (3800W) servers: 18 administrative weeks/server/year

– Group 2 (2800W) servers: 7 administrative weeks/server/year

– Group 3A (3800W) servers: 12 administrative weeks/server/year

– Group 3B (2800W) servers: 5 administrative weeks/server/year

• Administrative costs are currently $100/administrative hour. Assume that administrative costs will increase at the rate of 2%/year over the duration of the study.

• An administrative day is 10 hours long. An administrative week is 7 days long. A server day is 24 hours long.

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Project Two: The Current Scenario • Server backup efforts also vary across the server groups as

follows:

– Group 1A (3200W) servers: these servers are backed-up nightly and require 90 minutes per server.

– Group 1B (3800W) servers: these servers are backed-up nightly and require 105 minutes per server.

– Group 2 (2800W) servers: these servers are backed-up weekly and require 4 hours per server.

– Group 3A (3800W) servers: these servers are backed-up nightly and require 90 minutes per server.

– Group 3B (2800W) servers: these servers are backed-up weekly and require 2 hours per server.

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Project Two: The Current Scenario • Project Hint #3:

• Be careful with units and time. Some servers are backed-up nightly, others weekly. Example – Group1A servers are backed-up nightly requiring 90 minutes/server. Thus, each server in Group1A requires 365 x 1.5 hours/year of administrative time for backups. Since you are given the time requirement in minutes and administrative time is based on hours, convert backup effort into hours, so 90 minutes = 1.5 hours. Thus, one server in Group1A requires a total of 547.5 hours of backup time in 1 year. There are 2500 servers in Group1A so the total time required for backups is 2500 x 547.5 = 1,368,750 hours. Administrators are paid at the rate of $100.00/hour, so the cost of backing up Group1A servers for year 1 of the study is 1,368,750 x 100 = $136,875,000.00

• Servers that are backed-up weekly require only 52 backups/year.

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Project Two: The Current Scenario • ITCorp currently employs an external security firm to run routine security

audits on the mission critical servers. This occurs once a month and the charge is $8500.00. Current contract with this firm guarantees this price through the duration of this study.

• ITCorp currently employs a data storage company to maintain archival backup copies of server backups. The charge for this service is billed monthly and is based on the data volume stored each month. The bill last month was $7500.00. Based on the data volume trend produced by ITCorp, it is expected that the next billing level plateau will be achieved at the start of year 3 of the study when the monthly cost will rise to $10,000.00/month. This rate is expected to remain the same throughout the duration of the study.

An aside: According to industry sources, the average cost of storing 1TB of file data is currently $3,351.00/year (about $280.00/month). The rate shown above for the archival backup service would be correct for an organization which is archiving about 27 TB/month.

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Project Two: The Proposed Scenario • The virtualization project proposed for the ITCorp would reduce

its current number of physical servers from 5000 to 1325.

– Group 1 servers reduced from 3500 to 700. (Note this is a 5:1 consolidation ratio)

– Group 2 servers reduced from 500 to 125. (Note this is a 4:1 consolidation ratio)

– Group 3 servers reduced from 1000 to 500. (Note this is a 2:1 consolidation ratio)

• Sun Server X7-8 servers have been selected to host the virtualized environments. This is one of Sun’s latest and leading edge x86 servers. This is a 5 rack unit (5U) server that supports installations of up to 16 four-socket servers in a 42U rack. Up to 3TB of memory per server is possible. Each four-socket server can be configured with up to 25.6 TB (total of 51.2TB) of NVMe flash with support for four additional SSDs or HDDs.

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Project Two: The Current Scenario • Project Hint #4:

• Note that no servers are actually lost in the virtualization scenario. For example, the Group1 servers are reduced from 3500 physical servers to 700 physical servers (a consolidation ration of 5:1). This means that the original 3500 servers are replaced with 700 new physical servers and 2800 virtual servers. Although it isn’t really important to us in this study, the most likely scenario is that the tasks/applications/functionality of the original 3500 servers will be distributed across the 2800 virtual servers, and the 700 new physical servers will only be tasked with supporting the virtual machines and probably will have no other functionality assigned to them in the proposed scenario.

• The next page will let you know how to specify the configuration of the new physical servers that ITCorp will be purchasing for this proposed project.

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Project Two: The Proposed Scenario • Information on the X7-8 model specifically can be found at:

https://www.oracle.com/servers/x86/x7-8/index.html

• Use the configurations shown below: • Processor = Intel Xeon 8168 2.7GHz, 24 core, 205W • CPUs = 8 • Memory (64GB DIMM) = 96 DIMMs • Memory (32GB DIMM) = none • Memory (16GB DIMM) = none • Hard Disk Drives = none • Solid State Drives = 8 SSDs • PCI-Express Card =16 PCIe Cards • Workload = 85% for Group1 and 60% for Group 3

Group 1 and Group 3 Server configurations

Group 2 configuration

• Processor = Intel Xeon 6140 2.3GHz, 18 core, 140W • CPUs = 4 • Memory (64GB DIMM) = 48 DIMMs • Memory (32 GB DIMM) = none • Memory (16GB DIMM) = none • Hard Disk Drives = none • Solid State Drives = 4 SSDs • PCI-Express Card = 8 PCIe Cards • Workload = 75%

Sun Server X7-8

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Project Two: The Proposed Scenario • To determine the cost of the new servers go to the following page:

https://shop.oracle.com/apex/f?p=dstore:5:11553073189555::NO::P5_PROD_ HIER_ID,P5_LPI:128046541231961668974184,12804654011235166885718 5: (See Configurations).

• Note that this cost calculator is actually for the Fujitsu SPARC M12-2 server, which is different than the X7-8 servers that we configured for the power. While this configuration is not exactly the same as that which we configured for the power calculator, its pretty close and will give us an accurate enough value for inclusion in our analysis.

• Use the “Small” configuration for the Group 2 servers and the “Large” configuration for Group 1 and 3 servers. Use this as the price for your new servers. Also note the price for the first year of Oracle’s Premier level support for this system and use this price as the first year price for the maintenance contract on each server. (Note that these prices are 12% of the server cost.)

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Project Two: The Proposed Scenario • The virtualization software of choice will be VMware (we’ll use VMware

vSphere) and this will cost $8500/physical server. The maintenance contract on this software will be priced at 15% of the original cost and will remain in effect at this rate for the duration of the study.

• Each new server will be under a server maintenance contract that will have an initial cost as per your research (from link on page 15) and this cost will increase by 3% in each year of the study.

• Its estimated that all new servers (both physical and virtual) will require 10 weeks/server/year of administrative effort with backup effort assumed to be 90 min/physical server/day.

• Training employees on the new virtualized systems will require a time expenditure equivalent to $2500/year/employee trained on the system. In years 1 and 2 of the study four employees will be trained and in all subsequent years of the study two employees will be trained per year.

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Project Two: The Current Scenario • Project Hint #5:

• Physical servers require backups, virtual servers do not. The virtual server resides on the physical server, so in backing up the physical server, the virtual servers residing on that physical server are also backed up.

• Both physical and virtual servers require administrative efforts. The difference (see page 18) is that the administrative cost/effort on a virtual machine is assumed to be only 50% of the administrative cost/effort on a virtual machine. For example, if a physical server requires 10 hours of administrative effort/week, then the cost for that would be 10 hours x $100.00/hour = $1000.00. If that physical server hosted 4 virtual machines that also each required 10 hours of administrative cost/effort/week, then the cost for administering the virtual machines would be (4 x 10 hours x $100.00/hour)/2 = $2000.00. Thus the total administrative cost/effort on that one physical server in 1 week would be $1000.00 + $2000.00 = $3000.00.

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Project Two: The Proposed Scenario • Some basic assumptions about ITCorp and the future as it pertains

to your cost/benefit analysis: – The cost of 1kwH of power is currently 15 cents. Assume that the cost of power

will increase 2%/year over the duration of the study.

– When calculating power costs for the new servers, note that the loading of each server was already factored into the value produced by the power calculator.

– Assume that server maintenance costs will increase 3%/year over the duration of the study for all server maintenance agreements.

– The outside service contracts for security and storage will continue in the proposed scenario just as they are to continue in the current scenario.

– Assume that administrative costs on a virtual server are only 50% of the administrative costs on a physical server.

– 1 administrative day is 10 hours long. 1 server day is 24 hours long. There are 365 days in one year.

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Project Two: Your Task • Your first task for this project is to construct spreadsheets like the ones

we discussed in class that will illustrate the current and proposed infrastructure costs for the ITCorp given this proposed virtualization project.

• You should create (1) a variables spreadsheet(s) that includes all the variables defined in the project, (2) a current infrastructure cost spreadsheet, (3) a virtualization projected cost spreadsheet, and (4) a summary spreadsheet that highlights the major costs and benefits of the project.

IMPORTANT ! ! ! You must create your spreadsheet using variables to identify the various costs that are being tracked. In other words, don’t hard code any numbers into the formulas in your spreadsheets. The following page illustrates one of the variables pages in my spreadsheet where I defined the variables used in current cost spreadsheets. You must include a similar page(s) in your spreadsheet.

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Project Two: Your Task • Once your spreadsheets are completed, you’ll construct a 1 page executive

summary report of your findings.

• This report should address the feasibility of the proposed project and its financial impact on the ITCorp.

• Normally, an executive summary summarizes a more complete accompanying report. You will not be preparing this more complete report in this case, you will only be preparing the executive summary.

• If you have never prepared an executive summary before (if you did project 1, you’ve have now done so), the following links might be useful:

http://en.wikipedia.org/wiki/Executive_summary http://libguides.wpi.edu/c.php?g=355392&p=2396307 http://writing.colostate.edu/guides/documents/execsum/

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Project Two: Your Task • Note that an executive summary is different from an abstract.

• Abstracts tend to be most common in academic environments whereas executive summaries are primarily confined to business environments.

• An abstract is a brief summarizing statement which is read by people who are trying to decide whether or not to read the entire document.

• An executive summary is the document in miniature which can be read in place of the longer document.

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Project Two: Deliverables • On or before 11:59 pm (WebCourses time) Sunday October 6,

2019 submit the following items via WebCourses:

1. A spreadsheet (similar to that we developed in class) with worksheets containing variable definitions, current cost infrastructure, proposed project cost infrastructure, and a summary worksheet.

2. A one page executive summary of your findings with respect to the feasibility of this project for the ITCorp.