Impact Research 1 The Business Case in Virtualization Summary Document

Impact Research 2 Enterprise size affects the role of IT, the materiality of expenditure and savings, and comfort with new technologies. Very large companies may experience more difficulty in implementation due to established bureaucracies. Very small companies have trouble justifying the investment. Thirty servers or more leads to the greatest and most demonstrable cost savings and benefits when taking implementation costs into consideration 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: If there is organizational fit, virtualization does provide most vendor-stated benefits. Summary Size of Enterprise (# of employees) Sweet Spot: ~100 to ~5,000 Sweet Spot: 15+ Number of Servers (# of Supported Physical Servers)

Impact Research 3 2. Reduction in hardware-related maintenance costs The virtualization business case will be rooted in hardware savings  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. Summary 1. Reduction in one-time and ongoing hardware acquisition costs 4. DR/BC enabled by removing need for homogeneous hardware 3. Efficiency benefits from increased manageability Business Case Value 40%-75% Acquisition Cost Savings 25%-50% Monthly Recurring Savings

Impact Research 4 Fit Indicators

Impact Research 5 Fit Indicators In the context of virtualization, success means achieving all three set benefits SUCCESS INTANGIBLE BENEFITS: Recognized feature benefits inherent in virtualization and exhibited improved efficiency. TANGIBLE BENEFITS: Achieved the stated business case financial objectives, including one-time and ongoing cost savings and on-time implementation completion. STRATEGIC BENEFITS: Recognized value of virtualization and have plans in place to leverage technology for future growth.

Impact Research 6 It’s necessary to look both within and outside of IT to accurately assess fit Despite being a “cool” technology, perform adequate due diligence in assessing fit. Fit Indicators  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. Company Characteristics IT Department Characteristics Server Infrastructure IT Autonomy Political Complexity Size Etc. Materiality of Power Savings Proportion of Servers to Virtualize Etc. Number of Servers Utilization of Existing Servers Etc. Please see full report for additional Fit indicators and detail.

Impact Research 7 Small and mid-sized companies make the most use of virtualization technology  Virtualization is really an infrastructure initiative that can bring some level of benefit to any size of company.  Although adoption penetration of virtualization is greater in larger companies, the proportion of their environment that is virtualized is much less significant.  The greatest benefit can be seen in small and mid-sized organizations. Fit Indicators Planned/POC Using Not Using % of Servers Virtualized

Impact Research 8 Benefit Drivers

Impact Research 9 There are real savings resulting from virtualization implementation  Virtualization implementations bring benefits that span both tangible and intangible benefit areas: Cost Savings (spending less) Cost Avoidance (not spending more) Intangible Benefits (not readily quantifiable) Many clients interviewed realized ongoing savings of 30-50% Benefit Drivers SHRINK YOUR FOOTPRINT by decreasing rack space and cutting back on cooling/electrical costs 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 DECREASE HARDWARE ACQUISITION COSTS by buying and setting up fewer servers Cost Savings Cost Avoidance Intangible Benefits IMPROVED MANAGEABILITY & FLEXIBILITY SEPARATION OF HARDWARE/SOFTWARE LAYERS VIRTUALIZATION OF DESKTOPS Etc. Please see full report for additional detail on assessing cost savings Please see full report for all 7 intangible benefits

Impact Research 10 Pitfalls to Avoid

Impact Research 11 Heed the warnings of your peers  There are 10 key pitfalls we identified, of which 2 are highlighted below:  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 department. Quell your expectation of huge consolidation. Consolidation ratios mentioned by the vendors differ from actual client experiences. Common Pitfalls Be Wary of Including FTE Headcount Reduction Quell Your Expectation of HUGE Consolidation Per Processor Per Core What vendors report… What to expect… Number of Virtual Machines Please see full report for detail of all 10 pitfalls.

Impact Research 12 Making the Virtualization Business Case

Impact Research 13 The business case should be based primarily on hard cost savings  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: Business Case Areas Ongoing Cost Savings Costs Hardware Acquisition Facilities: Cooling, Power and Rack Space Incremental Hardware Acquisition Disaster Recovery and Business Continuity Labor and Maintenance Savings Host Machine Hardware Virtualization Software Purchase of the SAN (if required) Staff Training and Consultancy Costs Virtualization Software Maintenance Staff Training (Turnover) Salary Increases (In-demand Skills) One-time Cost Avoidance Please see full report for detail and rule-of-thumb calculations behind these Cost Saving and Expenditure areas

Impact Research 14 Creating the Plan

Impact Research 15 Twelve critical planning steps for virtualization implementation Step 1: Determining the Approach Step 2: Developin g the Business Case Step 3: Gaining Buy-In Step 4: Capacity Planning & Benchmar king Step 5: Hardware Selection Step 6: Software Selection Step 8: Applicatio n Sequencin g Step 9: Testing Step 10: Centralize/ Consolidat e Step 11: Migrate Step 12: Monitoring & Expansion Step 7: Resourcin g  Based on successful cross-industry implementations, below is a compiled leading-practices guide to moving forward with virtualization. Please see full report for details and breakdown of each best-practice step.