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A return on investment (ROI) analysis is one of the ways how organizations build a financial business case to evaluate an investment. With the existing challenges in today's economy, it seems like ROI discussions will play a bigger role this year and next year in the decision-making process to reduce costs, increase gains, and justify the investment. I'll like to hear your perspective about this and understand how an ROI analysis influences your decisions.
- Do you feel there will be a bigger need for an ROI analysis moving forward or is it already a "must have"?
- How important is it to justify ROI to receive funding from management in your organization?
A couple of weeks ago CA
released the results of a virtualization management survey they commissioned. I finally got around to reviewing it this week (download the slides here). The survey digs down deep into why these companies made the move to server virtualization, what benefits they feel were a result, what are the management challenges, and how those virtualization investments were measured (if at all).
Here is how the respondents are described in the study (on slide 3) -
- This study was conducted among IT management at companies with an annual revenue of $250 million or more and investing or planning to invest in virtualization technology.
... - The U.S. study was conducted between October 11, 2007 and October 24, 2007. The non-U.S. portion was completed between November 6, 2007 and November 12, 2007. A total of 300 surveys were completed online in the following regions:
U.S. - 100 surveys
EMEA - 100 surveys: UK (50) and Germany (50)
APAC - 100 surveys: Australia (75) and Korea (25)
Chris Preimesberger of eWeek had this take on the study -
New research reported Feb. 12 that worldwide, 54 percent of large enterprises rate management of their virtual server environment as a critical or high IT priority. Yet only 45 percent think their companies are doing an effective job in this area.
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Fifty-six percent of respondents are using multiple platforms/vendors for server virtualization management, while 35 percent are standardized on one platform. Sixty-eight percent of the respondents rated the importance of centralizing the management of multiplatform virtualized or physical environments as critical or very important.
Only 35% of worldwide companies who responded to the survey have standardized on a single vendor platform. With fair use in mind, I pulled a just a few screen shots from the slides to give you a visual (all of which are copyrighted by CA) -
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Even more interesting is the fact that only 40% of companies that responded expect to be standardized on a single vendor 18 months from now.
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There may be more competition in the marketplace than some other companies would have us believe.
Another part of the survey I found very interesting is the primary drivers and benefits. In my experience, cost reduction from server consolidation is the primary driver that starts most server virtualization projects, and other factors (like disaster recovery) drive expansion. This is true for many of the companies in this survey.
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The top four benefits for worldwide companies are "Ease of hardware provisioning and software deployment", "Lower TCO" , "Optimizing System Performance" and "server consolidation". I would argue that three of these are tied directly to costs, and those three lead by a wide margin in the US. I am surprised to see performance and load balancing beat server consolidation by 1% worldwide, however.
One very interesting note from the report is on the return on investment (ROI) of server virtualization. The survey found 45% of worldwide respondents did not have any method in place to to measure the ROI of virtualization solutions (slide 34). Another 26% worldwide "don't know" if they have been able to measure their server virtualization ROI. Network World reported last year on another study by CA that reported "40% of 800 IT organizations polled worldwide were uncertain if their use of server virtualization technology was successful" There certainly appears to be an opportunity to help measure the return on the investment in server virtualization.
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The overall conclusions from the survey are presented on slides 38,39, and 40. Other conclusions are that security and software licensing are big issues to these companies. In my opinion, The reality is that this is still a relatively new market (compared to many other IT markets) and there are many challenges and opportunities for the vendors in this space. I highly recommended reviewing the report when you have a few moments.