Blog Post: If you want to save money, don?t commit only to virtualization

By Stuart McKee, Microsoft State & Local Government National Technology Officer

According to a survey conducted last fall by the National Association of State CIOs (NASCIO), consolidation and cost control are the biggest priorities for state CIOs in 2011, and it’s no surprise that

cloud computing and virtualization are the top technologies states and local governments are deploying to meet their goals. As Public Sector CIOs attempt to balance their current priorities while preparing for future needs, many are now considering virtualization, private and public cloud solutions as one integrated system to save money while modernizing their IT systems.

Regardless of what system architecture makes the most sense, at the end of the day the technical decisions are often executed with vendors. When considering virtualization it pays—literally—to understand where agreements with your vendors can actually harm your goal of cost savings, and how to protect yourself for long term flexibility.

In fact, VMWare is asking many of you to sign three year license agreement for your virtualization projects, and there are some very good reasons why that might not be a good idea.

Here’s why.

The promise of virtualization is that consolidating servers can lower costs for hardware and labor-related server management. But CIOs are increasingly interested in building a private cloud as a more strategic way to consolidate their datacenters while maintaining strict regulatory requirements, and maintaining flexibility to achieve efficiencies and scale when they need it. While virtualization plays an important role in cost reduction by simplifying the deployment and management of desktops and datacenters, it does not, alone, enable the move to a cloud computing architecture.

IT is evolving into a service accessible from almost anywhere, anytime, on any device—with the same ease as visiting a website. Stated another way, imagine never having to set-up a server, update an operating system, or build a database system. That is the value of cloud computing: the ability to access core services quickly and roll out legacy software and new applications at Internet scale without having to deal with deployment logistics—not even the logistics required with a virtualized datacenter. In other words, if you like the efficiency and cost savings of virtualization, you’ll love how the cloud enables you to realize these benefits on an even greater scale.

Like many others who have led efforts to maximize technology investments at the state and local government level, I believe that cloud computing represents the biggest opportunity in decades for government organizations to be more agile and cost-effective. That being said, the virtualization decisions you make now critically impact your organization’s path towards cloud infrastructures.

So what does that have to do with vendor agreements?

With the tremendous amount of change and innovation occurring in government technology right now, public sector CIOs looking to extract the most value early should consider keeping their investments flexible. Forward-looking CIOs are starting to ask the tough questions—namely, what implications will my virtualization purchase decisions today have on future IT options when it comes to cloud computing?

This type of strategic thinking should be top of mind when you make decisions about your signing or renewing your enterprise license agreements (ELAs). If VMWare is asking you to sign an extended license agreement for your virtualization projects, there are two areas of risk to consider:

• Short-term risks: As the hypervisor becomes increasingly commoditized, differentiation will come from each vendor’s managements tools. For many organizations, the next significant wave of savings from their virtualization investments will come from integration and automation rather than consolidation.
• Medium-term risks: Virtualization decisions critically impact the glide path towards increasingly popular cloud infrastructures. There is a tremendous amount of change and innovation occurring in this space, and organizations looking to extract the most value early should consider keeping their investments flexible.

Before you spend too much money on VMWare, take a look at Windows Server 2008 Hyper-V, our next-generation hypervisor-based server virtualization technology.  It is available as an integral feature of Windows Server 2008 and is part of the family software you know and tools you trust.  You might also consider these facts:

• A Microsoft study of 150 large companies showed those running Microsoft virtualization spend 24% less on IT labor on an ongoing basis.
• When buying virtualization based on Microsoft technology you are spending only one-third to one-sixth of what you spend on a VMWare solution.
• We already offer many of the brands you know, use and trust today as cloud computing services, including Microsoft Office, Exchange, Sharepoint, SQL and CRM. In addition, our cloud computing platform, called Windows Azure, lets organizations migrate legacy applications and roll out new programs written on .NEW, Java, Ruby-on-Rails, PHP, and Eclipse.

So, if you are locked into a vendor that is too narrowly focused, like VMWare, you may be paying too much for commoditized features and unintentionally making your move to the cloud even harder.

Before you sign a VMWare ELA, check out this whitepaper “Savvy Customers Win Significant Savings When Negotiating VMware Enterprise Licensing Agreements” or visit http://www.microsoft.com/vmwarecompare.

This is the third part of a four-part series on Virtualization. Next up: “Private Cloud Simplified.” Stay tuned to Bright Side of Government for complete coverage.

Sarah Michelle Gellar Olivia Munn Melissa Sagemiller Roselyn Sanchez Soft Cell