VMware Virtualization The Right Most Strategic Investment VMware

VMware Virtualization: The Right, Most Strategic Investment VMware March 2009

Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Proven Customer Success

The Rough Road Ahead…. A global economic recession is forecasted for 2009 The economic environment is a leading indicator of tech spending 71% of CIOs anticipate flat or decreasing IT spending budgets IT budgets in developed countries set to decline by 12% in 2009 and 9% globally “Our IT spending indices dipped further to new lows in our latest survey, deep in contraction territory. ” - Goldman Sachs Source: Goldman Sachs IT Spending Survey, March 9 th, 2009 Source: IMF World Economic Outlook Report, Nov 6 th 2008

The IT Dilemma I am supposed to do the same job, but with less budget and headcount? !?

Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Proven Customer Success

Recent CIO Surveys Agree: Virtualization is the Top CIO Priority in a Tough Economic Environment “The current environment has moved virtualization toward the top of the priority list for CIOs. ” Source: Merrill Lynch CIO Survey, Oct 28 th, 2008 Source: Goldman Sachs IT Spending Survey, Nov 2 nd, 2008 “Total cost of ownership (TCO) reductions will be a key driver of the acceleration in server virtualization deployments as CIOs are forced to cut capital spending and reign in management, administrative and power/ cooling costs. ”

Customers Are Still Moving Ahead with Virtualization in 2009 CIOs expect to double the percentage of servers virtualized in 2009 Source: Goldman Sachs IT Spending Survey, Nov 2 nd, 2008

VMware Continues to be the #1 Software Investment for CIOs in a Tough Economy VMware Gaining 1. 2. 3. 4. 5. VMware Citrix Systems Cisco Software/ Security Oracle Symantec 1 # 13 Quarters Which software providers are gaining share of your IT spending dollars? Source: Goldman Sachs IT Spending Survey, March 9 th, 2009

VMware is the Proven, Trusted Leader Providing the Highest ROI and Lowest TCO “VMware’s incumbent position at the top of the rankings demonstrates that server virtualization momentum remains alive and well with a strong ROI case for a declining budget environment. ” - Goldman Sachs Which software providers are gaining share of your IT spending dollars? Source: Goldman Sachs IT Spending Survey, Nov 2 nd, 2008

Top 3 Reasons Why VMware is the Right IT Investment in a Tough Economic Environment 1 Reduce Physical Infrastructure Cost 2 Reduce Datacenter Operating Cost (e. g. Power & Cooling) 3 Minimize Lost Revenue Due to Downtime

VMware Delivers Tangible Business Outcomes Reduction in Datacenter Capital Expense $14, 235 Reduction in Datacenter Operating Expense 2. 0 -3. 0 $5, 694 Reduction in Risk $30 MM 0. 3 – 1. 0 $4 MM Infrastructure Cost per App Sys Admin per 100 Apps* Business Loss Due to Datacenter Outage** * Source: IDC and VMware TAM program ** Source: VMware customer – a $2 bn insurance company. Estimates based on 40 hrs needed to recover before virtualizing and 4. 5 hrs needed for the same recovery after virtualization.

Reduce Server Spend Through Consolidation Typical Consolidation: 15: 1 VMware… Decouples software from hardware Encapsulates Operating Systems and applications into “Virtual Machines” A Server or Desktop Virtual Machine Typical Excess Hardware Capacity: 3 Years! 12

Total Savings Per Workload VMware consolidates servers, storage and networking infrastructure to safely achieve higher utilization BEFORE AFTER 1000 80 $5, 816 84 10 $296 Real Estate (Sq ft) 2053 257 $431 Power (k. Wh) 407 52 $759 Cooling (k. Wh) 509 64 $949 Servers 1 2 Reducing Capital Cost Reducing Operating Cost Network Switches Savings per Workload (Over 3 years) • Actual customer savings per application; represents typical savings • Includes estimated cost of VMware licenses, Support and Subscription SAVINGS $8, 251*

Reduce Energy Consumption Highest consolidation rates on most secure and reliable virtualization platform Safely improve utilization rates 80% energy reduction Dynamic server and storage migration Power off unneeded servers in real-time Migrate storage dynamically 25% energy reduction Host desktop PCs in the datacenter Use thin clients, double refresh cycle Reduce storage for similar desktop images 70% energy reduction Copyright © 2005 VMware, Inc. All rights reserved.

Improving Operational Efficiency 2 Reducing Operating Cost Do more work with the same number of people = operating cost savings Free up resources and budgets from dayto-day maintenance to focus on future innovation and strategic projects Drivers of productivity improvements: Instant provisioning Dynamic patching Zero downtime maintenance Source: IDC and VMware TAM program

Value of Zero Downtime Server Maintenance VMware VMotion Server Maintenance is required for Updates to component hardware Updates / patches to the hypervisor Migration to newer servers Cost savings from zero downtime server maintenance with VMotion Avoid overtime cost to perform maintenance Avoid administrative time in scheduling downtime Business costs of downtime is specific to each industry and not included here For a 10 physical server, 150 VM environment, assuming: 2 hardware/ BIOS upgrades per server + 4 hypervisor patches = 6 maintenance activities per server per year Overtime Cost 10 # of servers X 6 X # of updates ( 2 hrs Time to perform upgrade X $150/hr Overtime $/hr Scheduling Downtime + 15 X 0. 75 hr X # of Time spent apps per scheduling server downtime per app $60/hr $/hr ) = $ 58, 500

Value of Zero Downtime Storage Moves Maintenance VMware Storage VMotion Storage Maintenance is usually required for LUN optimization Upgrades to better hardware Cost savings from zero downtime storage maintenance with Storage VMotion Avoid overtime cost to perform maintenance Avoid administrative time in scheduling downtime and planning the move Avoid cost of buying an alternate data mover tool For a 10 physical server, 150 VM environment (50 GB per VM of storage), assuming: Storage is moved once in 3 yrs, annualize 1/3 of the 7. 5 TB environment every year (2. 5 TB). ~20 GB can be moved an hour. Overtime Cost 124 hrs Time to move 2. 5 TB each yr X $150/hr Overtime $/hr Scheduling Downtime + 248 hrs Time spent scheduling downtime X $60/hr Admin $/hr Alternate Tool Cost Planning Move + 500 hrs Time spent planning the move X $60/hr Admin $/hr + $5000 = $ 68, 113

Value of Dynamic Load Balancing VMware DRS Customers report that without DRS automatically balancing their environments, they would either Decrease their consolidation ratio – this means that the full HW cost savings are not realized. Customers report up to 30% decrease in consolidation ratios. Have to manually monitor VMs to place them appropriately. For a 10 physical server, 150 VM environment, assume that the consolidation ratio decreases by 30% from 15: 1 to 10. Alternatively, administrators would have to spend time monitoring the cluster or responding to customer calls every day Decreased consolidation ratio means Increased Hardware Cost X 5 servers More servers needed $8, 000 Hardware, license, power/ cooling, space costs per server OR OR Cost of increased monitoring time = $ 40, 000 Cost of Extra Admin Time 2. 5 hrs. Hours per day X 260 Days in a year X $60/hr Admin costs/hr = $ 39, 000

VMware Update Manager Value of Automated Patching Guest Patching Administrative time – 2448 hrs, $147, 744 saved annually Calculated for 150 virtual machines, assuming 40 patches per machine Per virtual machine Per patch > Scan machines > > Assess patch requirements > > Remediate systems Troubleshoot Rollback – 10% $147, 744 Manual Automated 24 min 156 min 21 min 180 min 36 min Annual Savings for 150 VMs 900 hrs, $54, 000 1548 hrs, $93, 744 2448 hrs, $147, 744 Offline machine patching Reduces exposure from non-compliant offline/suspended virtual machines Systems have NICs disabled during patching to reduce risk

Ensuring Business Continuity Minimize Lost Reducing 3 Operating Revenue Cost Reduce business risk without increasing costs or complexity Minimize lost revenue from and avoid costs of business downtime Drivers of productivity improvements: Built-in high availability Automated recovery Source: IDC and VMware TAM program

Value of Automated Site Recovery VMware SRM cost savings can have several contributions: Cost of lower disaster recovery site investment Cost of lower recovery planning and management time Cost of less lost business revenue Cost of less lost wages The below only captures a conservative estimate of savings from lost business revenue and lost productive time Company that does $5 M in revenue a year = ~$20 k / weekday. Assume a disaster strikes. Assume that SRM can achieve RTO of 24 hours instead of 72 hours compared to traditional DR plan. Value of Lost Revenue 2 X Days of faster recovery $20, 000 X Lost revenue per day Value of Lost Time by Workers + 2 X Days of faster recovery X 40 Number of workers X $300/dy Cost of worker wages =$ 64, 000 (Per disaster)

Value of High Availability VMware HA High Availability cost savings can have several contributions: Cost of lost business, lost work Cost of lost productive time The sheer simplicity of VMware HA and reduced time & effort compared to other clustering solutions is not captured The below only captures a conservative estimate of savings from lost productive time For a 10 physical server, 150 VM environment, assuming 2 failures a year: Value of Reduced Lost Productive Time 4 hrs. Hours of downtime X X 10 Number of users per VM X 15 Number of VMs per host X $50/hr X Cost of User productive time 2 Failures per year in 10 host cluster = $ 60, 000

Value of Fault Tolerance VMware FT Fault Tolerance (FT) cost savings is primarily in preventing lost business revenue from when mission-critical, high-revenue applications go down Fault Tolerance prevents lost business revenue by providing zero downtime, zero data loss continuous availability for your applications The simplicity of FT and reduced time & effort compared to other hardware-based solutions is not captured For a 10 physical server, 150 VM environment, assume ~10% of VMs are protected by FT (15 VMs). 2 host failures in the cluster per year. Lost revenue per minute of high-revenue apps can range from $2000 -15000 per minute depending on type of transactions being processed. Value of Lost Revenue 4 Minutes of downtime prevented X $7000/min X Lost revenue per minute X 15÷ 10 Avg. number of FT-protected VMs per host Extra Hosts for FT X 2 Failures per year in 10 host cluster - $15000 Cost per host X 1 Number of extra hosts = $ 69, 000

Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Proven Customer Success

Customer Testimonials Reduce Costs “Using VMware software has brought a huge cost benefit to IT - avoiding costs by $1. 1 million is fantastic. For every production virtual machine, we estimate a $7, 500 cost avoidance per server. We multiply 150 applications by $7, 500 and estimate a $1. 1 million cost avoidance. Barry Naber, Technology Manager at International Truck and Engine Corporation Simplify Management The net impact of utility computing with VMware Infrastructure 3 for the business is higher service levels, for IT - it is simplified and easier to manage infrastructure. Fazil Habibulla, Vice President and System Architect, NATIXIS Capital Markets Meet Service Levels Efficiently Using VMware virtual infrastructure, we can offer the same levels of service and more flexibility for up to 40 percent lower server and operating costs. ” Rob Jones, Director of Technology, ALSTOM 25

VMware is Lowest TCO Per VM VMware’s cost-per-VM beats even “free” products… VMware VI 3 Foundation VMware VI 3 Enterprise 2 -way server (16 GB RAM) $7, 000 Cost: Guest Windows licenses 1 $5, 998 $995 $5, 750 $0 $13, 993 $18, 748 $12, 998 15* 7 $933 $1, 250 plus … $1, 857 Cost: Virtualization license Subtotal Total VMs 2 (2 GB each) Cost per VM Other Solutions VI 3 Enterprise includes advanced functionality such as live server and storage migration, dynamic workload balancing, built in high availability, data protection, and power management which competitors don’t have. 1 List price for 2 -socket Windows 2003 Server Datacenter Edition 2 Assumes a 2: 1 memory overcommit ratio based on VMware advanced memory mgmt technologies * Assumes 1 GB of memory used by “host virtualization SW” for all vendors

Available Resources Online ROI/ TCO Calculator: Robust and customizable analysis of virtualization’s impact on your IT budget and datacenter costs www. vmware. com/calculator Why Choose VMware: Vendor selection checklist to ensure a Complete, Robust, Proven Virtual Infrastructure www. vmware. com/technology/why vmware/

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