When I was starting my less than sparkling college career Ronald Reagan was president. He was touting a theory called "trickle down" economics that espoused the idea that if you give rich people more money they will spend it and those less fortunate will benefit as the money "trickles down." This policy was actually formally titled supply side economics and was sponsored by Reagan's director of the Office of Management and Budget, David Stockman. The tax rate on the highest income bracket was cut from 70% to 28%. These polices led to one of the longest peacetime expansions of the economy in US history. I am starting to see a similar "trickle down" effect with technology, especially virtualization. Historically, large Fortune 500 companies have embraced virtualization as a way to reduce their capital outlays for hardware and ease the burden on their IT resources. When I attended Oracle Open World I stopped by the VMware booth and their brochure for virtualizing Oracle was clearly aimed at large IT organizations touting that each instance of VMware ESX can run more than 100 virtual machines. That's great but a majority of small and medium enterprise companies don't have 100 servers period. So the question that has been in my mind is what are the benefits of virtualization when it comes to companies that don't have thousands of servers and require their own electrical substations? Specifically, what are the benefits of virtualizing applications like Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP) if you are a small company? Recently several of our clients have chosen to virtualize their servers for PLM. This blog will analyze how technology and practice are trickling down to smaller companies and how they are putting their own unique spin on justifying virtualization in smaller companies.

We have been advocates of virtualization and VMware for quite some time. We are a VMware certified partner and run ESX internally at our facility. As the saying goes, "we eat our own dog food". We also have published several articles on the topic including a series on how to virtualize Agile PLM which is now offered as a free E-bookand one titled "Why Virtualize? 7 Good Reasons to Consider Virtualizing your Enterprise Software Installation".  But all of these are from our perspective as a vendor. I wanted to get a customer's take on virtualization. I especially wanted to get feedback from smaller companies that don't have the same value drivers as larger companies. The four companies I spoke with would definitely be considered on the smaller side. Two of them have part time IT contract resources that come in weekly and the other two are more established organizations with fairly savvy IT resources on staff full time. When we engaged with these companies none of them had any virtualization in place. As I have mentioned in previous blogs we use VMware as part of our methodology, particularly for upgrades. We like to set up virtual machines that mirror our client environments and do our work on the local vm's and then move it over once we have resolved all issues with the upgrade. This approach allows us to minimize disruptions for our clients. Three of the four clients gained exposure to VMware through us and decided to extend the use further into their environments. The fourth client actually approached us about using VMware as part of their upgrade which was great news for us since we are very comfortable with this environment. I will discuss each company's usage and justifications below.

The first client has the most sophisticated environment of the four. They are upgrading from Agile Advantage to Agile 9.3 and have about 50 users. We had originally envisioned using one of their servers as a bare metal ESXi server for test instances of Agile. With the ESXi platform you can host multiple virtual machines and performance is comparable with traditional servers. It is very difficult to house multiple instances of Agile on the same computer so this approach really gives you a way to fully leverage your hardware. Once their IT director fully grasped the potential of this approach and how much better he could leverage his hardware he wanted to port the entire install to VMware and run an Application Server and a data base server on each server, one for production and one for testing. He even attended a training class on VMware and is now pursuing certification. He decided to pursue a shared storage solution with a SAN that will allow him to house multiple virtual machines on the storage environment and then deploy them to his servers based on usage requirements. This approach gives him ultimate flexibility and if he needs more hardware all he has to do put another server into the mix. His plan is to run 8 vms on each server which should allow him to replace all of the company's current servers and also run clones that would be available in case the main vm or the hardware went down. He also is able to snapshot the entire vm for back up instead of just application data which would mean much less downtime in the event of a failure. Beyond this he is actually snapshotting physical machines that are not vms so that if they fail he can restore a vm until they replace the physical system. Another point that he made is that VMware allows him to oversubscribe to the resources on a system. This means that even though he may only have 8 gb's of Ram on a server he can set up multiple vms on that server that take up more than this since they will not all be running simultaneously and all consuming that much memory. The same is true for the cpu and the system drives. This means he gets more value for each server than he would using traditional OS bound systems. In summary his initial outlay was $3700 which allows him to run 4 servers on two machines. He can restore a vm in five minutes versus having to wait 24 hours for a new system to be shipped assuming it is under warranty. So overall he is running 4 servers on two computers and getting better performance and has a more secure environment. Once you factor in the shared storage and his ability to provision systems as needed the payback is considerable.

Two of the companies have very similar profiles. They both currently are using Agile Advantage on demand and have less than 10 users. They contract their IT resources and are very cost sensitive. We introduced VMware to the first client as a way to run on their obsolete hardware. They did not want to purchase a new server as they moved from Agile Advantage on demand to Agile 9.3 on premise. By using a vm we could set it up with the optimal environment regardless of the hardware and if they decided to upgrade the hardware later (which they did) it would be easy to move over the system without having to do a new install. It also allowed us to set up a test environment for them. The IT resource at this company has decided to leverage ESXi which is the free server product from Vmware which can run in lieu of an OS. This approach provides better performance than loading vm's onto a system that already has an OS. He will be able to snapshot his vm's which will give him better coverage from a backup perspective and more flexibility in the future. They are also planning on leveraging Open VPN from VMware which will allow their suppliers to access the vm with Agile running on it without having to expose the rest of their network through traditional VPN. The biggest challenge he experienced was spinning up on ESXi since the company did not want to invest in training or software. The other client is using VMware server which runs on top of the OS of the server. Like ESXi this is a free product from VMware and it requires less knowledge to set up. The downside of using VMware server is two-fold. Performance will be slower, but in this company's case it won't be an issue for the present. Secondly, there is no ability to expand beyond the current footprint. ESXi can be used along with other VMware tools which can provide high availability and disaster recovery. So the first client has built a foundation they can continue to extend as their organization's needs grow. The second client will need to change things significantly in the future if they want to better leverage virtualization. Both companies however are still far better off than if they had loaded Agile on a traditional OS bound server. They can run multiple instances of Agile on a single machine, take better advantage of the machines resources, and back up the entire machine instead of just the data from the application. Additionally neither company had to spend any extra money on software to do this.

The last company I spoke with has a footprint that is similar to the first company. They are a more mature organization moving from a on premise installation of Agile Advantage to Agile 9.3. This client is in a fairly aggressive growth mode and the IT organization is struggling to keep up with all the changes. They are running out of space for new servers and IT doesn't always have visibility into upgrades and new software coming online. When we first engaged with this client the IT resource did not have a new server for us to use and wanted us to upgrade from and to the same system. VMware was the only way we could accomplish this. We set up a vm of the current system in our environment and put a target vm on their production server so that we could run test passes to allow them to assess the new Agile 9.3 environment before we moved over. As we got farther into the project we became concerned that the new environment could potentially start to affect performance on the production environment so we were able to convince IT to find a surplus server we could deploy vm's to. Once IT saw the new ESXi environment on the surplus server he recognized the potential and jumped in with both feet. He ordered new hardware and shared storage and made plans to virtualize the entire production environment and also start building vm's for other applications in the company. His value drivers were around being able to take full advantage of the hardware, being able to perform maintenance on systems without having to disrupt access to software, reducing the number of physical servers and all of the other hardware associated with the servers (i.e. UPS etc.), and having better solutions for disaster recovery and backup. This environment is far more scalable and since he has been told to expect rapid growth this was a crucial factor in his decision to virtualize. Again his investment in software was fairly modest. The Essentials Plus bundle from VMware is around 4k and provides all of the capabilities a smaller companies needs to create all of the vm's they will need and also maintain them in an optimized manner. The shared storage is probably the most significant investment. SAN's start in the 10k range and go up from there. VMware does support NAS which is more affordable but there is a significant performance hit.

My takeaway from these activities is that more companies are starting to recognize the value of virtualization and act on it. Much like the economic theory of the 80's smaller companies are learning from their larger brethren and benefitting from the investments these fortune 500 companies have made over the past few years. Functionality that would have been unreachable for all but the largest of companies is now accessible to even the smallest of companies. Taking advantage of the innovations in this area is essential if companies want to stay competitive. Having an IT environment that is flexible and fully secured is a critical element to a company's success. More and more data is being accumulated and PLM and ERP tools are becoming the backbone or well-run product development organizations. Safeguarding the information in these systems and optimizing them for high performance is no longer optional. If you are a small company you should take advantage of the windfall made possible by larger organizations and try to become one yourself.