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Maria Trombly
22 October 2007
Securities Industry News
As space- and power-hogging hardware overruns data centers, financial services firms are increasingly turning to technology from virtualization specialists such as Marlboro, Mass.-based Egenera.
Server virtualization, which reduces infrastructure complexity by automatically allocating servers to applications as needed, has moved into the mainstream for technology purchasers, and IT professionals are optimistic about future use, according to International Data Corp. (IDC) analyst Matthew Eastwood, who says that 22 percent of servers were virtualized as of March, and 45 percent will be virtualized in the next year.
One user of the technology, Fisher Investments of Woodside, Calif., found that its data center wasn't able to keep up with its rapid growth in manpower. "On the IT side," recalls group vice president Mark Greenberg, "we struggled with 145 servers in the data center with a backlog of applications and a set of strategic applications that were going to severely increase the number of servers we had"--and the effort required to manage them.
Since the San Andreas Fault runs through its hometown, the firm also faced the prospect of an earthquake taking out the data center.
"What most firms do is build a new application and go out and buy another server for disaster recovery and install that at a different site," Greenberg says. Virtualization allows a software management console to handle jobs previously assigned to staff--installing operating systems, applications and drivers. The management console can install applications on the live system and the backup servers simultaneously.
Using traditional servers, "you have a significant management effort not only from the data management" perspective, but also in terms of infrastructure. And the one-server-to-one-application model means that servers are underutilized--up to 70 percent of a server's capacity is typically wasted, he says.
According to Fisher Investments co-founder and director of administration Sherri Fisher, the firm has expanded from about 500 to 1,000 employees since January 2006; its assets under management grew to $46 billion, up from $25 billion. More than a dozen new enterprise applications were added.
Still, the firm has been able to cut its servers to 40 by adopting blade servers from Egenera.
"Blade servers themselves are extremely attractive because of the single management platform," Greenberg says. "One interface, as opposed to 140." It's also easy to replace the blades' processor chips because Advanced Micro Devices and Intel Corp. continue to improve performance and cut prices in their battle for market domination.
Previously, it would take two weeks to order a new server, install applications and get it configured, explains Greenberg. But with the new, virtualized system it takes only a few minutes to pop out the old chips, slide in new ones and reboot.
"We were running a server on a key system," he says. "It got slow, we had issues. So overnight, we put in a new server--switching from a two-way unit to a four-way unit in a few minutes, without having to install a new operating system and new software."
The new systems are easy to manage and scale, he notes.
Since the servers are virtualized, the firm has been able to get away from the concept of one server per application. Today, the company has Web, application and database server farms. A typical server can hold four Microsoft Corp. SQL databases.
Greenberg couldn't quantify the savings the company sees from reduced management costs but estimates that they're significant. He says that the cost of the new blade servers is no more than the company would have spent by now buying replacements for old servers.
Fisher Investments has also virtualized storage, with a storage area network from Fremont, Calif.-based 3PAR that has over 100 terabytes of capacity.
Disaster recovery is handled by a combination of the Egenera and 3PAR platforms. The firm has two data centers and a disaster recovery backup in an undisclosed location--with different electrical grids and seismic areas. Data and applications from the two centers are replicated at the recovery site ever five to ten minutes.
"A lot of firms have to be very, very specific about what is replicated," says co-founder Fisher. "They have to go to the different business units and ask, Do you really need this?' We just go ahead and replicate everything, whether it's needed in the first three hours of a disaster or the first three months."
Not only does that simplify replication, but also recovery, she says: "It's ready to go in case we need it. We've been testing, and had everything up and running within an hour."
Gradual Transition
Egenera, which was founded in 2000 by former Goldman Sachs CTO Vern Brownell, has about 250 direct customers--between 50 and 75 of those are in financial services, says Egenera VP Susan Davis. Hundreds of other companies use the Egenera platform through virtual utility services that host applications such as Microsoft Exchange and Oracle Corp. databases.
Because it replaced its entire server infrastructure and uses virtualization for all of its disaster recovery needs, Fisher Investments is a unique case, according to Egenera. Other securities industry customers such as Japanese brokerage firm Daiwa Securities Co. have opted for a more gradual transition to virtualization.
In May 2006, Daiwa announced that it had adopted Egenera for its strategic information systems. Based on the success of the initial deployment, the company is migrating additional services to the Egenera BladeFrame platform. The firm has also recommended the Egenera system to other Daiwa Securities Group subsidiaries, including Daiwa Securities SMBC and the Daiwa Institute of Research.
Pioneer Investments, the investment management arm of Milan-based UniCredit Group, last month announced that it switched to BladeFrames for its Oracle PeopleSoft Financials infrastructure, and it plans to use Egenera for disaster recovery. "We see Egenera as a key platform moving forward with other strategic applications and initiatives," said Christopher Chapin, VP of infrastructure services at Pioneer, which has over $313 billion in assets under management, in a statement.
Egenera's Davis says that companies save up to 50 percent by moving to Egenera BladeFrames because of reductions in hardware and management costs.
She claims that Egenera's virtualization technology is ahead of what is offered by competitors IBM Corp. and Hewlett-Packard Co. "We're not just virtualizing a server," she says. "We're virtualizing all the connections between the servers. It allows you to manage groups of servers, add capacity, subtract capacity," which, she adds, some in the industry are referring to as virtualization 2.0.
Many firms face a crisis of complexity, she says, adding, "There are too many things to manage." With virtualization, companies can do more with less, which is causing the number of server shipments to drop, says Davis.
According to IDC, more than 41 million traditional servers will be installed in 2010--a 700 percent increase over 15 years. Currently, for every $1 spent on servers, 50 cents go to power and cooling costs; that will increase to 70 cents by 2010. Building a new data center costs about $1,000 per square foot, or $40,000 per rack.
That's significant incentive to cut down on the numbers of servers deployed. IDC estimates that companies will spend $20 billion on server virtualization in 2010, an increase of 68 percent over 2005.
Fisher Investments plans to stick with its virtualization platform for the foreseeable future. Since the platform is easily scalable, the firm doesn't expect to have to change infrastructure for at least the next five years. "The next time a new chip-set comes out, Egenera has a road map for that," Greenberg says. "If we need more space, we buy another cabinet and connect it to our storage area network."
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