Nationwide Insurance case study

Nationwide Insurance, ranked 98 in the US Fortune 100, describes itself as one of the largest insurance and financial services companies in the world -- and by switching over to a virtualised production environment, it reckons it's saved at least $500,000. Here's how it happened.

Nationwide's insurance business spans domestic property and casualty insurance, life insurance and retirement savings, asset management, and strategic investments. Nationwide has been a VMware user since 2002, when it initially used Workstation and GSX Server for test and development.

Over the last two years, the company migrated to ESX Server, VirtualCenter and VMotion, which it's been using since 2004. Its consolidation ratio was 12:1.

Jeff Hunter is the company's systems engineer, and he was at VMware's recent launch of Virtual Infrastructure 3. Among the systems he manages are over 40+ ESX Servers - both two- and four-way, VirtualCenter and VMotion running on two-way machines and over 475 virtual machines. And he's about to install the newly launched Virtual Infrastructure 3.

About one-third of those are doing production work while the rest cover disaster recovery, plus test and development work. The company runs the usual suite of apps, including PeopleSoft, Citrix, Bloomberg, Hyperion Performance Suite, and Lotus Sametime as well as core services like domain controllers, file servers, and print servers.

What made the company move over to a virtualised infrastructure? "In 2002, we saw the need for more flexible test and development environment. VMware worked well, so once it had proved itself, we tried running production systems. We started with non-critical systems, such as the intranet for staff policies", said Hunter.

"People asked 'why go virtual?'. We reviewed the processes, the stability, and made sure that it made sense to put it in the environment. We went through the board from technical and financial standpoint -- there had to be a cost benefit. Our TCO study found $500,000 savings from the capital budget, plus savings on opex such as power, cooling and data centre space."

The company estimates that it saved $2,250 per machine, and experienced an increase in utilisation figures from 10-15 per cent to 60-70 per cent. Other savings include the ability to provision a server in hours rather than weeks, the elimination of downtime for hardware upgrades or maintenance and server admins having to work fewer hours.

Other advantages of going virtual include:

  • Ease and speed of deployment
  • Use of templates
  • Enables more projects because hardware expenses and constraints are greatly reduced
  • Can provide more robust test environment
  • Centralised management with VirtualCenter
  • Admins no longer need to walk to separate servers
  • Disaster recovery
  • Do not need to replicate hardware
  • Can provision mirror virtual machines at another location

Has Nationwide ever been tempted to switch to the opposition? "No. We compared VMware ESX Server with Microsoft Virtual Server in 2005 and decided to stay with VMware", said Hunter.

How did the new virtualised environment integrate with the rest of the enterprise? From a chargeback perspective, we used the same model as physical boxes, and the business units happy as they saved money."

Surely it can't have been a totally smooth ride? "The biggest pushback came from the individual business units", said Hunter. "People were used to having a physical box they could see, touch and use. We had to walk them through the process of managing it, and most people use terminal services for that now."

Other barriers concern the technology. "Not every application runs on VMware. For example, fax software needs to talk to an individual fax adapter", said Hunter. "Also heavy databases -- our business units' concern is throughput. There's also the issue of vendor support. Some of the smaller ones don't have a high level of technical support for virtualisation. Also since we're a global company it doesn't always make sense to go virtual -- takes a lot of dollars to get that level of infrastructure installed."

And Hunter has yet to realise savings on staff. "We have no more and no less - because we're still in the infancy of virtualisation. Time needs to be spent perfecting processes, and when it's all working smoothly we'll look at it again."

And for the future, Hunter is keen to get on with implementing VMware's new Virtual Infrastructure 3. "We are beta testing VI3 and we'll will start on installing it for real in a couple of weeks. Our first major venture was ESX 2 and VC1. The challenges are same as with all with new systems. It won't be a simple upgrade -- more of a migration. We need to work out a plan, and then implement it."

There's still lots to be done too. "We have our own data centre and own a lot -- thousands --of servers. My aim is to virtualise most of them. And then we're on to the desktops."