Kennedy Technology Group Weblog!

KTG's Virtual Datacenter Services Vs. Amazon AWS

KTG’s Virtual Datacenter Managed Service is a "virtual private infrastructure cloud" perfect for smaller organizations looking to get out of the IT infrastructure management business while gaining the uptime, performance, security and scalability traditionally available only from larger IT departments.  Our Virtual Datacenter service also comes with the “personal touch” and flexibility of a hybrid model unavailable from Amazon AWS's “self-service” platform - more geared towards software development professionals.

For example, a software integration customer recently signed on primarily because we provided a custom, turn-key VPN security solution (for their platform serving financial services customers), with flexible scale options, all for a simple monthly fee.  The customer had a reasonable understanding of workload demand (capacity needs) and didn’t need to buy and manage all of the infrastructure components (e.g. building out and managing virtual machine images, firewalls, DR site, etc).

Enterprise customers looking for hybrid infrastructure management solutions and enterprise class security with cloud features should consider offerings from Terremark and RackSpace Cloud.  Terremark’s digitalOps Service Management Platform is a unique differentiator of their delivery platform.

To learn more about Kennedy Technology Group, please visit us at http://www.kennedytechgroup.com/.

What will a future Cloud Computing ecosystem resemble?

The ability for a company to tap into “externally owned and operated” computing capacity “just in time” with “pay as you go” billing and “elastic scale” are key features of the growing alternative computing approach known loosely as “Cloud Computing”.

I discuss thoughts on the evolution of this new computing paradigm on my personal blog - Orchestrations.

Time is running out — Gain bottom line tax savings for your business

If you're still pondering whether to release that PO for new computing hardware here’s some news that may help.  There may be remaining tax savings available in 2008 that can mean real cash in your bank account today, and savings forward.

The 2008 U.S. Economic Stimulus legislation signed into law earlier this year was not just for individual citizens.  Also provided were accelerated depreciation provisions that greatly benefit small businesses. Example uses for your business include the purchasing (and immediately expensing of) new capital hardware and software.  But the equipment must be put into use by 12/31/2008!

How does the stimulus package work?

1. Businesses can expense up to $250,000 in property and equipment purchased in the 2008 tax year (the 179 Deduction), yielding real tax savings:

• Business results – tax savings effectively subsidize the purchase of new hardware and software to reap the benefits of virtualization and consolidation – including reduced operating costs and faster ROI.

2. Write-off capital acquisitions faster with two additional deductions:

• Special depreciation allowance allowing businesses to write off 50% of what you paid for property acquired and placed into service in 2008.
• In addition to the first 50% deduction, you can take a write-off on the normal first year depreciation for the remaining 50% of what you paid for the equipment in 2008.  Given the depreciation rules, this results in 60% depreciation immediately.

Example investment:

Using $50,000 to invest in new server computing hardware, the financial impact would be $30,000 ($50k * 60%).  In a 33% tax bracket that means $10,000 in cash savings immediately. 

Then the benefits of virtualization kick-in which can be estimated at $3,500 per year in power savings, reduced IT management costs, and savings in office real-estate.  And this doesn’t include value created through increased stability, uptime, and performance typical of virtualized IT environments.

Feel free to contact me at byron@kennedytechgroup.com for questions specific to your business situation.

To learn more about Kennedy Technology Group, please visit us at www.kennedytechgroup.com.

Sources and further reading on the 2008 Economic Stimulus Package:

U.S. Small Business administration - http://www.sba.gov/stimulus

Business Provisions of the Economic Stimulus Act of 2008 - http://www.irs.gov/newsroom/article/0,,id=183867,00.html

IRS To Issue Guidance on Special 50-Percent Depreciation Allowance -http://www.irs.gov/newsroom/article/0,,id=181364,00.html

2008 Economic Stimulus Act Provides Tax Benefits to Businesses -http://www.irs.gov/newsroom/article/0,,id=179227,00.html

Gaining a greener datacenter

It’s impossible to catch up on the news or even watch a basketball game these days without hearing something about “going green”. It seems that going green – that is, reducing the environmental impact of your business – is the theme of the day, and the IT industry certainly has some very real responsibility – and opportunity – here.

Although, at most larger companies, power bills are often paid for out of the facilities budget, IT managers in smaller and medium-sized organizations know all too well the growing costs of power and their impact on overall datacenter costs.

Some challenges

• It has been widely estimated that typical server utilization averages somewhere between 6% and 12% in most US datacenters.
• While IT systems’ performance innovation has kept up with corporate demand, energy efficiency (measured in business value per watt) has not.
• According to the Environmental Protection Agency (EPA), the amount of power used by U.S. datacenters doubled between 2000 and 2006, and is expected to double again by 2011.
• The cost per kilowatt of energy continues to rise.
• For every dollar spent on powering systems, another dollar is required to cool them.
• Gartner has estimated that power and cooling costs are approaching nearly 50% of the average IT Opex budget.

The good news

We can make measurable progress towards environmental responsibility, energy savings and carbon reduction – while saving some money along the way – simply by running a slightly tighter ship.

Tips for reducing power and cooling costs

• Measure. The business saying, “You can’t manage what you can’t measure,” applies perfectly. Review power bills and facilities costs and map them back to the physical infrastructure (and application) drivers. Environmental monitoring software and professional power audits can help. Ensure new products provide real-time consumption data.
• Review rack configurations. Ensure servers are positioned properly to maximize airflow. Consider newer high-density optimized rack solutions from companies like APC, Rackable Systems and Egenera.
• Consolidate and virtualize. Reduce the number of physical servers, storage and network infrastructure and increase average utilization. Virtualization reduces power and cooling costs directly as physical systems are removed from service.
• Energy-spec servers. Blade servers alone are not the solution. Consider energy specifications on servers, including power-supply efficiency (>90%) and processor voltage. The useful life of equipment is three to four years. A small increase in initial costs for more energy-efficient hardware should pay for itself in a matter of months.
• Update cooling systems. Newer cooling systems are more efficient, have variable-speed fans and can be positioned in-row, where they can help optimize airflow. Checkout Liebert and APC.
• Reduce datacenter facilities. As capital and operational expenses continue to grow, it’s becoming increasingly difficult for IT managers to justify building out multiple datacenters. Consider outsourcing your secondary datacenter needs to a company like Simply Continuous (www.simplycontinuous.net). They’ll backup your data over a secure network connection, store it securely in their datacenter facilities (forget tapes), and provide you a fully accessible online replica of your production applications so you can test recovery on an ongoing basis. They can also assist with broader business continuity and disaster recovery readiness planning.

Further reading

• The Green Grid – http://www.thegreengrid.org/
• EPA Energy Star Program – http://www.energystar.gov/
• The Green Data Project – www.greendataproject.org
• Flex your Power – http://www.fypower.org/

To learn more about Kennedy Technology Group, please visit us at http://www.kennedytechgroup.com/.

Virtualization — building momentum for results

Last week I attended the Virtualization Executive Forum in San Francisco. Hosted by leading technology management magazine InfoWorld, it included an industry analyst’s perspective of how virtualization is impacting the current IT landscape, a customer keynote from David Reilly of Credit Suisse addressing how virtualization is building agility in their business processes and infrastructure, and a review of AOL’s use of storage virtualization.  A vendor roundtable session from BMC, CA, HP and other industry leaders capped a very informative day. (On a side note, the magician at the VirtualIron booth was especially entertaining!)

Based on our virtualization project experience at KTG, I’ve found that a primary challenge organizations face with virtualization projects comes from functional uncertainty in the IT ranks, not technology stability or any other limitations.  Virtualization, while delivering nearly immediate business results, and obviously working successfully for the companies at the forum I attended, comes with a host of new practices and complexities. Particularly challenging for many is the blending of numerous areas of IT management — storage, systems, networking, and security. Mid-sized and larger organizations with specialists in these areas have an understandably difficult time reconciling this blurring of responsibilities which have traditionally been more clearly defined.  This presents a unique challenge for virtualization adoption in these companies.

Some key best practices we’re advising clients to help “jump-start” the transition and reap the rewards from virtualization:

1. Start with the big picture in mind. In every instance where we’ve implemented virtualization, our clients have saved money, reduced the number of systems to manage, and improved their business continuity readiness. Every time. IT managers should paint a longer-range picture when discussing the business value of virtualization; provide clarity on roles and responsibilities; and describe how IT platforms will evolve. Communication goes a long way towards easing staff fear, uncertainty and doubt.
2. Start small. Identify a few key areas (such as testing and development, or disaster recovery) where you can gain experience with the technologies and become comfortable with the management and support changes required to maintain a virtualization platform. This will also provide you the confidence and organizational support required to move forward with broader (and higher-risk) applications.
3. Identify the right platform. The truth is, numerous virtualization technologies will work and there is room for a variety of players and continued innovation, especially around management and monitoring tools.  We’ve seen proven success again and again in the field with VMware ESX (Vi3) and are also very impressed with the continued improvements of both VirtualIron and Citrix Xen Server.
4. Get help. Partner with a firm who can assist you in the planning, implementation and knowledge transition required to ensure you get the most from your virtualization investments. Consultants who have broader experience in networking, storage, security, applications and systems in addition to virtualization are uniquely suited to help you build a more cohesive platform and steer you to production readiness.
5. Leverage service providers. There is also significant value and opportunity in obtaining ongoing support from third-party providers of managed services for smaller and mid-market organizations in areas including application hosting, disaster recovery and business continuity. By partnering with a third-party firm, you can leverage their expertise, processes, and technology investments in ways that help you round out your architecture.

Questions on Virtualization? Please feel free to email me at Byron@kennedytechgroup.com.

To learn more about Kennedy Technology Group, please visit us at www.kennedytechgroup.com.