User Survey Analysis: Next Steps for Server Virtualization in the Midmarket Gartner RAS Core Research Note G00207375, James A. Browning, Alan Dayley, 21 October 2010, RV2A411012011 Approximately 30% of midsize businesses worldwide started to virtualize servers before 2009, but that number roughly doubled during 2009. The majority of midsize businesses are virtualizing at a rapid pace. Server virtualization has empowered midsize businesses to examine the entirety of their infrastructure and look for ways to lower their cost base, while improving utilization and availability in many cases, more so than large enterprises. Because of this, midsize businesses have become a major new growth engine for server virtualization and other infrastructure modernization investments. The results cited in the report are based on data gathered from a North America-based online survey conducted in June 2010. The survey creation and data collection was a joint effort by Everything Channel s IPED Research and Gartner Research. The survey had 326 completed responses, 185 of which were from midsize businesses. The survey was focused on investments and actions planned in the areas of virtualization and cloud computing. Key Findings On average, midsize businesses have approximately 30 to 50 servers. On average, midsize businesses are running 10 virtual machines per physical server. This average workload has not changed in the past two years, based on previous Gartner research focused on midmarket virtualization plans. Slightly more than 75% of midsize businesses expect to have server virtualization in wide use by 2012. Investments in disaster recovery aligned with server virtualization efforts will be the biggest opportunity for IT providers over the next two years.
2 Recommendations Product marketing managers with technology and service providers should recognize that midsize-business plans for server virtualization are more aggressive than most market perceptions and estimates. IT providers should focus on solution capabilities that include virtualization as customers virtualization projects mature. Figure 1. Midmarket Server Virtualization Stance, 2009 Product teams within server vendors should develop infrastructure solutions for virtualization customers to balance out losses seen in server hardware sales. Independent software vendors (ISVs) should ensure that their solutions are affordable and perform well in a virtual environment. VMware must continue to actively market to the midmarket and be sensitive to the pricing of its product, compared with perceived value over the competition to maintain market leadership. SURVEY OBJECTIVE The virtualization trends and intentions cited in this document were based on a joint survey conducted by the Everything Channel s IPED Research in conjunction with Gartner Research. The survey had responses from 326 North American organizations. This research is based on the actions and future intentions of 185 midsize businesses that responded to the survey. The survey also asked questions related to cloud computing and, in particular, infrastructure as a service (IaaS). DATA INSIGHTS Nearly 57% of the midmarket respondents to this survey indicated that they had server virtualization in production in 2009, with nearly 28% stating that they had it in wide use (see Figure 1). On average, those that had virtual servers in production had virtualized nearly 41% of their original workloads/physical servers in 2009. Slightly more than 14% of the respondents virtualized more than 80% of their servers in 2009. To clarify, the 80% is of the physical servers they started with not the percentage of physical servers they now have after their consolidation efforts in 2009. On average, midsize businesses are running 10 virtual machines per physical server. Therefore, the percentage of current physical servers running virtual machines is still less than 10%, after the above consolidation. Server virtualization has caused most midsize businesses to rearchitect and modernize their IT environments in three primary areas. They are buying larger (and fewer) servers, with more CPU N = 185 and memory. The percentage of midsize businesses that do not use blade servers in their virtual environments is noteworthy. Most say that the entry point for blade servers is just too high. Large rack servers (multisocket and multicore) have been the platform of choice for server virtualization in the midmarket The move to server virtualization has also forced many midsize businesses to deploy a storage area network (SAN) for the first time, and others to upgrade their SAN storage capacity. The third and most-forward-thinking move by midsize businesses has been to build the virtualization concept into their disaster recovery plans for off-site replication and hosting. Still, the most-interesting and unexpected finding with the current state of midmarket virtualization efforts is that many are reporting few or no challenges or problems. The primary issues that have been cited by midsize businesses are nontechnical ones. The top challenge cited by the majority of midsize businesses has been a higher-than-expected learning curve and the time associated with training. It should be noted that the majority of this feedback is relative to the use of VMware, which is the hypervisor of choice for 88% of the midsize businesses that responded to this survey. Most of these businesses stated that once they obtained the experience required, their virtualization deployments have been relatively 2010 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. 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smooth. The second-most-cited challenge also a nontechnical one is understanding and adjusting to software-licensing issues and software companies not certifying and/or supporting their software to run in a virtual environment. The two most-cited technical challenges confronted during virtualization deployments have been sporadic and unpredictable performance from virtual machines (VMs) and issues with configuring the SAN to work with virtualization. The majority of midsize businesses that have dealt with performance problems find it difficult to figure out when performance bottlenecks are SAN-related, VM-related, application-related or I/O-related. The biggest future challenge for midsize businesses will be the ability to deliver equivalent (or better) performance in a VM/SAN environment than they provided in their original physical server/ direct-attached storage environment as they migrate to more VMs. This presents an opportunity for IT providers, because there will likely be an increase in capacity planning and workload optimization needs in the midmarket created by less-than-optimal virtualization implementations resulting from poor planning, projects done in isolation and overly aggressive deployments. When asked about their server virtualization plans for 2012, 87% of midsize businesses stated that they would have virtualization in use on their servers (see Figure 2). Slightly more than 75% expect to have it in wide use. While midsize businesses have been increasing virtualization efforts significantly in the past two years, it is clear that they do not plan to slow down during the next two years. Not only will more midsize businesses deploy server virtualization during the next two years, but many of them will virtualize many servers at once. There are many midsize businesses with goals of virtualizing as many of their servers as possible during the next two years. Survey respondents, on average, said they expect to have 70% of their original workloads/physical servers virtualized by the end of 2012. When asked about their future planned investments and initiatives around server virtualization, there were two primary trends. First and foremost, the majority of midsize businesses plan to continue to move toward an internal virtual architecture and to convert as many physical servers to virtual infrastructure as makes business sense. This will result in the need to increase the compute and storage capacity, which will open the door for them to evaluate all options, including blade servers and IaaS. While blades and IaaS were not the majority choice for compute resources in previous virtualization project phases, it is likely that midsize businesses will evaluate the maturity and affordability of these solutions as they move forward. The second most-frequently cited trend among midsize businesses as they continue their deployment to a virtual infrastructure is consideration of plans to add disaster recovery and high-availability to their newly virtualized IT systems. The use of virtualization by midsize businesses for disaster recovery is set to change dramatically during the next few years. Many midsize businesses have reported configurations in which they develop a disaster recovery hot site in a remote office with bidirectional replication to the corporate data center to take advantage of the live failover capabilities of the virtual environment. The target disaster recovery site is often built on old hardware that has been virtualized. The evaluation of cloud services for disaster recovery is also on the radar for many midsize businesses. Using a cloud provider that synchronizes clients virtual production sites is an attractive and affordable option for expanding disaster recovery initiatives. 3 Figure 2. Midmarket Server Virtualization Plans, 2012
4 This trend around disaster recovery will be one of the biggest opportunities for IT providers during the next few years. Develop a portfolio of affordable disaster recovery solutions with a spectrum of choices for midsize businesses to choose from, depending on their business requirements and their IT budgets. Can Midsize Businesses Really Virtualize 100% of Their Servers? In the early part of 2009, we started hearing from a significant number of North American midsize businesses that said they intended to virtualize 100% of their servers within a three-year time frame. While many of these companies were adamant about their goals at the beginning of their virtualization efforts, many backed off a little as they discovered some of the obstacles that will prevent them from reaching a 100% virtual server environment. The obstacles to 100% virtualization most frequently cited by midsize respondents in this survey and other primary and secondary Gartner research were: The lack of certification of some of their applications in a virtual environment, and the fact that some applications and workloads if virtualized are not supported by the software vendor. Capital expenses for server and storage hardware, and software-licensing costs. Legacy applications with specialized hardware requirements and hardware dependencies. Some applications don t really benefit from running in a virtual environment (i.e., Citrix). This survey identified a softening of a mild threat made by a number of midsize businesses in the early phases of their virtualization efforts, as they reported frustration with software vendors practices around support, licensing and pricing for virtualization. This led to a scenario in which many users reported considering replacing their incumbent software vendors solutions with others that could be virtualized more easily and affordably. However, in the 2010 survey, 90% of the respondents stated that they did not intend to replace their incumbent software vendors. Two primary reasons were cited: (1) it was too costly to migrate for some applications; and (2) many software vendors have softened their own positions on support and licensing policies. However, many midsize businesses said that the ability to virtualize future applications will be a mandatory criterion for selecting new software vendors and applications. So, while the threat of losing customers may be off the table for software vendors, they should make sure their solutions are affordable and perform well in a virtual environment to ensure that they appeal to new customers. The majority of midsize businesses are making software decisions based on virtualization capabilities, licensing flexibility and support policies. Midsize businesses have begun eliminating those vendors that aren t willing to work with them. Figure 3. Intentions to Switch From VMware to Microsoft Hyper-V
Server Virtualization Penetration in the Midmarket Survey respondents were asked what primary virtualization platforms their organization was currently using or testing. Slightly more than 88% of the survey respondents that have virtualized their servers stated that they were using some version of VMware. Seventy-two percent of these VMware customers are using a VMware hypervisor exclusively, and 71% have only one version of VMware running in their environments. Vsphere and ESX 3.5 are the two versions that are most used. Nearly 19% of the midsize businesses that responded to this survey are using Microsoft Hyper-V. Only 5% of the companies surveyed are using Microsoft Hyper-V exclusively. Nearly 12% of the survey respondents stated that they are using Citrix XenServer. When current VMware users were asked about the possibility of switching to Microsoft Hyper-V by 2012, nearly 65% said it was unlikely (see Figure 3). VMware has enjoyed a market with little serious competition for years, and it has obviously developed a loyal base within the midmarket. However, serious price competition has developed in the small and midsize business (SMB) market, and it has not yet been determined if cost savings opportunities will move midsize businesses away from their existing VMware investments. The best opportunity in the midmarket to maintain or grow market share will be how virtualization vendors bundle and integrate their existing server solutions with their desktop and cloud solutions. Midsize businesses have always been attracted to the bundling of IT functionality to create higher-value solutions. Because they have their sights on desktop virtualization and cloud computing, this could be the dynamic that makes them stay or switch to obtain the best fit and value for their newly virtualized environments. Running in a virtual environment will be a mandatory requirement for any new software midsize businesses purchase in the future. METHODOLOGY The results cited in this report are based on data gathered from a North America-based online survey conducted in June 2010. The survey creation and data collection was a joint effort by Everything Channel s IPED Research and Gartner Research. The survey had 326 completed responses, 185 of which were from midsize businesses. The survey was focused on the investments made and the actions planned in the areas of virtualization and cloud computing. Twenty-four percent of the midmarket respondents were CIOs, while the remainder were VPs, IT directors, and IT managers. Seventy-five percent of the companies that responded had less than $500 million in annual revenue. Evidence This survey was conducted in June 2010. Organizations surveyed were from North America. There were a total of 326 respondents; 185 of these were from midsize businesses, which have between 100 and 1,000 employees. They survey collected data on the virtualization and cloud-computing investments made in 2009 and the intentions in this area through 2012. The Methodology section in this report provides background on the respondent organizations. 5