Microsoft Case Study on PoundHost Internet.
Hoster Uses Hyper-V to Provide Servers on Demand and Boost Profitability by 55 Percent
PoundHost is a fast-growing hosting service provider in Maidenhead, United Kingdom, that embraced server virtualization as a way to curb hardware costs and lower hosting prices. However, the high cost of VMware and lack of management tools hurt competitiveness. PoundHost replaced VMware with Windows Server 2008 R2 Datacenter and Hyper-V technology to reduce licensing costs by 80 percent and add new services. Using Hyper-V in conjunction with Microsoft System Center data center solutions, PoundHost now offers customized online ordering and delivers configured servers in less than an hour. Between a dramatic increase in virtual-machine sales and reduced licensing costs, PoundHost has increased profitability by 55 percent. Automated server provisioning has reduced IT costs by more than U.S.$50,000 annually, and proactive server monitoring increases server availability.
Situation
PoundHost is a leading hosting service provider in the United Kingdom, offering unmanaged dedicated and co-located servers to customers throughout the United Kingdom, India, Turkey, and Europe. PoundHost, a subsidiary of BlueSquare Data Group, started in 2001 by offering Web hosting at £1 per megabyte (approximately U.S.$1.60 per megabyte)hence the company name. Today, the company has four data centers containing approximately 4,500 servers, employs 50 people, and serves approximately 2,000 business customers.
PoundHost began offering shared Web hosting services but gradually shifted its business to providing dedicated servers and co-location services, for which PoundHost hosts customer-owned servers. By 2007, PoundHost had approximately 2,000 servers in two data centers and watched the emergence of virtual machines-multiple servers implemented in software running in a single physical host server. "Before virtualization, our cheapest hosting offering cost £50 a month," says Matthew Munson, Group Technical Director for PoundHost and BlueSquare Data Group. "We wanted to attract a new market segment by charging £20 to £25 a month, but we weren't going to get there with physical-server offerings."
PoundHost began to research server virtualization software and decided to use VMware, which could support both the company's many Linux operating system-based servers and the servers based on the Windows Server 2003 operating system. "Customers were really interested in virtual servers and liked the fact that VMware was an enterprise product and connected easily to our LeftHand SAN [storage area network] for a relatively low cost," Munson says. "These factors were competitive differentiators for us, as our competitors were using lower-grade open source solutions and often suffered downtime. We designed high-availability failover clusters so customers stayed up 100 percent."
However, as the dedicated virtual-machine business at PoundHost grew, two big problems emerged with VMware: the expensive licensing model and the difficulty of managing VMware-based virtual machines. "With VMware, you pay monthly licenses per guest server, which meant that our virtual servers were priced higher than anyone else's," Munson says. "Also, we could use VMware tools to manage the virtual machines themselves, but we wanted to offer server monitoring, backup, and software-update services to increase our services and revenue. VMware didn't have a suite of tools to do these things. We were happy with VMware from a technical standpoint, but from a business perspective, it wasn't working for us."
Solution
In January 2009, local Microsoft sales representatives contacted PoundHost and told its IT staff about the Windows Server 2008 operating system with Hyper-V virtualization technology, which was in beta release at the time. "Hyper-V could do nearly everything that VMware could do, for a much more competitive price," Munson says. "Plus, the Microsoft System Center products integrated with Hyper-V, so we could manage and provision servers much more easily than we could with VMware." Microsoft System Center data center solutions provide IT administrators with tools to help centrally monitor and manage their IT infrastructure.
In early 2009, PoundHost deployed Windows Server 2008 R2 Datacenter on a cluster of 10 HP DL385 G5p servers. Windows Server 2008 R2 contains improvements to Windows Server 2008 in the areas of virtualization, Web application platform, power management, and reliability. "The Datacenter edition of Windows Server 2008 R2 includes licensing for all guest operating systems in the host-server license, which makes it a very cost-effective alternative to VMware," Munson says. In the first eight weeks of offering Hyper-V-based virtual machines, PoundHost customers ordered 100 virtual machines, and PoundHost has room for hundreds more in its cluster.
Online Server Configuration
Today, customers can order virtual machines on the PoundHost Web site in just a few minutes, and the server is automatically configured and available for use within an hour. The Web interface is extremely easy to use: Customers choose the number of processors, amount of memory, storage required, and operating system desired. As they make selections, a graphical shopping list appears on the screen. Or, they can simply select one of several preconfigured options.
Once customers have completed their server configuration, the order is validated through the PoundHost billing system and passed to Microsoft System Center Configuration Manager 2007. The PoundHost staff use the Windows PowerShell command-line interface and scripting language to create scripts that automate the construction of the virtual machine to the customer's exact specifications. Microsoft System Center Virtual Machine Manager 2008 creates the virtual machine on the host server, and System Center Configuration Manager 2007 installs the operating system, configures the appropriate Internet Protocol (IP) addresses, and installs the customer's business software and all necessary security updates.
When the server is ready-in 20 to 60 minutes-System Center Configuration Manager 2007 notifies the PoundHost billing system, which sends the customer an e-mail message announcing that the server is ready. The message provides the IP address of the server, instructions on how to log on to the server, and support information. "When our virtual-server offerings were based on VMware, customers could only select prepackaged configurations because VMware didn't have the back-end tools necessary to dynamically configure and build servers," says Steve Belton, Software and Systems Architect for PoundHost and BlueSquare Data Group. "Once the customer's order was submitted, we had to build the server manually. With Hyper-V, we can offer customers much greater flexibility, and the System Center solutions build the server automatically."
Value-Added Services.
Customers can troubleshoot and restart their servers, reimage operating systems, add new IP addresses, and perform other support tasks remotely using Windows PowerShell scripts, without any interaction with the PoundHost staff. PoundHost uses Microsoft System Center Data Protection Manager 2007 to provide automated disk-based and tape-based backup of workloads running on virtual machines. "The System Center solutions provide server monitoring, backup, centralized security updates, and configuration management, so we could offer value-added services for our virtual machines that weren't available to us with VMware," Belton says.
High-Availability Features.
Using the Live Migration feature that is included in Hyper-V in Windows Server 2008 R2, PoundHost can dynamically move virtual machines to different host servers without interrupting or bringing down customer workloads running on those virtual machines. This enables PoundHost to deliver high levels of availability.
Benefits.
By migrating its hosting environment from VMware to Windows Server 2008 R2, PoundHost was able to offer customized online server ordering and boost its profitability by 55 percent. It was also able to reduce IT costs and trim electrical costs by nearly $4,000 annually. With the ability to proactively monitor servers and dynamically move virtual machines to new host servers, PoundHost can deliver enterprise-class uptime.
On-Demand Server Delivery.
PoundHost now has a dynamic virtualization infrastructure that enables it to configure and sell servers much faster, with much less work. Customers can custom configure a virtual machine on the PoundHost Web site and have it built and delivered to them in less than an hour, as opposed to the three hours or longer it took in the VMware environment. Plus, customers have complete freedom to choose the server components that they want; they are not limited to choosing one of several prepackaged configurations.
"Customers today have a Web mentality," Munson says. "They want to be able to order a server at 3:00 A.M. if they want, and they don't want to wait until Monday morning. We're much more competitive with Hyper-V because we can offer an enterprise-caliber server at a great cost."
Profitability Boost of 55 Percent.
Demand for Windows Server 2008 R2-based servers has been much stronger than PoundHost anticipated. "We sold 100 virtual machines in the first two months and expect to sell another 1,000 in the next two months," Munson says. "We've doubled virtual-machine sales with our Hyper-V offering, plus operating costs are lower because Hyper-V is so much less expensive than VMware. A host server containing 50 guest servers would cost over £750 [$1,200] a month with VMware but only £66 [$107] a month with Hyper-V-an 80 percent savings. Our profitability has increased by 55 percent with Hyper-V."
PoundHost has also seen a shift from Linux-based to Windows Server-based servers since offering Hyper-V-based virtual machines. "We're suddenly selling many more Windows-based servers than Linux-based servers; this is due to the ease of online ordering and the fact that we're able to provide an enterprise-class offering with 100 percent uptime, easy scalability with linkage to a storage area network, and very competitive prices," Belton says.
Additionally, PoundHost anticipates new revenue of at least $18,000 annually from the sale of System Center offerings, such as virtual-machine monitoring, patching, and backup.
Lower IT Staff Costs.
Dynamic, self-service virtual-machine provisioning gives the PoundHost staff more time to focus on enhancing customer support and creating new product offerings, rather than maintaining the IT infrastructure. "Previously, it took two hours to manually build a server, but we can now automate the process with System Center solutions and accomplish the task in less than an hour," Munson says. "For as many servers as we deploy annually, we are saving at least one and maybe two full-time employee salaries-a savings of £30,000 to £62,000 [$50,000 to $100,000] annually."
Increased Availability.
With the Live Migration feature of Windows Server 2008 R2, PoundHost can take physical servers offline to update and maintain them without inflicting downtime on dozens of customers. Its use of System Center Operations Manager 2007 to proactively monitor server hardware contributes to high service levels.
"We can move customers off of physical servers without their even knowing, and detect server issues, such as a failing fan, before they take down a server," Munson says. "The result is extremely high service levels that keep customers running without interruption."
Lower Electrical Costs, Greener Impact.
PoundHost is using virtualization to simplify server deployment and offer superior customer service but also to reduce server costs. "As a key data center strategy, virtualization is enabling us to save thousands of dollars annually on server hardware," Munson says. "Even more valuable than the hardware are the power and real-estate costs, which are far more expensive. For every 35 servers that we virtualize, we save £200 [$320] a month in electrical and cooling costs, or about £2,400 [$4,000] annually. Plus, we have more growing room in our data centers, which enables us to slow the rate of expensive data-center growth."
Of course, reducing its electrical costs helps PoundHost significantly reduce its carbon footprint. "By using virtual machines rather than loading up data centers with racks of power-hungry physical servers, we are able to be a better environmental citizen," Belton says.