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The New Economics of Hyper-Converged Infrastructure

In just a few short years, hyper-converged infrastructure (HCI) has emerged as a critical enabling technology for IT teams to modernize data centers while keeping costs under control. With HCI, IT is typically able to reduce total cost of ownership (TCO) by 50% or more compared with traditional three-tiered architecture models.

The ability to cost-efficiently modernize data centers is creating huge demand for HCI solutions. Gartner predicted HCI will grow 79% in 2016, with the overall market reaching $2 billion. Gartner also characterized HCI as the fastest growing segment of the overall integrated systems market.1

TCO savings are by far the biggest factor driving HCI demand. Reduced cost was cited as the top purchasing criteria by 47% of current HCI users and 37% of planned buyers in the TechTarget Research Data Center Market Landscape Study. In addition, factors such as reduced configuration and integration problems and consolidation—which also lower TCO—were cited as top criteria.

Top 5 Purchase Criteria for Hyper-Converged Infrastructure

  In Use Planned
Reduced cost 47% 37%
Increased performance 26% 26%
Consolidation 24% 23%
Reduced configuration/integration problems 21% 41%
Increased scalability 15% 22%

Source: TechTarget Research Data Center Landscape Study, July 2016

Reducing TCO with hyper-converged infrastructure
HCI provides IT with a modern software-defined architecture that delivers the benefits of cloud economics, agility and scalability to on-premises or hybrid cloud data centers. In an HCI solution, the server, storage and network resources are all virtualized and combined under a unified management platform.

HCI leverages automation and orchestration to reduce risk and dramatically simplify all operations, including initial deployments, ongoing maintenance, scaling and on-boarding. IT teams can provision infrastructure and services at the speed their business users demand, without having to work nights and weekends.

The value of HCI in lowering TCO goes beyond cost savings: IT teams can accelerate speed to market; drive major productivity increases; improve infrastructure performance; support new initiatives such as virtual desktop infrastructure (VDI); and make the overall business more agile and responsive to the needs of employees, customers and partners.


Real-world use cases
Companies of all sizes in all industries are leveraging HCI to drive new data center economics. Here are three examples:

Coop Denmark is the largest retailer of consumer goods in Denmark, with more than 40,000 employees and revenue of approximately $7 billion a year. When the company ran into performance bottlenecks with its existing storage solution, it weighed two options: expand the legacy storage system with additional expenditures or implement a new storage architecture based on HCI.

After doing a thorough cost analysis, Coop Denmark decided to go with VMware vSAN as its storage solution. “The total cost of our IT systems is very important because we are operating in a very low margin market with stiff competition,” says Soren Vendler, IT enterprise architect manager. “We are very keen on standardizing our IT so it’s as cost-effective as possible.”

VMware vSAN with flash storage eliminated the performance bottlenecks. Today, vSAN powers all of the company’s business processes, speeding everything from checkouts to inventory management. And the cost savings have been dramatic: “We were able to finance the design and implementation of our new vSAN server infrastructure by using the money we had put aside for maintenance of the older server platform,” says Vendler. “We didn’t have to go to the board and ask for any new money.”

Wachter Inc., based in Lenexa, Kan., is a leading national provider of complex infrastructure solutions such as power, data, automation, communications and security systems. Storage performance and capacity limitations threatened to impact business operations. “We were getting to the point where we either had to purchase more capacity or come up with a different solution,” says Carl Shriver, IT operations manager.

The company chose VMware vSAN storage with Cisco UCS servers. The new vSAN cluster delivered significant performance improvements—about a tenfold increase versus the prior storage. IT has also been far more responsive to business needs. “If someone needs a new application installed or a new database, I can spin up a new VM with storage in 10 or 15 minutes,” says Shriver. “It’s such a fast process that it frees up time for a lot more things.”

And TCO has been significantly lower. “Most of the traditional SAN options would have given us 15 to 20 terabytes at a cost of somewhere between $5 and $7 a gigabyte,” Shriver says. “With the new Cisco servers and vSAN, we got cost savings at the rate of one-fifth of the traditional SAN, with 45 terabytes that cost less than $1.50 a gigabyte. It was a massive difference.”

CINgroup, based in Dayton, Ohio, is the leading provider of bankruptcy software in the U.S. market. As data volume and variety grew, the company’s traditional SAN could not meet capacity, performance and backup requirements, particularly as CINgroup moved to a cloud delivery model.

CINgroup considered buying more spindles but concluded that would not be sustainable. It considered using a public cloud service but worried that costs would be unpredictable. After thorough evaluation, CINgroup deployed a hyper-converged vSAN solution from VMware.

The performance improvements were immediate: CINgroup is now able to provide exceptional performance for its customers with sub-millisecond storage response times. “We got a major performance boost with vSAN—even better than expected,” says Bob Tester, enterprise architect. “Storage was a big bottleneck before, and now that problem is eliminated.”

In addition to performance improvements, vSAN has helped CINgroup reduce TCO significantly: Storage Capex was reduced by 70% and Opex by 10%. In addition, energy costs were reduced by 30%, and the company was able to reclaim the equivalent of two full-time employees. “With vSAN, we can maintain great performance for our customers at a predictable cost—less than one-third of what it would cost us to host our data centers in the public cloud.”

Getting Started with Hyper-Converged Infrastructure (HCI)

How can networking and storage HCI benefit your company? Here are the four characteristics of a future-ready solution.

Learn More

IT teams are under constant pressure to keep costs down while also improving performance, agility and scalability. HCI provides an opportunity to accomplish all of these goals with a modern deployment model.

As seen in the case studies in this article, TCO benefits include lower Capex and Opex, along with accelerated time to value, increased productivity and improved infrastructure performance. As IT leaders across all industries have come to realize, the new economics enabled by HCI suit the new economics demanded by today’s businesses.

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1Gartner Says Hyperconverged Integrated Systems Will Be Mainstream in Five Years,” Gartner, May 5, 2016

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