A lot of organizations look to consolidation and virtualization as a way to increase utilization. While this is certainly true, there is another very interesting way to look at it: consolidation and virtualization are necessary tools in the battle against falling utilization.
The reason? When it comes time to refresh servers, you simply cannot buy gear that is nearly as slow as the stuff you are replacing. Moore's Law dictates that the number of transistors on a chip will double every 18 months, which roughly translates into the doubling of compute speed. This has certain limits, and lately we have seen a shift away from increasing speeds and toward "multi-core" strategies, but the net effect is roughly the same.
This means that on a 3 year lease cycle you will be replacing systems with ones that are roughly 4 times faster. The increase in app response is no doubt appreciated by end users, but from a utilization perspective this means that the utilization of these systems drops significantly with every hardware refresh.
When viewed on aggregate this has interesting implications. If we approximate Moore's Law to say that speeds increase by about 58% per year, and we consider a pool of 300 servers that have been purchased over 3 years, then the aggregate compute capacity would be:
100+158+252 = 510 units of power (realtive to the power of the year 1 servers)
If on the 4th year you refresh the first 100 with servers that are 4x more powerful then the pool becomes:
158+252+400 = 810 units of power
This is, interestingly, a 58% increase in the compute capacity over the previous year, meaning that upgrading only a portion of a server pool will still track to Moore's law on the larger set.
More importantly, however, it means that you need to achieve at least a 4:1 consolidation ratio on any new servers just to keep your utilization levels stable (ignoring application growth). If you are replacing 6 year old servers then you need a 16:1 ratio, and for 9 year old gear you would have to achieve a 64:1 ratio just to keep things the same. Needless to say this can become quite challenging.
The upshot of all this is that doing nothing will typically cause utilization levels to drop over time, and the single-digit utilization levels that many organizations experience (particularly on Wintel servers) are undoubtedly contributed to by this effect. It also means that anyone looking to use consolidation or virtualization to increase utilization levels better be very careful about the expectations that they set. The incessant shrinkage of transistors is working against you...
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