Virtualization & Cloud, Peaches & Honey

Brian Wood Blog

Virtualization and cloud computing offer tremendous economic and operational benefits, whether the deployments be public, private, or hybrid in nature.

As the article below from Wall Street & Technology describes, Citigroup was able to consolidate from 70 to 20 data centers — and could even go down to 10 — by leveraging virtualization and increasing utilization.

Most firms do not have the resources or strategic rationale to build their own private cloud network.

For the rest of us there are public (aka “multi-tenant”) cloud  services such as AIS BusinessCloud1 and AIS ClearCompute.

Emphasis in red added by me.

Brian Wood, VP Marketing

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Extreme Makeover: Citi Consolidates 70 Data Centers to 20

By Greg MacSweeney, Editorial Director

Global financial institutions, following the 2008 financial crisis, took a long, hard look at all aspects of their business. The same has been true for technology organizations that have had to adjust to the new realities of the financial services landscape.

Many IT groups have trimmed staff, outsourced and consolidated operations to match reduced technology budgets. Larger organizations, grown from acquisitions, expansions into new business lines and unchecked growth during years of high profitability, have faced a daunting task. Disparate systems, redundant data centers and high numbers of under-utilized IT assets (think: thousands of servers running at 2% capacity), caused operational costs to soar.

Citigroup, as been well-known since the crisis began, has been going through a process of evaluating its entire business. Citi has already sold its Smith Barney unit to Morgan Stanley, numerous consumer banking units in various countries and laid off thousands of workers — most recently 11,000 this month.

But on the operations side, Citi has been focusing on consolidating its global data center footprint, with some remarkable success. When Citi started its five-year data center consolidation project five years ago, it had 70 data centers. Today it has just 20, reports Jagdish Rao, head of enterprise operations and technology at Citigroup. “We are near to the end of a five year data center consolidation strategy,” Rao says. “This is a massive consolidation that follows our global operational model.”

In order to cut 50 data centers out of the equation, Citi did a complete review of all its existing facilities, its business needs and the future plans for the business, including areas where the bank is expecting to see growth. As Citi had many older data center facilities, along with some that were acquired during acquisitions, Rao says the bank determined that it could close a large number of data centers. Rao, who reports to Don Callahan, Citi’s CAO and chief technology & operations officer, and his team also realized that the best approach to reaching a goal of optimal capacity, was to close some of the oldest facilities and also build eight brand new data centers to increase overall efficiency.

Go Green
“As we consolidated from 70 to 20 data centers, we constructed eight brand new data centers around the world,” Rao says. All of the data centers are ISO and LEED certified, including the LEED platinum certified facility in Frankfurt. “When you move to a new house, you get the latest and greatest,” in terms of features and functionality, Rao says. “The same is true in a data center. The environment is a concern and our data centers are very efficient.”

The focus on efficiency has helped reduce the costs of running the facilities. “The whole data center infrastructure cost has come down drastically,” Rao says. “In fact, the reduction in costs has been so substantial, the entire consolidation program was self-funded” through operational savings.

The efficient technology in the data centers has also helped Citi “flip” its IT spending, something that all financial firms are looking to do. “Five years ago, 60% of spending was on infrastructure and maintenance, with 40% focused on application development. Today, those figures are reversed, Rao adds.

40,000 Virtualized Servers

One of the major initiatives that helped reduce cost in Citi’s IT infrastructure was to virtualize all of its servers. The bank has virtualized 40,000 of its servers in its data centers. The virtualized server network now runs at 40 to 50% capacity, up from a low utilization average of 5% to 10% just a few years ago, reports Rao. “Being that it is a virtual environment, we are comfortable” running at 50% capacity. “We could become more efficient, but there are other concerns,” he says, noting that Citi needs to be able handle spikes in activity, such as trading market volumes. “You have to have the capacity to handle the spikes. We won’t run it at a higher” capacity level, he adds.

Citi has increased its utilization during a time when the volume of transactions and data continues to increase. “The nature of business requirements has not changed and we have seen a 15% increase in volume across all businesses,” Rao says. “We process greater volumes, but size of the transactions is smaller.” For instance in the trading business, the trading volume has increased although the order ticket size has decreased.

Similarly, “If you look at the credit card business, the number of transactions is skyrocketing, but the average size of the transaction is much smaller,” Rao notes. But when it comes to data center capacity, a large credit card transaction for a flat screen TV at Best Buy is treated the same as a purchase of a cup of coffee at Starbucks.

Citi also has increased its storage utilization to 60%, up from 10% a few years back. “Modern technology allows you to do this,” Rao says. “When you run it as a massive shared infrastructure, there are benefits to the scale. Essentially, we are running a huge private cloud.” Increasing storage utilization only a few percentage points brings huge benefits for Citi, considering it has 72 petabytes of data in its data centers.

One form or modern technology that Citi is using in its data centers is newer solid state memory (SSD), or flash memory. Although SSD accounts for only one percent of Citi’s overall storage capacity, according to Rao, firms typically use SSD to improve performance and even reduce costs.

Jeff Richardson, executive vice president and chief operating officer at LSI Corp., a provider of flash storage and other flash solutions to enterprises, told Wall Street & Technology that flash storage may “increase the cost of the server by 10 percent.” However, the improved performance and reduction in the need for the number of servers because of the flash technology, should lower the overall cost to an enterprise, Richardson says.

Cloud On Hold
Citi’s massive private cloud is one reason why Rao says Citi isn’t looking at external cloud providers at this time. “Since we have increased our data center efficiency, we have not found the economic rationale” to move to the cloud. “Today, the cloud solutions do not give us the flexibility or the cost savings.”

Also, Citi isn’t convinced that external cloud solutions will meet its compliance needs. “We constantly evaluate all of our options,” he says. “But when it comes to the cloud, there are data privacy issues and regulatory constraints” that Citi feels have not been sufficiently addressed by external cloud providers.

For instance, Rao says Citi could actually reduce its data center footprint even further, but it must keep 10 satellite data centers to comply with personal data privacy regulations. “If there were no regulatory constraints, I could run the entire infrastructure in 10 data centers,” he says. “The 10 satellite centers are run in certain countries to comply with local regulations.”

Also, by running data centers at just 50% of capacity, Rao says Citi can efficiently move transaction processing load across the globe when needed. “At 50% capacity, we could move [transaction load] back and forth,” he says. “We are operating 24/7. Workloads are shipped back and forth between the US and Asia, and that makes the infrastructure work more efficiently.”

http://www.wallstreetandtech.com/it-infrastructure/extreme-makeover-citi-consolidates-70-da/240144622