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A new frontier: virtualization is beginning to find its place in the insurance industry.

The concept of virtualization, both for computer storage and servers, has gained significant momentum since the virtualization software pioneer, VMWare (now owned by EMC), was founded in 1998. More recently, the number of virtualization solutions available has increased significantly. Microsoft has its own competitive product, which in mm competes with an open-source alternative (Xen) and venture-funded start-ups such as Virtual Iron.

Basically a way to share hardware between applications, virtualization allows the "pooling" of resources that results in consolidating hardware, maximizing the use of the remaining hardware. Applicable to servers and storage, virtualization allows different applications and operating systems to rtm on shared enterprise-level servers and storage.

Virtualization can benefit insurance IT departments through:

* Lower capital expenses by increasing the efficiency of storage/server hardware, decreasing the number of server/storage units and the amount of network infrastructure and associated racks needed for the hardware.

* Lower operating expenses by decreasing data center square footage, cooling and electrical power requirements.

* Decreased labor costs by cutting administrative and maintenance requirements.

* Decreased software licensing costs and simplified software asset management by reducing the number of software licenses required.

* Decreased IT risk from disasters by providing a simple, effective, tool for business continuity planning.

* Improved IT alignment with business units by significantly improving IT's ability to deploy hardware on an immediate-need basis.

With the technology now nearing its 10th anniversary, virtualization is no longer just for "bleeding edge" IT organizations. Several insurers, including AIG Technologies and Guardian Life Insurance, have experienced the above benefits when using virtualization.

For AIG Technologies, it was able to consolidate servers at a 20:1 ratio, on average replacing 20 servers with a single, larger server. In addition to decreasing maintenance and administration costs, licensing costs were decreased and reliability was actually increased through improved server-level redundancy.

The time for AIG Technologies to enable a server for use by a business application was cut in half (from six hours down to three). Other organizations have seen even more significant improvements. Taking into account the time needed to specify an exact hardware configuration, process purchase requisitions and orders, order hardware, lead times and the time to receive/build/test the hardware, server provisioning times of two weeks are not unusual. Decreasing this two weeks to the same three hours results in significantly increased IT responsiveness to business application deployment needs.

While experiencing similar benefits to AIG Technologies when using virtualization, Guardian Life Insurance maintained its application isolation, avoiding conflicts, while having different virtual machines running on the same underlying hardware. As part of its process to adopt virtualization, Guardian was able to retire unsupported hardware platforms, again decreasing costs and increasing application reliability.

Two other areas of IT positively impacted by virtualization include business continuity planning and software development. By moving applications from site to site using virtualization tools, business continuity plans can be tested more frequently, and less expensively, than they can be today. For software development, virtualization can be a significant productivity tool. From saving/ provisioning different versions of applications for the developers, to supporting offshore development to "bug-fixing" by just-in-time application snapshots, developers can access the hardware resources they need, when they need them, in a matter of hours (or minutes).

In terms of the future, while virtualization has already proven its worth in servers and storage, new organizations such as the Virtual Desktop Infrastructure Alliance will continue to drive the expansion of virtualization use. With client PCs the most underutilized resource of all, the Alliance is focused on extending virtualization to the desktop to help provide a foundation for utility computing.

Regardless of the underlying hardware, client computers will be able to be pooled, much as is already done with virtualized servers and storage. The end result is that insurers will be in a continually improving position to lever their existing IT investments, regardless of whether they reside in the data center or in management offices.

Gates Ouimette is a Best's Review columnist from Massachusetts. He can be reached at gateso@yahoo.com.
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Author:Ouimette, Gates
Publication:Best's Review
Geographic Code:1USA
Date:Jun 1, 2006
Words:667
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