Retailers are finding that computer virtualization can reduce their hardware, maintenance and energy costs while offering new capabilities
Computers are so commonplace that it's easy to become jaded with their speed and power. Yet every so often a new twist on computer technology comes along — something like virtualization — to remind you of their seemingly limitless possibilities.
Virtualization, in essence, allows a single physical computer with a single operating system to be subdivided into many “virtual” computers, each with its own operating system. A retailer could use one of those virtual computers to support a new resource-intensive application rather than going out and buying a new physical machine.
For example, Associated Grocers of Baton Rouge, La., runs its BlackBerry application on a virtual server at its headquarters. “Normally, BlackBerry needs its own server, so in the past we would have purchased another physical box, waited for it to be delivered and installed the operating system before beginning the application installation,” said Steven Miller, Associated's senior vice president of strategic planning, projects and information services. But with virtualization, “we just copy an existing operating system and provide naming and IP credentials.” The whole process takes about five minutes.
It's not hard to understand virtualization's fast-growing business appeal: In an economy requiring budget tightening at every level, it allows retailers to cut their hardware and maintenance costs while saving energy to boot, effectively doing more with less.
As a result, virtualization is catching on among food retailers and wholesalers. According to “Virtualization in Retail Survey 2008,” a study released by Microsoft in April, 71% of surveyed retail companies are using virtualization technologies in their stores or headquarters. Among the surveyed retailers, 37% fell into the food and drug category, which included supermarkets, specialty food stores, beverage stores and drug stores.
“This is a technology that retailers are beginning to use in increasing numbers to minimize their costs,” said Kevin Sterneckert, director of research, retail, AMR Research, Boston.
FORTY INTO THREE
Since Miller joined the company three years ago, Associated has stepped up its use of virtualization software from VMware, Palo Alto, Calif., a major supplier of this technology. Using the software, Associated now runs about 40 mostly Windows-based virtual servers on a cluster of only three physical servers at its corporate headquarters, said Miller. The applications running on those servers include BlackBerry, Instant Messenger, Terminal Services, Domain Controllers and Web Servers. The wholesaler also has a backup VMware server for disaster recovery.
In addition, Associated recently purchased another cluster of two physical servers to run multiple Microsoft SQL databases; the cluster encompasses 15 virtual servers, each running various SQL databases. Miller is increasing the storage capacity of the cluster with a hard-drive application from NetApp, Sunnyvale, Calif.
He is also deploying applications on virtual servers that Associated's retail customers and vendors can access remotely. A new one is a price management system from BRdata, Melville, N.Y., which Associated will use to communicate price changes to stores, host price files and print price books and tags; retailers can log on to run custom retail prices and reports.
Virtualization affords Associated a great deal of flexibility in dealing with computing resources, while minimizing the risk of failures. For example, when an application experiences a problem in a virtual machine, the problem is isolated and doesn't adversely impact applications running on other virtual machines.
Moreover, Associated can perform maintenance on a virtual machine while temporarily moving its services to another physical machine, Miller said. “And we're doing this while people are connected and using these resources. They don't know what's happening.”
The technology also allows Miller to do what he called a “virtual evaluation” of an application, upgrade or patch. “First, you save your application in its current state,” he explained. “Then you load the upgrade or patch, and if it fails, you say fine, just delete that and go back to where you were.”
In assessing the monetary benefits of virtualization, Miller pointed to the cost savings in terms of less hardware and hardware maintenance, as well as improved administration; the advantages of instant recoverability and fail-over; and the reduction in energy and cooling costs, making it an environmentally friendly solution as well.
On the investment side, costs include state-of-the-art hardware servers and hard-disk arrays, VMware software licenses, and operating system licenses. Miller did not comment on the payback period for the investment.
Miller acknowledged that managing an array of virtual machines can become very complicated. “It requires some knowledgeable and sometimes hard-to-find technical people,” he said. “And it's hard to keep them, because a lot of companies are doing this now.”
Costco Wholesale, Issaquah, Wash., is another major distributor that has embraced virtualization at its headquarters, based on technology from Microsoft. According to a case study on Microsoft.com, Costco realized in 2006 that it needed to invest in virtualization to “control the proliferation of servers” in its data center.
Costco initially selected Microsoft's Virtual Server 2005 system to consolidate servers and more easily perform testing and validation of new software. Since then the wholesale club retailer adopted more current tools from Microsoft, including its System Center Virtual machine manager 2008 and Hyper-V virtualization technology.
Costco now operates five physical servers that host 50 to 60 virtual machines running domain controllers, Microsoft Exchange Server and infrastructure applications, according to the case study. The company hopes to increase the ratio of virtual machines to physical server from about 10 to 1 to 15-20 to 1.
In Microsoft's study, 42% of retailers were using virtualization in centralized locations and data centers, while just 14% were using it at store locations only.
Since the beginning of the year, C&K Market, Brookings, Ore., has demonstrated that virtualization can also be used at the store level.
C&K, which operates 60 stores in Oregon and Northern California under the Ray's Food Place, Shop Smart, Price Less Foods and Pharmacy Express banners, is running six or seven virtual machines on a single “semi-beefy” Dell server in four stores, with a fifth coming next month, said Alan Nidiffer, C&K's vice president and chief information officer.
“We've proven the concept, and we're taking every opportunity to install the system,” he said. The first three stores were retrofit jobs, while the next two involved new stores.
C&K's traditional setup is to use six or seven PCs in its stores, each running a dedicated application such as the store manager's desk, direct-store-delivery receiving, video rental, fresh-department scales, bookkeeping and file maintenance. In the virtual scenario, those applications each run on a Windows-based virtual machine in the Dell server, which includes VMware software as well as a redundant backup.
Store employees tap into their virtual machines via a thin-client Neoware device the size of a hardcover book. “To the user, there's no difference than before,” said Nidiffer. “They still have their own desktop and email.”
Unlike PCs, the thin-client devices have no moving parts or processing power. As a result, they are not subject to the same maintenance issues as PCs, such as bad motors or faulty hard drives.
“In the long run, we save on maintenance and downtime,” noted Nidiffer — a savings of about $1,500 per year per store, or $90,000 annually for the chain.
As for the one-store cost of virtualization software, operating system licenses and thin-client devices, C&K has found that it is “about the same cost as seven brand-new PCs,” or between $9,000 and $10,000, Nidiffer said.
Next year, Nidiffer has budgeted $90,000 — the projected chainwide annual savings — to retrofit nine to 10 more stores with the virtual technology.
Nidiffer pointed out that with the geographically dispersed nature of C&K's chain, it can take a day or two for a technician to reach a store to repair a PC that malfunctioned. If it's a video rental PC, that might impact sales. But if a virtual machine crashes, “we can rebuild it remotely in three to five minutes” by restoring a recent backup, he said. That has already happened a handful of times, once with a store manager's virtual machine.
So far, Nidiffer has not virtualized his stores' POS terminals, though he is working on it in the lab. “I'm not fully convinced yet, because of the absolute got-to-go nature of the POS,” he said.
He acknowledged that store personnel, especially managers, are not always entirely comfortable with virtualized machines. “The store manager sees one server running the whole store, and wonders what happens when it breaks, as it probably will?” Nidiffer said. “But we feel there's enough redundancy in the main server to minimize that.”
Redundancy is a critical factor in virtualization, observed AMR's Sterneckert. “The magnitude of the point of failure is greater, so the requirement for redundancy and disaster recovery is important not to overlook.”
C&K's wholesaler, Unified Grocers, Commerce, Calif., also expressed discomfort with the virtual setup. Unified runs an ordering application on a dedicated PC in C&K's standard stores, but that was virtualized in the VMware stores.
“It took a lot of talking and testing to convince them it was sound,” said Nidiffer. “But they are forward-thinking, and they helped us to get it to work.”
C&K also uses VMware on a cluster of three physical servers at its corporate headquarters, running at least 10 virtual machines on those servers. Applications on the virtual machines include BlackBerry, Microsoft Exchange, Symantec antivirus software and proprietary financial applications.
Percentage of surveyed retailers using virtualization