4-page Case Study
Posted: 1/3/2013
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Applied Innovations Hosting Firm Offers New Services, Reduces Expenses by Upgrading Server Software

Applied Innovations is a Florida-based hosting company that stays on the cutting edge of technology to give customers more competitive solutions and gain efficiencies that lower operating costs. It recently upgraded to Windows Server 2012 and Microsoft System Center 2012 to take advantage of increased virtualization density, more sophisticated IT management tools, and higher availability. With the upgrade, Applied Innovations can offer new services that both help customers and boost revenues. By using the software’s many automation features and greater virtualization density, Applied Innovations has been able to reduce data center costs by half and plans to expand revenues fivefold by 2015 without increasing operating expenses. It can also reduce downtime; it recently migrated 100 newly acquired customer workloads into its data center with just a few hours of downtime.

Applied Innovations provides a range of Windows-based web hosting solutions for small and midsize businesses. The Boca Raton, Florida–based company was founded in 1999 with the goal of giving smaller businesses cost-effective, enterprise-caliber resources that could help them be competitive and successful in the online marketplace. Applied Innovations is a member of the Microsoft Partner Network with a Silver competency in hosting. The firm has 15 employees.

Applied Innovations counts many technology companies as customers, and they tend to want the latest and greatest hosting technology so that they can stay ahead of their competition. It also serves many e-commerce companies, which want technologies that will give them a competitive advantage. “We were one of the first companies in the world to launch a hosting business on the Windows Server 2008 operating system, one of the first to work with Microsoft on its Dynamic Data Center Toolkit, and one of the first to go live with the Windows Server 2012 operating system,” says Jess Coburn, Chief Executive Officer for Applied Innovations. “We’re proud of these ‘firsts’ and are always looking for new technologies that will help us better serve our customers.”

Staying current on the latest technology costs money, to be sure, but in the long run, Applied Innovations has found that it makes money and saves money. For example, for being a small company, Applied Innovations manages a fair-sized data center, hosting 35,000 domains on 2,500 server instances for 10,000 customers. It’s been able to manage so many servers with such a small staff by using the Hyper-V virtualization technology in Windows Server 2008 R2. Its 2,500 virtual servers run on about 50 host servers.

* We plan to increase our revenues fivefold by 2015, and by using Windows Server 2012 and System Center 2012 in our data centers, we won’t have to increase our operating expense to do so. *

Jess Coburn
Chief Executive Officer, Applied Innovations


While Applied Innovations had achieved an impressive degree of virtualization density (the number of virtual machines per host server), it wanted to be even more aggressive. However, it ran into virtual disk and CPU limitations in Hyper-V. “We have to continuously do more with less to increase our data center density while providing the same or even better level of service,” says Wayne Lansdowne, Chief Systems Architect at Applied Innovations.

In addition to wanting to improve virtualization density, Applied Innovations wants to continuously improve application availability. When doing routine server maintenance, it could not migrate running workloads from one host server to another as flexibly or quickly as it wanted, and for customers doing e-commerce, there was simply no room for downtime.

The workload migration challenge became a business blocker in early 2012 when Applied Innovations acquired the US customers of a United Kingdom hosting company that had decided to leave the US market. With the acquisition, Applied Innovations acquired 100 new customers and around 250 virtual machines. Applied Innovations needed to figure out how to migrate these customers from the original vendor’s data center to its own with minimal downtime. “We were looking at having to bring down these customers’ applications for several days to move them into our data center, and this was unacceptable to many of the customers,” Coburn says.

When the acquisition opportunity came up, Applied Innovations had already been evaluating Windows Server 2012. In fact, the company was part of the Microsoft Technology Adoption Program (TAP) for the new operating system. “The TAP was a fantastic experience because we were able to give Microsoft direct feedback, much of which we saw implemented in the final product,” says Lansdowne.

Applied Innovations decided to take advantage of the new capabilities in Windows Server 2012 to facilitate the acquisition migration. It imported all the new customer workloads into a cluster based on Windows Server 2012, using the live migration feature in Hyper-V and improvements to Cluster Shared Volumes. Hyper-V live migration enables data center administrators to migrate running virtual machines between host servers without downtime. Cluster Shared Volumes has been enhanced in Windows Server 2012 to enable the construction of active-active file server clusters that can swap workloads without downtime.

Capacity, Availability, Other Improvements
Applied Innovations was also pleased at the capacity improvements in Windows Server 2012 Hyper-V, which provide significant enhancements in scalability and performance for virtualized workloads. Windows Server 2012 supports as many as 32 virtual processors and 1 terabyte of memory for Hyper-V guests, a new virtual hard disk format (VHDX) with larger disk capacity of up to 64 terabytes, and additional resilience. This will allow the hosting company to achieve even higher virtualization density.

Hyper-V Replica is another key feature for Applied Innovations. Hyper-V Replica provides asynchronous replication of virtual machines between storage systems, clusters, and data centers over two sites to provide business continuity. “As a South Florida company in the path of hurricanes, we’re well aware of how quickly normal business operations can be upended,” Coburn says. “We can use Hyper-V Replica to provide disaster recovery to our customers at a very attractive price. We plan to ‘productize’ Hyper-V Replica and create a disaster recovery solution that’s far more affordable than existing third-party solutions. Disaster recovery needs to be a consideration for any business.”

* We can use Hyper-V Replica to provide disaster recovery to our customers at a very attractive price. *

Jess Coburn
Chief Executive Officer, Applied Innovations

By using new file and storage services in Windows Server 2012, Applied Innovations can use industry-standard storage instead of expensive storage area networks (SANs). “Storage is a huge portion of our hardware costs,” Coburn says. “If we can use a bunch of industry-standard servers and storage and still deliver a high level of service, that will be phenomenal.”

Applied Innovations plans to take advantage of improvements in Remote Desktop Services and RemoteFX to provide more compelling and more easily managed virtual desktop infrastructure offerings. “These features will open up new opportunities for us in the hosted desktop market,” Coburn says. “Broadband service is so cost effective that virtual desktops are becoming more common. We’re gearing up for this new opportunity.”

New Management Tools, Licensing Efficiencies
Around the same time that it upgraded to Windows Server 2012, Applied Innovations upgraded to Microsoft System Center 2012, which provides a wide range of data center and technology management capabilities. The company is currently using the Virtual Machine Manager component of System Center 2012 to automate the deployment and optimization of virtual machines and to centrally manage both virtual machines and physical servers. Next, it plans to deploy the Operations Manager component to monitor server and application health and the Orchestrator component to automate workflows such as the provisioning of virtual machines.

“System Center saves us time and money,” Coburn says. “It interoperates with a broad set of applications and infrastructure elements and lets us manage host servers, virtual machines, SANs, and every other element of our data center. By using the Microsoft Services Provider License Agreement, we can let our customers manage their own cloud infrastructures using Virtual Machine Manager. System Center also gives us a multitenant management framework and offers a very rich feature set. It would have taken us months to create a comparable management framework ourselves.”

The Microsoft Services Provider License Agreement (SPLA) enables services providers and independent software vendors to license the latest Microsoft software to provide software services and hosted applications to customers.

High-Capacity Dell Hardware
Applied Innovations runs Windows Server 2012 on Dell PowerEdge R620 servers with two octa-core Intel Xeon processors and 256 gigabytes (GB) of RAM. It also uses the Dell EqualLogic PS6510X Storage Array. “Dell does a great job of integrating with Microsoft,” Coburn says. “They just released the EqualLogic PS6510X Storage Array, which unlocks additional features in Windows Server 2012, namely iSCSI support. Previously, once an iSCSI disk grew, it could not shrink again, but with the PS6510X, our volumes can grow and shrink so that we can reclaim space.”

By upgrading to Windows Server 2012 and System Center 2012, Applied Innovations will be able to offer customers new services that help them be more competitive, while creating new revenue opportunities for itself. It will also be able to reduce operating expenses and grow the business without increasing headcount. Applied Innovations has also improved availability by using the live workload migration capabilities; it was able to migrate the workloads of an acquired company in hours versus days.

Give Customers New Services and Increase Revenues
By taking advantage of Windows Server 2012, Applied Innovations can offer new services to its customers, such as a workload replication service built on Hyper-V Replica and hosted desktops built on Hyper-V and Remote Desktop Services. This will help customers be more successful and give Applied Innovations a way to increase its revenues.

* By using Windows Server 2012, we’ve been able to shut down an entire data center, reducing our data center costs by half. *

Jess Coburn
Chief Executive Officer, Applied Innovations

“We’re going to use Hyper-V Replica to make enterprise-class high-availability services available to small businesses at a price that they can afford,” Coburn says. “They will be not only affordable but extremely robust. We can also use Windows Server 2012 and System Center 2012 to offer a new level of managed infrastructure-as-a-service services that let us extend our classic hosting services. It’s an entirely new business opportunity for us. We can increase our revenues by taking advantage of Microsoft cloud software while increasing our customers’ capabilities and competitiveness.”

Reduce Operating Expenses
What could be better than creating new revenue-producing services? Doing so without increasing overhead. “We plan to increase our revenues fivefold by 2015, and by using Windows Server 2012 and System Center 2012 in our data centers, we won’t have to increase our operating expense to do so,” Coburn says.

Already, Applied Innovations has reduced its operating costs by shrinking its data center footprint. “By using Windows Server 2012, we’ve been able to shut down an entire data center, reducing our data center costs by half,” says Coburn. “This is largely due to the increased virtual machine density we get with Windows Server 2012 Hyper-V, but also due to the ability to use industry-standard storage and live migration capabilities.”

Additionally, the cost of clusters goes down because Applied Innovations is able to use high-capacity servers with 256 GB of RAM and squeeze more workloads onto fewer, more powerful host servers. In the acquisition migration, Applied Innovations was able to consolidate 16 servers to 6 servers.

The savings extend to licensing and labor costs. The company’s flexible and highly automated infrastructure gives it the ability to do things like absorb the recent acquisition without hiring additional support people or engineers. “The fact that we’re able to support such a large customer base with a small number of people speaks volumes to the level of efficiency and automation that Windows Server 2012 and System Center 2012 give us,” Coburn says. “Some economists are predicting a second recession in 2013, and by maintaining a lean infrastructure with low operating costs, we can help our customers maintain a high level of IT service when they have to start tightening their belts.”

Microsoft licensing further contributes to a lean bottom line. “The SPLA is instrumental in our cost efficiencies,” Coburn says. “By using the SPLA, we pay a monthly fee, which covers everything: operating systems, System Center, Microsoft SQL Server, and other Microsoft applications. When our server counts go up, our licensing adjusts automatically. With the SPLA, we can keep our licensing costs in line with our business.”

Increase Availability and Migrate an Acquisition in Just Six Hours
By using Hyper-V live migration, Applied Innovations can perform routine server maintenance work, such as applying security updates, with far less downtime. This helps the company deliver better availability to customers and also perform much of this maintenance work during normal work hours rather than at night.

This same feature helped Applied Innovations migrate 100 newly acquired customers and 250 servers in just six hours, versus days without it. This made the difference between keeping and losing many of these new customers. “If we had not used Windows Server 2012 to migrate these customer workloads, we would have had to do an export and import the virtual machines, and the customers would have felt a much longer window of downtime,” Lansdowne says. “It would also have been more error prone. As it was, we had zero mistakes and everything went amazingly well. Hyper-V live migration opens up a new, pain-free avenue for business growth.”

Windows Server 2012
Windows Server drives many of the world’s largest data centers, empowers small businesses around the world, and delivers value to organizations of all sizes in between. Building on this legacy, Windows Server 2012 redefines the category, delivering hundreds of new features and enhancements that span virtualization, networking, storage, user experience, cloud computing, automation, and more. Simply put, Windows Server 2012 helps you transform your IT operations to reduce costs and deliver a whole new level of business value.

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For More Information
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For more information about Applied Innovations products and services, call (866) 706-8691 or visit the website at:

Solution Overview

Organization Size: 15 employees

Organization Profile

Applied Innovations is a Boca Raton, Florida–based web hosting provider that specializes in hosting services on the Windows Server platform. The company hosts 35,000 domains for 10,000 customers.

Business Situation

Applied Innovations is always looking for new technologies that can give customers a competitive advantage, increase data center density, lower operating costs, and improve availability.


Applied Innovations upgraded to Windows Server 2012 and used it to integrate an acquisition in a matter of hours and also to increase virtualization density, reduce operating costs, and improve availability.


  • Give customers new services and increase revenues
  • Reduce operating expenses
  • Increase availability
  • Migrate an acquisition in just six hours

  • Dell PowerEdge R620 servers with dual octa-core Intel Xeon processors
  • Dell EqualLogic PS6510X Storage Array

Software and Services
  • Windows Server 2012 Datacenter
  • Microsoft Hyper-V
  • Microsoft System Center 2012
  • Windows Server Remote Desktop Services

Vertical Industries
Hosters & ISPs

United States

Business Need
  • Cloud & Server Platform
  • Cost Containment

IT Issue
  • Cloud Services
  • Virtualization