Saxo Bank

Danish Bank Virtualizes Infrastructure to Reduce Costs

Saxo Bank, an investment bank headquartered in Copenhagen, Denmark, brokers the trading of financial transactions to its customers. The bank’s innovative Web-based trading platform and excellent customer service have led to rapid growth over the past 10 years, which in turn has led to a rapid expansion in the number of servers required to handle the bank’s data-intensive operations. Saxo Bank is using the Windows Server® 2008 Hyper-V™ virtualization technology and Microsoft® System Center Virtual Machine Manager to combine multiple workloads on each server, thereby reducing the total number of servers in the data center and making administration easier. The bank plans to virtualize nearly all applications over the next few years, with the project expected to produce a three-year internal rate of return of 150 percent and a net present value of 5.8 million Danish kroner (U.S.$1.2 million).

 

Situation

Saxo Bank, an investment bank headquartered in Copenhagen, Denmark, brokers the trading of financial instruments (such as foreign exchange, CFDs, stocks, and futures) to its customers. The bank led the way in offering customers a cost-efficient way to trade currencies, options, and other financial instruments over the Internet. “From your PC, be it via a rich client or a Web browser, you can trade with us in different asset classes,” explains Tobias Straessle, COO of Saxo Bank. “So you can trade foreign exchange, equities, bonds, CFDs, futures—everything out of a single account. That’s what’s unique about Saxo Bank.”

Although the bank is only 15 years old, it has grown rapidly. Starting in 1992 with two founders, the bank now has more than 1,350 employees and manages more than ten billion Danish kroner (DKK) in client funds. “We have clients in 180 different countries. We have partners who are using our technology in more than 120 different countries,” notes Straessle. “At peak times, we are processing almost 500,000 transactions per day.”

Technology has facilitated this rapid growth because it enables the bank to deliver a wide variety of products at competitive prices and in a manner that is convenient for customers worldwide. “We are a technology company at heart. Our technology allows us to provide customers with extensive real-time trading information over the Internet so they can make decisions and then execute trades quickly, at competitive prices,” explains Lars Thomsen, Solutions Architect at Saxo Bank.

There are three ways for customers to access Saxo Bank’s trading platform. The most widely used is an application that runs on customers’ home computers. Through the application, customers receive real-time trading information, and execute trades. Saxo Bank also offers trading services to other financial organizations, such as Citibank, via its white-label offering whereby these banks can offer customers their own branded Web-based trading services that are executed through Saxo Bank. Finally, the bank offers direct access to its trading platform through a standards-based B2B (business-to-business) link to institutional investors such as pensions and hedge funds. Because the majority of trades from all three services are handled directly though the Internet, Saxo is able to offer its trading services at low prices.

Figure 1. Employee growth at Saxo Bank over the past 10 years. More than 40 percent of the bank’s employees are in the IT department.

Over the past two years, Saxo Bank has expanded operations to financial trading centers and areas where it can provide direct access to customers who prefer to meet brokers in person. This expansion has increased the IT administrative needs of the company because the IT department must now support remote offices. The bank has also executed several acquisitions in the past two years that have required new systems to be integrated.

Saxo Bank uses only x86-based servers that run the Windows Server® operating system. “Saxo Bank built its technology platform on a Microsoft environment because Microsoft can supply everything we need using a consistent platform that simplifies administration and increases reliability,” explains Thomsen. “If you look in the capital markets area, a lot of banks use different technology platforms, but we have never found any limits to what we can do using Microsoft technology,” adds Straessle. Saxo’s Windows Server–based environment has proven to be highly reliable and has scaled easily to meet the bank’s needs.

The bank has built redundancy into all of its key software applications and strives to meet 100 percent availability for all its trading platforms. In many countries, trading platforms must meet regulatory requirements for availability.

Saxo Bank keeps the majority of its servers in two data centers. The bank has 600 physical servers today with approximately 125 applications running on Microsoft® Virtual Server 2005. The number of physical servers is currently growing at about 200 servers per year. Each application has a server located at each data center and all servers are added in pairs so there is always 100 percent physical redundancy between the two data centers. Each of the two data centers is powerful enough to handle the full Saxo production load their own, including include peak loads during trading volume spikes—short periods of much higher than normal volume as markets react to current events.

This system for providing redundancy has served Saxo Bank well, but now the bank is looking for ways to reduce costs as it continues to expand rapidly. The bank is also reaching the space limitations at its secondary data center and would like to deploy a solution that reduces the total number of servers required at this location.

Solution

Saxo Bank has used virtualization to help reduce costs and facilitate server consolidation for several years using Virtual Server 2005. However, the introduction of the Windows Server 2008 Hyper-V™ virtualization technology and Microsoft System Center Virtual Machine Manager has provided Saxo Bank with a way to deploy virtualization on a much wider basis.

We are very confident that the Hyper-V can help us grow in the future, that we can get the scalability and the performance we need. Tore Fribert Co-CIO, Saxo Bank

“I think virtualization can help us in many ways. Mostly, it’s about supportability and maintainability,” explains Tore Fribert, Co-CIO of Saxo Bank. “Being able to provision services and applications fast, being able to support the applications, and being able to manage the applications efficiently.” Hyper-V provides scalability and high performance by supporting the following key features:

• Reliability and security through hypervisor architecture.
• Flexibility and manageability by supporting features like the quick migration of virtual machines from one physical host to another.
• Integration with System Center Virtual Machine Manager.

“The workload management features of Hyper-V are important for us. To be able to move a service from one physical box to another physical box to gain more performance is essential for our operations. When we see volatile markets, our systems have to be able to perform maybe a hundred times more transactions than on a usual day,” notes Fribert. “So the feature of moving a service or an application from one box to a bigger box, almost instantly, is very important for us.”

System Center Virtual Machine Manager provides a comprehensive management solution for the virtualized data center that enables increased physical server utilization and centralized management of virtual machine infrastructure. “To go from a physical box to a virtual machine is simple. In fact, it can be done in minutes,” explains Fribert. “With System Center Virtual Machine Manager and Microsoft System Center Operations Manager we can identify the right services to move. So it’s very easy.”

Figure 2. The virtualization project at Saxo Bank will generate significant savings for the bank beginning in 2009.

Saxo Bank will transition its current Virtual Server environment to Windows Server 2008 Hyper-V and begin to move additional workloads as well. The bank’s short-term goal is to have 25 percent of its core banking applications and 80 percent of non-core applications running in a virtual environment by the end of 2009. The bank plans to eventually have all of its applications running on virtual servers. “We plan to virtualize as many applications as possible because we feel that we will be able to maintain the high levels of availability we require, but with much less hardware,” explains Thomsen. The bank will also use virtual servers for all of its test environments going forward.

Virtualization will also be used to improve the process for managing the servers in remote offices. Each office has servers for Microsoft Exchange Server and other file and print services. Currently Saxo sends administrators to new offices to set up the servers and must have local staff to maintain them. In the future, Saxo will be able to use Hyper-V to deploy software to remote servers over its network. Virtual machines can be saved as files and can be installed remotely.

Benefits

Saxo Bank expects Hyper-V and System Center Virtual Machine Manager to produce significant savings due to server consolidation and reduced administration requirements. The virtualization project is expected to produce a three-year internal rate of return of 150 percent and have a net present value of 5.8 million Danish kroner (U.S.$1.2 million). This result is based on a cost of 800,000 kroner (U.S.$168,000) to test Hyper-V and install System Center Virtual Machine Manager and projected cost reductions of up to 6.8 million kroner (U.S.$1,450,000) per year in 2010. “Cutting costs as we continue to grow is a challenge, but is important to the bank so that we can use the cash to drive our global expansion,” explains Thomsen. “Virtualization is a great technology to help us achieve our goals.”

Savings from Server Consolidation

The benefits from server consolidation include hardware savings, savings on power and cooling, and reduced administration expenses.

The current average server utilization at the bank is approximately 20 percent, and the bank is deploying nearly 200 new servers per year. If the bank continues expanding its server infrastructure at the current pace, there would be 1,000 servers deployed by the end of 2010. Using Hyper-V to deploy several applications on one physical server will allow the bank to reduce this number to just over 640 servers, resulting in a 36 percent decrease in the number of servers required. This will lower the hardware and data center costs for the servers, including space, power, and cooling, by 4.7 million kroner (U.S.$1 million).

In addition, the bank will be able to avoid paying for immediate expansion to its secondary data center. Saxo Bank currently leases space for its secondary data center. This leased space will soon be filled at Saxo’s current rate of expansion and the bank will need to contract for additional rack space. Hyper-V will enable server consolidation that will delay the need to lease additional space for several years. “We had planned on paying for more rack space in the next year or two,” explains Thomsen. “Now we think that we will be able to delay that for several years, which will be a great help in meeting our budget.”

Reduced Administration Costs

System Center Virtual Machine Manager provides administrators with a complete view of the virtual server environment and allows them to perform all administration tasks from one central console. This complete view makes remote administration easier, especially as Saxo expands globally. Currently, administrators travel to new offices to set up the servers and install required software programs. “Using Systems Center Virtual Machine Manager, you can take a server template and distribute it from a central point,” explains Bo Stolborg, Director of Technical Projects at Saxo Bank. “Meaning we do not have to send staff out to our data centers or our branch offices. We can manage and run the whole thing remotely.”

Improved Agility

Virtualization with Hyper-V will provide Saxo Bank with the ability to deploy additional server applications quickly and easily as demand increases. This flexibility will help the bank to manage the spikes in trading flow that frequently occur. Saxo Bank also plans to use virtualization in its test environments to ensure the testing and qualification of new applications or upgrades are quicker and less expensive. “We are very confident that the Hyper-V can help us grow in the future, that we can get the scalability and the performance we need because Saxo Bank is growing very, very fast,” explains Fribert. “With Hyper-V we are confident that we can support that growth.”

About Piedmont Consultants

This business value case study was developed by Piedmont Consultants, a specialized technology marketing firm that helps technology companies implement a value-based approach to selling their products and services. For more information about Piedmont Consultants, visit the Web site at:
www.piedmontconsultants.com

Hyper-V and Microsoft System Center Virtual Machine Manager 2008
Together, Hyper-V technology, a key feature of the Windows Server 2008 operating system, and Microsoft System Center Virtual Machine Manager 2008 provide a reliable virtualization technology and comprehensive management solution that make it easier for customers to virtualize their IT infrastructure and reduce costs. With integrated administration, customers can use a single console to centralize management of a heterogeneous virtual machine infrastructure; increase physical server utilization; rapidly provision new virtual machines; and provide dynamic performance and resource optimization of hardware, operating systems, and applications. Both of these technologies easily plug into existing infrastructures, so companies can continue to use their current patching, provisioning, management, and support tools and processes. This combined virtualization technology and management solution also provides great value, because customers can make the most of their IT professionals' skill set, the breadth of solutions from Microsoft partners, and comprehensive support from Microsoft.

For more information, go to:
www.microsoft.com/hyper-v
www.microsoft.com/scvmm

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
www.microsoft.com

For more information about Saxo Bank products and services, call (+45) 39 77 40 07 or visit the Web site at:
www.saxobank.com