4-page Case Study
Posted: 11/23/2011
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Northwest Savings Bank Bank Gains 100 Percent Reliability, Estimates Cost Reductions of 44 Percent, with Virtualization

Northwest Savings Bank transformed its IT infrastructure, formerly centered on an IBM iSeries system, to one centered on servers that run the Windows Server 2008 R2 Service Pack 1 (SP1) operating system. It soon realized that, with servers based on Windows servers playing a greater role in the infrastructure, it needed those servers to provide better disaster recovery, greater reliability, more manageability, and lower costs than were necessary when PCs functioned mostly as terminals for the iSeries. By adopting the Hyper-V technology in Windows Server 2008, along with Microsoft System Center management tools, the bank has gained 100 percent system reliability, a 93 percent reduction in the time required to configure new servers, 25 percent faster time-to-market for new applications, and estimated reductions of 47 percent in capital costs and 44 percent in annual operating costs.

Situation
If you’re looking for something new to say about customer service, good luck—a recent Bing search turned up nearly 92 million webpages on the subject. You might try talking to Eric Stoever, who will tell you that focusing on customer service will make a company’s IT infrastructure more reliable and agile, while reducing its cost.

If that seems like an unusual twist on the typical benefits claimed for customer service, consider the source. Stoever is Chief Technology Officer at Northwest Savings Bank, an unusual bank. The midsize regional bank, active in Pennsylvania, New York, Ohio, and Maryland, grew unabated throughout the Great Recession and has paid dividends for the past 68 consecutive quarters. The bank credits much of its growth to its single-minded focus on customer service, a focus that has earned it the highest rankings for customer service among mid-Atlantic retail banks in each of the last two years from market analyst J.D. Power and Associates.

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* The complete uptime we get with Hyper-V is proof enough of its maturity. It has been robust from the beginning. *

Eric Stoever
Chief Technology Officer, Northwest Savings Bank

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In 2007, Northwest Savings Bank decided to replace its existing IBM iSeries customer service application with Encore by Harland Financial Solutions, written on the Microsoft .NET Framework and running on the Windows Server and Windows desktop operating systems. One consequence of this change was a need to standardize the PCs on which the application’s front end would run. The adoption of the new customer service application also required moving the back-end business logic off the iSeries and onto PC servers running the Windows Server 2008 operating system, since upgraded to Windows Server 2008 R2 Service Pack 1 (SP1). The iSeries computer wasn’t decommissioned—it still runs the bank’s core banking system—but now it interacts with the environment through PC servers running Windows Server.

As the bank continued its technology transformation, its server population soared to about 300 servers, up by more than 40 percent. Although PC servers were now more important to the bank, the disaster recovery infrastructure—hosted for Northwest Savings Bank at a SunGard facility—was still the one devised for the bank’s pre-transformation days. Expanding it to support the new infrastructure was crucial for reliability—and prohibitively expensive.

Managing this environment posed another challenge. While the Windows Server infrastructure had expanded greatly, the IT staff had not. Northwest Savings Bank ran what Stoever calls “a lean shop,” with fewer than a dozen technicians available for Windows Server system management. Those technicians were handling the burden, but the projected pace of continued expansion would require the bank to hire additional staff members, which would increase overall costs.

Increased costs were the opposite of what the bank was looking for. Personnel would cost more, disaster recovery would cost more, capital expenditures (for PC hardware) and operating expenses would climb. Northwest Savings Bank hadn’t weathered the economic recession only to falter during the recovery. Adopting a new customer service application was leading to a number of challenges.

Solution
Northwest Savings Bank addressed these challenges by adopting virtualization technology. The bank realized that running several virtual machines, or virtual servers, on a single physical host could help solve many of its concerns: growth in the physical server population could be slowed and even reversed; disaster recovery could be expanded to boost reliability; the environment could be managed more effectively; and costs could be contained.

If Stoever and his colleagues had considered a virtualization solution several years earlier, they might have considered VMware. But by 2009, Northwest Savings Bank—and enterprises everywhere—had another virtualization choice that was rapidly proving to be enterprise-ready without the costs associated with VMware. For Northwest Savings Bank, that newer choice also had the advantage of being part of the platform that the bank already used. That choice was the Hyper-V virtualization technology in Windows Server 2008.

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* We looked closely at Windows Server with Hyper-V and were confident that it provided what we were looking for in a virtualization solution. There was no reason to look at VMware. *

Eric Stoever
Chief Technology Officer, Northwest Savings Bank

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“We looked closely at Windows Server with Hyper-V and were confident that it provided what we were looking for in a virtualization solution,” says Stoever. “There was no reason to look at VMware.”

The IT team first configured a virtual machine using Hyper-V and worked with it for a few weeks to become familiar with the Microsoft virtualization technology. Then, Stoever and the bank’s IT personnel turned their attention to their disaster recovery solution, where the possibility of having to increase their monthly payments to the vendor was a real concern. Northwest Savings Bank was particularly concerned about reliability and disaster recovery because the virtualized environment would host business-critical applications, such as the new customer service application.

They initially replaced a third of the physical infrastructure with virtual machines. Instead of bringing backup tapes to the SunGard facility in the event of an outage, bank personnel intend to send copies of virtual machines in the production environment to the disaster site over high-capacity lines every time there’s a change the servers. In the event of an outage, the virtual machines are immediately available to help keep the bank functioning.

The bank focused next on its data center environment. Over the course of two years, Northwest Savings Bank virtualized about 37 percent of its physical environment, putting about 100 virtual servers on nine physical hosts. The density of virtual servers per host ranges from 10 to 15. Those hosts are HP servers, the HP ProLiant 580 and ProLiant 380. The bank originally adopted the ProLiant 580s for its storage capacity; now, as the bank moves to adopt storage-area network devices providing shared storage, it is able to adopt the more cost-effective ProLiant 380s. “HP works for us,” says Stoever. “We need hardware we can depend on—and HP is it.”

In this phase, the bank virtualized key customer service applications, domain controllers, several small line-of-business applications, a content management system, test and development environments, and a 12-server farm for Microsoft Office SharePoint Server 2007. By 2013, the bank expects to bring the rate of virtualization to 70 to 80 percent of its total environment. Microsoft Exchange Server 2010 is targeted for virtualization, along with other application servers.

Beyond using Windows Server 2008 R2 SP1 and Hyper-V technology, Northwest Savings Bank also adopted the Microsoft System Center family of management products for its virtualization environment. The bank uses a variety of System Center products, including Microsoft System Center Virtual Machine Manager 2008 R2, Microsoft System Center Configuration Manager 2007, Microsoft System Center Operations Manager 2007 R2, and Microsoft System Center Service Manager 2010.

“Virtual Machine Manager demonstrates the maturity of Hyper-V,” says Jason Anderson, Lead Engineer for Windows Server Architecture at Northwest Savings Bank. “We use it to gain a single dashboard of all of our virtual machines and their status, and to update settings or make other changes to those virtual machines. Configuration Manager helps us to deploy software updates. And Operations Manager and Service Manager really change the game in IT management because they bring the internal customer into the equation. We can serve internal customers better because we have much more visibility into their environments. And serving our internal customers better means that they can serve our external customers better.”

Benefits
Northwest Savings Bank has achieved the reliability it sought for its IT infrastructure—along with manageability, agility, and lower cost—making that environment ideal for business-critical applications, such as the customer service solution.

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* Microsoft worked with us closely to help ensure that we were adopting the best licensing model for our situation. Our licensing model now is more appropriate, more flexible, and cheaper. *

Eric Stoever
Chief Technology Officer, Northwest Savings Bank

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Achieved 100 Percent Reliability
A key driver for virtualization at Northwest Savings Bank was the need for a new disaster recovery setup to meet the heightened requirements for reliability created by the new production environment. The bank more than met this goal through its adoption of Microsoft virtualization.

The use of virtual machine images that can be easily moved from the bank’s network to the disaster recovery facility, and configured whenever needed, streamlines the recovery process, giving Stoever and Anderson confidence that they’ll be able to fully recover their production environment should the need arise. Further, their use of virtualization makes it easier and more cost-effective to test the recovery process more frequently than before, to confirm that the recovery site is up-to-date and working properly.

It’s not that they’ve had the need to recover their virtualized production environment. “In the two years since we virtualized the environment, we haven’t had any outages related to Microsoft virtualization,” says Anderson. “We’re seeing Hyper-V as 100 percent reliable.”

To Stoever, the reliability of Hyper-V speaks to the enterprise-readiness of Microsoft virtualization. “The complete uptime we get with Hyper-V is proof enough of its maturity,” he says. “It has been robust from the beginning. Now that we depend on our Windows environment for business-critical functions like customer service, that’s extremely important to us.”

Stoever only sees Hyper-V becoming more reliable. He expects that as the bank expands its virtualization environment, it will make use of Hyper-V features, such as failover clustering and the live migration of virtual machines from one physical host to another, to help avoid both unanticipated downtime and downtime due to scheduled maintenance. He also expects to use Hyper-V Dynamic Memory to double the density of virtual machines on each physical host.

“We see using Hyper-V to gain increasing levels of cost-effectiveness and reliability,” Stoever says.

Decreased Time to Configure Servers by 93 Percent
Northwest Savings Bank uses its virtualized environment not only to gain reliability for its customer service application and other business-critical applications, but also to gain more agility in how it uses those applications. Some of that increased agility is based on using features inherent in Microsoft virtualization solutions; some of it is based on the faster and easier system management that the bank gains through its use of System Center products.

One example of the bank’s newfound agility is its ability to quickly bring new servers online. A new hardware server and application used to take two to three weeks to deploy—including the time to spec the hardware; get a purchase order approved; order, receive, and configure the hardware; and load and configure the software. Now, the bank can configure a new virtual machine and deploy application software for it in less than a day—saving 93 percent of the time of the former process, along with the cost of a physical server.

Being able to configure servers quickly—and cost-effectively—means that IT personnel can configure additional servers more frequently. That’s a particular benefit to the bank’s software developers, who now can test software options more quickly and thoroughly, leading to shorter development cycles and higher quality software.

“We entertain development efforts on a scale that we couldn’t have imagined before Hyper-V,” says Stoever. For example, he cites the bank’s current reengineering of its loan origination system software, with the virtual environment being used for development, testing, training, and production. It has taken 18 months to get the new software into production use—saving 25 percent of the two-year period that Stoever estimates it would have taken in a purely physical environment. “The bottom-line benefit of speeding the development cycle for new systems with Hyper-V is that we get new tools, like a better loan-origination system, into the hands of our employees and, more importantly, our customers faster than we could have done before,” he says.

Reduced Estimated Capital Costs by 47 Percent, Operating Costs by 44 Percent
The various benefits that Northwest Savings Bank gains from its use of Microsoft virtualization—greater reliability, greater agility—each produce cost savings, too. Some of the key savings include:
  • Disaster recovery. The bank expanded its disaster recovery capability without needing new hardware, new cabinets, more electrical power, and the other requirements of physical expansion. That saves the bank about U.S.$45,000 per year in increased fee payments to the vendor.

  • Hardware consolidation. As it reaches its goal of 75 percent virtualization of its data center, the bank will hit another milestone: the avoidance of a $500,000 capital expense to replace retiring hardware and a $150,000 annual reduction in expense for maintenance of that hardware.

  • Personnel cost. The bank is expanding the size of its infrastructure by a third through virtualization, without similarly increasing IT staff size. Due to the productivity it gains through its use of Microsoft System Center products, the bank can utilize IT personnel for other activities. Stoever expects total personnel savings through use of the System Center tools to be about 10 percent.

  • Licensing. Northwest Savings Bank has increased the server count in its environment, along with the functionality of that environment. But it hasn’t increased its licensing costs. The bank has actually reduced its Microsoft licensing costs by 12 percent. Stoever credits the savings to the bank’s move from a standard Microsoft Enterprise Agreement for volume licensing to an Enrollment for Core Infrastructure license. “Microsoft worked with us closely to help ensure that we were adopting the best licensing model for our situation,” says Stoever. “Our licensing model now is more appropriate, more flexible, and cheaper. People talk about wanting to do more with less. With help from Microsoft and flexible licensing terms, that’s exactly what we’re doing.”

Stoever estimates that combining these various savings could mean reductions of about 47 percent in capital expense savings, plus 70 percent in annual operating expense savings. The hardware savings alone speeds the payback on new physical servers by 33 percent.

“We started this IT transformation to provide better customer service, not to reduce costs,” says Stoever. “It’s great that we can use Microsoft virtualization to accomplish both goals at the same time.”

Windows Server 2008 R2
Windows Server 2008 R2 is a multipurpose operating system designed to increase the reliability and flexibility of your server and private cloud infrastructure, helping you to save time and reduce costs. It provides you with powerful tools to react to business needs faster than ever before with greater control and confidence.

For more information, visit:
www.microsoft.com/en-us/server-cloud/windows-server

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 in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234. 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 Northwest Savings Bank products and services, call (877) 672-5678 or visit the website at: www.northwestsavingsbank.com

Solution Overview



Organization Size: 2100 employees

Organization Profile

Headquartered in Warren, Pennsylvania, Northwest Savings Bank operates 169 banking locations in Pennsylvania, New York, Ohio, and Maryland. It has assets of more than U.S.$8 billion and 2,100 employees.


Business Situation

The bank moved from an IBM iSeries-based environment to one based on Windows Server 2008 R2 SP1, and it needed an effective way to manage the growing number of servers.


Solution

The bank adopted a Microsoft virtualization solution based on Windows Server 2008 R2 SP1 with Hyper-V and Microsoft System Center products for consolidated, comprehensive management.


Benefits

  • Achieved 100 percent reliability
  • Decreased time to configure servers by 93 percent
  • Reduced estimated capital costs by 47 percent
  • Reduced operating costs by 44 percent


Hardware
  • • HP ProLiant 380, 580 servers


Software and Services
  • Windows Server 2008 R2 Service Pack 1
  • Microsoft Exchange Server 2010
  • Microsoft Office SharePoint Server 2007
  • Microsoft System Center Configuration Manager
  • Microsoft System Center Operations Manager 2007 R2
  • Microsoft System Center Service Manager 2010
  • Microsoft System Center Virtual Machine Manager 2008 R2
  • Microsoft Hyper-V

Vertical Industries
Banking

Country/Region
United States

Business Need
Cloud & Server Platform

IT Issue
Virtualization

Languages
English

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