Virtualization helps Asia Pacific companies avoid US$98bn in IT spending

A new study reveals that US$98 billion worth of spending is expected to be avoided in the Asia Pacific region from 2003-2020 in the areas of server spending, power and cooling, floor space and cost of manpower and overheads.

The VMware-sponsored IDC Server Economies Index provides an analysis over the past 10 years and looks forward through 2020. 

“This new study is evidence of the dollar value impact of virtualization on businesses. Virtualization is the foundation of the datacenter’s transformation and cloud computing’s evolution, so this is the tip of the iceberg,” said Andrew Dutton, senior vice president and general manager, VMware Asia-Pacific and Japan.

Virtualization has disrupted the industry

Evidently, virtualization has introduced significant benefits to enterprises and environmental sustainability. Organizations have been able to reduce capital and operational expenses, while reducing potential lost revenue associated with downtime, outages and failures, thus allowing their manpower to shift from routine tasks to strategic projects and adding value to the business.

Virtualization has also been a positive contributor to any datacenter sustainability model. For every watt of electricity spent on powering and cooling the server farm and datacenter, the energy generation and distribution have had to create at least five watts, through loss, leakage, step up or step down transformation.

 “The IDC Server Economies Index validates the perspective that virtualization is one of the technology disruptors in Asia Pacific and likely to appear prominently on our IDC Predictions agenda for years to come,” said Avneesh Saxena, Group Vice President, Domain Research Group, IDC.

Virtualization impact across Asia Pacific

When comparing results across the countries studied, the findings showed that the mature markets of Australia, Japan and Singapore derived US$8 billion more spending in historical costs due to virtualization than the emerging markets. For these mature markets, the critical costs avoided was servers, which contributed to nearly half (47%) of overall costs in the four areas.

In contrast, the emerging markets of China (PRC), India, Indonesia, Malaysia and Thailand saw greater forecast of the costs avoided by US$15 billion in future, than the mature markets. Given that it has one of the lowest current levels of server virtualization, China saw the most significant difference between historical and forecast savings – US$39 billion – resulting in the PRC being able to increase cost avoidance by more than five times.

Virtualization avoids nearly US$100 billion in costs

Overall, results showed that the key area where costs are avoided was in the server spending category, accounting for around half (US$48.7 billion) of the overall costs across the region from 2003-2020.  The next significant area of savings was in the avoidance of the power costs (US$17.6 billion) associated with these servers. Forecasts showed, however, that both physical land and power cost savings erode over time as a percentage of the overall cost avoided.

“Forecast figures point to an exciting time where more companies will embark on their journey to the software-defined datacenter – the next generation infrastructure for cloud computing, where control of the datacenter is entirely automated by software,” said Dutton. “Each new era requires a new generation of infrastructure for the enterprise, and we will continue to see virtualization power people and organizations to move from the client server era to the mobile cloud era of computing.”