CASE STUDY-2

CASE STUDY 7 DATA CENTER CONSOLIDATION AT GUARDIAN LIFE

As one of the largest mutual life insurance firms in the United States,

Guardian Life (www.guardianlife.com) has more than 5000 employees and

over 3000 financial representatives in 80 agencies. Guardian and its

subsidiaries provide almost three million people with life and disability

income insurance, retirement services, and investment products such as

mutual funds, securities, variable life insurance, and variable annuities. The

company also supplies employee benefits programs to six million

participants, including life, health, and dental insurance, as well as qualified

pension plans. In addition to regional home offices in New York City;

Bethlehem, Pennsylvania; Spokane, Washington; and Appleton, Wisconsin,

the company has 55 remote sales offices and 80 remote agency offices.

Like other insurance companies, Guardian Life is an information

intensive organization where data processing and communications network

infrastructure have consistently been important contributors to its success.

Guardian Life’s IT organization has earned numerous accolades including

multiple CIO100 awards from CIO magazine [PRNE11]. According to Dennis

Callahan, Executive Vice President and Chief Information Officer for,

Guardian Life, “A strong partnership between IT and the businesses enables

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Guardian to deliver cost-effective technology services that facilitate world-

class customer service, product innovation, and operational efficiency.”

Ensuring alignment between business and IT is important to Guardian Life

and provides a consistent theme for many of the insurance companies IT

projects including its data center consolidation initiatives [CIOZ12].

Data center consolidation has been an ongoing concern at Guardian for

more than a decade. Guardian’s IT governance structure is team-oriented

and the company’s data center consolidation initiatives are overseen by it

Infrastructure team. The Infrastructure team is primarily co-located in New

York, and Bethlehem, Pennsylvania but it has key support teams in Spokane,

Washington, Appleton, Wisconsin, and Pittsfield, Massachusetts.

Guardian Life began taking a serious look at data center consolidation in

2000, but in the aftermath of the September 11, 2001 terrorist attack,

Guardian also became more concerned with business continuity issues.

Guardian had four significant data centers, at its four home offices, but the

primary data center was in New York City. After 9/11, Guardian wanted

make infrastructure changes to ensure business continuity across its existing

data centers and made plans to add two more data centers to the mix.

Guardian performed an assessment of its data centers to provide a basis

for planning on the location of data processing resources. One surprising

outcome of this assessment had to do with utilization. The assessment

revealed that the four data centers had about 1000 UNIX and NT servers,

with an average capacity utilization of 10%. Even at peak demand, only 25%

of the processing power of the servers was being used [MUSI02]. Guardian

responded to this assessment with a plan that included the following

objectives:

1. Move the primary data center from New York City to Bethlehem, Pennsylvania.

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2. Improve the efficiency of its data centers, including server and storage utilization. Specifically, Guardian set a goal of reducing the number of servers supporting Guardian’s applications and databases by 40% and reducing the server support staff by 60%.

3. Ensure a smooth transition to the new primary data center.

The company chose IT consulting firm Greenwich Technology Partners

(GTP) to help it design and carry out the transition. GTP began with an

assessment of the company’s IT environment and looked at the impact of

moving the data center from New York to Bethlehem. A major issue related

to the move was that the largest number of data center users was located in

the New York area. Thus, the new deployment needed to provide sufficient

data transmission capacity to meet these users’ needs. Fortunately, the

network infrastructure already in place was fairly standard and easily

scalable (Figure C7.1).

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An ATM WAN backbone linked the four regional home offices. Frame

relay connections linked the remote sales offices and remote agency offices,

and 100-Mbps and 1-Gbps Ethernet LANs provided connectivity within

campuses. The Cisco Catalyst 5500 and 7200 series routers provided

Ethernet support combined with a modular, easily scalable design. The Cisco

IGX 8400 ATM switches could be scaled to support an ATM network service

at any desired capacity. With three widely used networking technologies in

place, some of the problems that might have been encountered in a more

convoluted networking environment were avoided.

GTP also looked at the application and database patterns. They

determined that in addition to traditional applications such as file and print

services, PeopleSoft, and Lotus Notes, Guardian also used a collection of

applications to support its intranet. Then, as now, the site included

marketing materials and sales tools for the firm’s agents, account profiling,

and customer data. The company had also invested in a number of financial

services applications, including applications for supporting its trading and

securities functions. Due to their complexity and the amount of resource

required to support them, many of Guardian’s applications have historically

been supported by dedicated servers.

The transition team, consisting of Guardian and GTP personnel, did

extensive validation work and benchmarking to make sure the data they had

gathered during the initial assessment were accurate. They measured

network utilization at granular levels and modeled various consolidation

scenarios for reducing server hardware.

From this analysis, GTP proceeded to develop a plan for consolidating

the servers, looking at both business and technology issues. For example,

the team considered the criticality of the applications supported by the

servers, as well as which business units they belonged to. Some servers

were good candidates for consolidation; others were not; and others were

out of warranty, which made them too expensive to keep. After the

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migration plan was devised and the new architecture developed, more

testing was conducted to ensure their viability.

The team devoted much thought and analysis to the migration to the

new architecture, so as not to disrupt day-to-day operations. The plan

targeted the least complex opportunities first, starting with file and print

services. Guardian initially had more than 30 servers providing file and print

services. These were consolidated into just two servers clustered in a high-

availability, fault-tolerant configuration. For more complex parts of the plan,

the team opted to do some of the consolidation in New York, and only then

move the servers to Bethlehem after the consolidation had settled down.

The initial consolidation and relocation project yielded tangible benefits

to Guardian in terms of reduced hardware and personnel requirements. But

the benefits extended well beyond these initial objectives. The mindset of

solving new problems efficiently and in the context of the existing

infrastructure had taken hold. Guardian no longer automatically takes orders

for new servers to support applications as it did throughout the 1990s.

Instead, Guardian analyzes each new application requirement and attempts

to support it with the existing hardware/software suite or with minimal

upgrades and extensions.

The total cost of the data centered consolidation project was $4.5

million, but the company saved more than $3 million in 2002, offsetting

much of that cost. Even greater savings were realized during each of the

following two years.

Further Consolidation In 2010, Guardian embarked on a second major data centered consolidation

initiative. The maturation of virtualization technologies and evolution of high-

bandwidth WAN connections encouraged Guardian to consolidate six data

centers into two [MITC11]. This is illustrated in Figure C7.2. Guardian will

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consolidate its mission critical data processing infrastructure into one

primary data center that it will own. The company plans to lease a second

modular pod for use as its second data center. Pod data centers can be

thought of as data centers in a box. These can be configured by vendors to

customer specifications and delivered as a container that looks similar to

refrigerated box car or multi-modal shipping container stacked on ships or

carried by tractor trailer trucks. Pods are energy efficient but can be a

cramped for human movement.

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In addition to moving to a much leaner data center infrastructure,

Guardian is migrating from Unix to Linux. It has also started to move some

of its applications to the cloud [MITC11]. By the beginning of 2012, Guardian

had moved 18 back-end applications to SaaS and had begun transitioning e-

mail, HRIS, and IT services into the cloud. The breadth of Guardian’s move

to the cloud put the company on the leading edge among Fortune 250

organizations [MITC12].

Guardian is using the IDEAS Advantage services from Ideas

International to help it make decisions about remodeling its data center

infrastructure [GOLI11]. These sophisticated tools in combination with

Guardian’s commitment to cloud services indicate that the insurance

company’s data center consolidation initiatives are far from over. Guardian

has not yet moved its core ERP systems to the cloud, but even this is under

consideration.

Discussion Points 1. Do some Internet research on the reasons why businesses generally

invest in data center consolidation projects. What benefits do they commonly hope to realize? How do Guardian’s rationale for consolidating data centers compare to those of other businesses?

2. Getting outside consultants to manage data center consolidation

projects is a common practice. Discuss the pros and cons of using consultants to manage data center consolidation projects?

3. How/why has virtualization fueled business interest in data center

consolidation?

4. Why is the availability of high-speed, high bandwidth communications an important consideration in data center consolidation plans and decision-making?

5. Do some Internet research on modular (pod) data centers. Summarize

the advantages of disadvantages of modular data centers.

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6. Guardian is consolidating from six to two data centers supplemented with SaaS cloud services. As the company continues to move applications to the cloud, could it consolidate to zero data centers? Why or why not?

7. Do you think that winning multiple CIO 100 awards has encouraged

Guardian’s IT executives to recommend risky IT projects? Why or why not?

Sources [CIOZ12] CIO Zone.”Guardian CIO on Aligning IT, Business.” Retrieved online at: http://www.ciozone.com/index.php/Management/Guardian-CIO- On-Aligning-IT-Business.html. [GOLI11] Golia, N. “Guardian Life Using Analytics to Assist Data Center Planning. Insurance Technology, September 1, 2011. Retrieved online at: http://www.insurancetech.com/architecture-infrastructure/231600651 [MITC11] Mitchell, R. “Cloud to Lower Bar, Intensify Competition.” Computerworld, March 7, 2011. Retrieved online at: http://blogs.computerworld.com/17935/cloud_to_lower_bar_intensify_comp etition [MITC11] Mitchell, R. “Best Practices for Scaling up SaaS to the Cloud. Techworld, February 14, 2012. Retrieved online at: http://features.techworld.com/sme/3337405/best-practices-for-scaling-up- saas-in-the-cloud/ [MUSI02] Musich, P. “Project Gets Helping Hand.” eWeek, November 25, 2002. www.eweek.com. [PRNE11] PR Newswire. “Guardian Life Recognized by CIO Magazine for Third Consecutive Year in CIO 100 Awards.” Retrieved online at: http://www.prnewswire.com/news-releases/guardian-life-recognized-by-cio- magazine-for-third-consecutive-year-in-cio-100-awards-54985272.html

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