Energen achieves half-million dollar savings by migrating Oracle and SAP software to IBM System p

Energen Corporation is among the Top 20 independent exploration and production companies on the basis of its US oil and gas reserves. Listed on the New York Stock Exchange, Energen has averaged more than 30 per cent annual growth in earnings and total shareholder return over the last five years. The company has proved reserves of natural gas, oil and natural gas liquids totaling 1.7 trillion cubic feet. Its regulated business, Alabama Gas Corporation (Alagasco), is the largest distributor of natural gas in Alabama, serving around 455,000 customers.

In the face of deteriorating system performance and worsening support from its vendor, Energen wanted to refresh its mid-range server environment. This environment – primarily used for its SAP and Oracle software – had grown to 20 physical machines, representing a significant investment in both hardware and software licenses.

“We were already familiar with logical partitioning and server virtualization on the mainframe platform,” says Ron Payne, Director of Infrastructure Services at Energen. “Consolidating to the IBM System p platform enabled us to do the same for our Sun mid-range environment, delivering annual savings of around $500,000.”

The migration from Sun to IBM System p enabled Energen to consolidate from 20 servers down to two, significantly easing the pressure on Energen’s data center, where the continual addition of new physical servers was using up valuable floorspace and putting a growing strain on the electricity supply.


Choosing a supportive partner
Energen’s concerns about the cost and reliability of its mid-range infrastructure coincided with a planned refresh of the platform for SAP software. Says Ron Payne, “It made sense to take a fresh look at the entire environment, to see where we could cut costs and improve service levels. Our technology partner, Mainline Information Systems, put together an analysis to show how moving to virtual servers on IBM System p could significantly cut our Oracle licensing costs in addition to reducing our hardware costs. That, and the fact that IBM had a much stronger local support network, convinced us that System p was the right platform for Energen.”

Keith Jinright, Data Center Manager at Energen, adds: “We had significant support issues with our previous vendor, Sun, which was cutting back support in the south-eastern US and laying off employees. By contrast, IBM and Mainline both have a strong local presence. That was a significant selling point: given the business-critical nature of our SAP software environment, we need to have skilled support close at hand.”


Powering up with System p
Energen implemented two IBM System p5 570 servers, each with eight IBM POWER5+ processors. IBM contributed towards the cost of the migration and consolidation of the SAP software, which was carried out with the assistance of consultants certified by SAP.

Energen migrated its entire SAP ERP environment – including functionality for financials (accounts receivable and accounts payable), human resources and payroll – from Solaris on 20 physical servers to IBM AIX V5.3 on the two new p5-570 servers. The SAP ERP application now runs in logical partitions (LPARs) that dynamically share the processing power of the p5-570s.

Karl Swelling, UNIX Systems Administrator at Energen, says: “Each LPAR is configured to use up to six POWER5 processors, and the usage is uncapped, so each environment can adapt dynamically to changing business requirements. We pre-set the policy – for example, so that production environments take priority over test and development – and the system automatically allocates resources to the different LPARs.”

The move to virtual rather than physical servers for the SAP software environment also means greater speed and flexibility in server provisioning. With the previous Sun server infrastructure, it would take at least a month to meet a request from the business to build a new server. Says Keith Jinright, “In the past, we needed to specify, order and await the delivery of the server, then allocate time for buying additional software licenses, installation, configuration, patching, testing and release to production. Using virtualization on IBM System p, it now takes just two days in total, and the effort is minimal.”


Pushing ahead with virtualization
With server virtualization, Energen can deploy a server that is precisely the right size for a new business requirement, simply by allocating the required resources to its LPAR. Unlike implementing a new physical server, where the capacity is effectively fixed from the date of purchase and can only be varied upwards through a disruptive physical upgrade at additional cost, virtualization means that Energen can increase or reduce the size of its virtual servers instantly and dynamically to make the most efficient use of the available resources.

In addition to Micro-Partitioning – whereby a small LPAR can occupy as little as one-tenth of a single processor – Energen is taking advantage of the Virtual I/O Server feature of IBM Advanced POWER Virtualization on System p.

Says Karl Swelling: “We previously had two ordinary network cards and two fiber-channel cards in each of our 20 physical servers. With Virtual I/O Server, we now have just four network and four fiber cards in each System p server. When we need to set up a new virtual server, we simply carve out a new LPAR and link it to the virtual network – it’s much simpler and more cost-effective.”

Energen has also embraced virtualization for its Microsoft Windows environment, using VMware technology to consolidate from 60 physical servers to just four, for an estimated $600,000 in cost savings. The company plans to consolidate a further 15 Intel-processor based servers running Linux to Linux partitions on one of the p5-570s. Says Keith Jinright, “We run a number of Linux-based open source applications for Web serving, network services and so on - by consolidating to partitions on System p, we will improve the ease of management and further shrink our Intel-based environment.”


Cutting costs for Oracle
Energen’s previous licensing deal with Oracle was on a “named-user” basis, and each CPU used for Oracle accounted for 25 licenses from a central pool of 1,000. Looking at the entire environment, including all development, test and quality assurance instances, Energen had already reached the limits of this licensing deal with its previous infrastructure. By consolidating its 20 Sun servers to just two p5-570s and switching to a server-based license with Oracle, Energen was able to reduce its software licensing costs by 40 per cent.

“We certainly made a saving on hardware costs, but the reduction in Oracle licensing costs was the main contributor to the total $500,000 annual savings we achieved by migrating to IBM System p for our SAP software environment,” says Ron Payne. “Migrating from Solaris also produced software cost savings, because with IBM AIX we no longer needed a separate volume management solution from Veritas, saving around $100,000 annually.”

“The server consolidation project was hugely successful,” says Brunson White, VP and CIO of Energen. “We have never completed a project that has so quickly generated as much return on investment as this one.”


Greater flexibility and efficiency
In addition to the reduction in costs for software, hardware acquisition and maintenance, Energen’s migration to the IBM System p platform for its SAP software environment has improved performance - a typical batch processing run went from 24 hours down to just two hours – an improvement of more than 90 per cent. The IBM solution has also simplified server administration and enabled more efficient utilization of the available computer resources.

Says Karl Swelling, “The mid-range environment is now much easier to manage. Administration on AIX is great – the command set is very consistent, and it’s tied in very tightly with the hardware. With Solaris, we needed to buy a lot of additional software.”

Average processor utilization on the p5-570s now stands at 25 per cent, with peaks between 50 and 75 per cent utilization for overnight batch runs of non-SAP workloads such as Oracle and data warehousing applications.

“In the old environment, many servers were running at less than 10 per cent utilization, so much of our growing investment in hardware was sitting idle and not delivering any value back to the business,” says Keith Jinright. “We’re now doing a much better job of utilizing the assets, and reliability is better too. Since going into production with our SAP ERP environment on IBM System p, we’ve experienced no unplanned outages.”

The IBM solution has significantly improved the support available for Energen’s mid-range server environment, as Keith Jinright explains: “We are in the IBM Advocate program – it’s like adding a highly experienced employee at a fraction of the cost. If we have a technical question, we can get the right answer very quickly – the advocate really knows the product.”

Ron Payne concludes, “Migrating to IBM System p for our SAP software environment has given Energen a more compact and efficient infrastructure that combines significantly lower capital and operational costs with better performance and flexibility.”