BCBS Minnesota achieves a significant TCO reduction by virtualizing SAP applications on IBM System z

Published on 11-Jan-2010

Validated on 03 Dec 2013

"Even without factoring in the maintenance and support costs... we found that running a virtualized Linux environment on System z would be significantly less expensive than a more traditional distributed architecture." - Ted Mansk, Director of Infrastructure Engineering and Databases, BCBS Minnesota

BlueCross BlueShield of Minnesota


Deployment country:
United States

Energy Efficiency, Server Consolidation, Service Management, System z Software, Virtualization, Green/Sustainability, Linux

IBM Business Partner:


Blue Cross and Blue Shield of Minnesota (BCBSM) is the largest health plan in the state, providing health coverage to more than 2 million members. With headquarters in Eagan, MN, and branch offices in Minnesota’s Arrowhead region and Rochester, BCBSM employs 3,800 people and operates as a not-for-profit, taxable organization: more than 90 per cent of the premiums it receives are paid back out for health care claims.

Business need:
As a not-for-profit healthcare organization, Blue Cross and Blue Shield of Minnesota (BCBSM) continually strives to reduce operational costs and deliver better value to its two million members. Its existing Microsoft Windows and Intel processor-based server landscape for SAP was costly to operate and maintain, and BCBSM began looking for a better solution.

Working with IBM and SAP, BCBSM consolidated 40 HP Intel-architecture servers to a single IBM System z server with IBM Integrated Facility for Linux (IFL) engines. The SAP ERP applications now run in a virtualized SUSE Linux environment. The IBM DB2 database supporting the SAP applications runs under z/OS on the same System z server.

With System z, total cost of operations will be reduced significantly over the next five years, compared to the cost of a distributed infrastructure. Reductions in space, electricity and cooling requirements are helping BCBSM to achieve its green computing objectives. Virtualization has cut server provisioning times by 99 per cent, enabling the IT team to respond faster to requests. Availability has improved significantly, and disaster recovery can be achieved 97 per cent faster than before.

Case Study

Blue Cross and Blue Shield of Minnesota (BCBSM) is the largest health plan in the state, providing health coverage to more than 2 million members. With headquarters in Eagan, MN, and branch offices in Minnesota’s Arrowhead region and Rochester, BCBSM employs 3,800 people and operates as a not-for-profit, taxable organization: more than 90 per cent of the premiums it receives are paid back out for health care claims.

To maintain this high ratio of payouts to premiums and provide the best possible value to its members, BCBSM puts continual pressure on its operational costs. In the IT department, this translates into a strategy of doing more with less – choosing the hardware and software that will drive business optimization while reducing acquisition, implementation, support and maintenance costs.

BCBSM uses ERP software from SAP to manage its core financial processes. When a decision was taken to upgrade from SAP R/3 to SAP ERP 6.0, the IT team began to review its hardware strategy to find the most cost-effective platform for the future.

A new platform for SAP applications
“For several years, we had been running the IBM DB2 database that underpins our SAP ERP landscape on the IBM System z platform – but the SAP applications servers themselves were running in a Microsoft Windows environment on Intel processor-based hardware from HP,” explains Ted Mansk, Director of Infrastructure Engineering and Database at BCBSM.

“Since Microsoft releases patches for Windows once a month, we needed to invest a sizeable amount of time to keep the operating systems current. This caused down time for the business as well. We decided to investigate some other options and determine if we could find a cost-effective solution that would avoid these issues.”

BCBSM evaluated various Unix-based hardware architectures, and also looked at Linux on the IBM System z mainframe platform.

“We did our due diligence and spoke to many companies about how they constructed their SAP application server landscapes,” comments Ted Mansk. “The feedback we received was that Linux on System z was one of the most stable platforms imaginable: none of the references had ever experienced a serious outage. Our own experience of running DB2 on z/OS on the System z platform bears this out – you don’t have to worry about it, it just works.”

Finding the most cost-effective option
BCBSM then performed a five-year TCO study to see if Linux on the System z platform could deliver comparable price-performance to a distributed Windows or Unix-based server landscape.

“Even without factoring in the maintenance and support costs – which would be considerable for a large estate of physical servers – we found that running a virtualized Linux environment on System z would be significantly less expensive than a distributed architecture,” says Ted Mansk. Suddenly, the choice of infrastructure had become an easy decision.”

Pulling out all the stops
Working with IBM and SAP, BCBSM performed the SAP ERP upgrade and migrated around 40 SAP application servers from the HP hardware onto six new Integrated Facility for Linux (IFL) processors installed in its System z9 Enterprise Class mainframe.
The IFLs also run more than 100 non-SAP application servers, and have enabled the organization to decommission many physical machines.

“We had to start the project after the annual financial close in December, and we needed to complete it within two months to avoid delaying a number of other strategic projects,” comments Ted Mansk. “IBM showed extraordinary dedication to help us complete the project within an extremely tight deadline. The project team worked seven-day weeks over the winter holiday season to get the job done.”

Advantages of virtualization
Running the SAP application servers on SUSE Linux Enterprise Server in virtual partitions on the IFL processors delivers several advantages for BCBSM.

First, the lead time for server provisioning has been reduced dramatically. When the business requires a new test or development environment, the IT team can deploy a Linux partition within 20 minutes. There is no longer any need to source a new physical server, wait for delivery, then install and configure it – a process which could take six to eight weeks.

“Since the move to Linux on System z, we’ve received some really positive feedback from the business,” comments Ted Mansk. “Users really appreciate the fact that when they need something, we can now get to work on it at once, instead of having to wait weeks for new hardware to arrive. Equally, because the System z platform is so much more reliable than our previous infrastructure, we no longer get any complaints about performance and availability issues.”

Availability and disaster recovery
In fact, since the new infrastructure went into production, BCBSM has not experienced a single incidence of unplanned downtime or underperformance. Equally, the company’s disaster recovery capability has been improved dramatically by the new solution.
“With the old distributed architecture, we would have struggled to restore our SAP application servers within 48 hours,” says Ted Mansk. “With the whole SAP environment running on System z, we can perform a full disaster recovery at our secondary data center within 90 minutes – an improvement of nearly 97 per cent. In addition, the ease of maintenance also contributes to improving availability.”

With SAP on IBM System z, BCBSM can achieve near-continuous availability by reducing the need for planned downtime. It is possible to perform nearly all maintenance to the hardware, z/OS and DB2 while all systems are up and running – a feature unparalleled in the industry and a specific design goal of the platform.

Realizing the cost savings
Finally, BCBSM expects the new infrastructure to deliver cost savings over and above the initially predicted TCO in the initial cost-benefit analysis.

“When we performed the initial cost-benefit calculation, we did not factor in the maintenance and support costs, or the cost of power, cooling and server room space,” comments Ted Mansk. “The savings in these areas are likely to be considerable. For example, we only need 1.5 full time employees to manage the entire System z Linux environment – which would be unthinkable if they were looking after 140 physical servers.

“Equally, in terms of energy efficiency, the System z not only enables cost savings – it also helps us reduce our impact on the environment. We take a lot of pride in being good corporate citizens, so anything we can do to make the organization more sustainable is a major benefit.”

Looking to the future
In mid 2009, BCBSM migrated its database to DB2 version 9, and upgraded its hardware platform to the Enterprise Class z10. The new, more powerful z10 quad-core processors deliver a considerable improvement in performance. In addition, the fact that BCBSM pays by the IFL and not by processor speed means a “free” hardware upgrade in performance was experienced – something that would not have occurred in any other distributed platform.

“From every perspective, running SAP applications under Linux on System z makes sense for our organization,” concludes Ted Mansk. “Performance, reliability, disaster recovery, server provisioning and cost-efficiency have all seen dramatic improvements – helping BCBSM deliver better service and better value to its members across the state.”

Products and services used

IBM products and services that were used in this case study.

System z: System z10 Enterprise Class (z10 EC)

z/OS, DB2 for z/OS, Tivoli Storage Manager, z/VM

Operating system:
z/OS and OS/390

IBM-SAP Alliance

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