Nationwide cuts costs in the cloud

With smart workload consolidation from IBM

Published on 09-Oct-2012

"The creation of a private cloud built around the z196 servers supports our business transformation goals by enabling the rapid, seamless deployment of new computing resources to meet emerging requirements." - Jim Tussing, Chief Technology Officer for infrastructure and operations, Nationwide

Customer:
Nationwide

Industry:
Insurance

Deployment country:
United States

Solution:
Cloud Computing, Smarter Computing, System z Software, Virtualization, Virtualization - Server

Overview

In the last 80 years, Nationwide has grown from a small mutual auto insurer owned by policyholders to one of the largest insurance and financial services companies in the United States, with more than 38,000 employees. Headquartered in Columbus, Ohio, this Fortune 500-list company is the number one provider of public-sector retirement plans and the seventh largest auto insurer in the United States.

Business need:
Nationwide’s 3,000 distributed servers were inefficient and costly. To increase business agility and halt growing costs, Nationwide started a virtualization journey that ultimately led to the cloud.

Solution:
Nationwide consolidated its distributed server landscape to Linux virtual servers running on IBM System z® mainframes, creating a multi-platform private cloud optimized for all its different workloads.

Benefits:
Reduced power, cooling and floor space requirements by 80 percent. Reversed expenditure on distributed server landscape, saving an estimated $15 million over the first three years.

Case Study

In the last 80 years, Nationwide has grown from a small mutual auto insurer owned by policyholders to one of the largest insurance and financial services companies in the United States, with more than 38,000 employees. Headquartered in Columbus, Ohio, this Fortune 500-listed company is the number one provider of public-sector retirement plans and the seventh largest auto insurer in the United States.

The need for consolidation
To retain its position as a leader in a competitive industry, Nationwide wanted to increase its agility and ability to innovate, but its IT infrastructure was holding it back.

Like all insurance providers, Nationwide requires high-speed transaction processing to handle its daily business activities, such as policy verification, claims processing, and generating customer quotations. The company was running this core processing on IBM System z mainframes, typically deploying other workloads – such as enterprise applications or web servers – in a distributed server environment. As Nationwide grew, so did the distributed landscape, eventually becoming a sprawling environment of over 3,000 physical servers. These servers were consuming large amounts of floorspace, energy and human resources, and yet their computing resources were underutilized. With software licensing typically based on the processor count, these costs were extremely high too.

Jim Tussing, Chief Technology Officer for infrastructure and operations at Nationwide, says: “We had literally thousands of servers deployed that were 80–90 percent unused from a capacity standpoint. At a time when Nationwide was seeking to increase the pace of innovation across its products and channels, new environments were taking many weeks or months to provision and deploy. Our infrastructure was definitely stifling innovation.”

First steps
Following a rigorous analysis of various options, Nationwide decided to consolidate its distributed environment to Linux virtual servers hosted by IBM z/VM® on the IBM System z platform. In combination with IBM WebSphere® Application Server and IBM DB2®, z/VM offered significant cost advantages over other possible platforms.

Brian Callaghan, Associate Vice President of middleware and emerging technologies at Nationwide, says: “By moving workload from thousands of distributed processors to a very small number of powerful mainframe processors, we have made enormous savings in software licensing costs. IBM z/VM has enabled us to pack hundreds of virtual servers across six virtual machines, achieving extremely high resource utilization. More significantly, it also gives us the ability to create new virtual servers within minutes, boosting the ability of the business to respond to new challenges and opportunities quickly and effectively.”

With IBM z/VM, the virtualized servers are able to use the fast I/O of the mainframe and share its resources, while simultaneously taking advantage of the traditional mainframe strengths of reliability and high availability.

The flexibility of the solution was proven when Nationwide premiered a high-profile TV commercial during the Super Bowl, and was able to seamlessly ramp up the capacity of its web servers by provisioning new Linux virtual servers on the mainframe. When the peak traffic subsided, the company simply moved the allocated resources back into the central pool for other applications to use.

The two mainframes for Linux were installed in two separate data centers, with one running the production environment for enterprise, line-of-business and web applications, and the other devoted to application development and testing. The second mainframe also doubled as a disaster recovery resource, with data replicated between the two sites on a 30-second delay. Following three years of successful operations, Nationwide ran a new analysis of its platforms, and again determined that Linux on the IBM mainframe remained the best option, upgrading to two new IBM System z10® servers.

“Moving from managing physical environments to managing highly virtualized environments is a significant capability advancement, which requires investment,” says Jim Tussing.

“The additional efficiency virtualization can provide brings with it additional responsibility. For example, managing capacity on a server that is 20 percent full is a different ballgame than managing capacity on a server that is 80 percent full.

“Careful attention to the configuration of processes, tooling and skills within the organization managing the environment is required in order to achieve the benefits of virtualization without risking loss of system availability or performance. It is the continued and relentless pursuit of improving our virtualized environment management capability that is now taking us into internal private cloud.”

The road to cloud
In recent years, emerging business challenges have increased the appetite for innovation at Nationwide, and added to the requirements around flexibility, resilience and finding the optimal platform for each application.

Jeff Imholz, Senior IT Architecture Consultant at Nationwide, says: “We worked with IBM to review the technology options in the light of our business objectives, and decided to create a best-in-class infrastructure that would manage all of our Java applications in the most appropriate architecture based on the workload characteristics of each application.”

Nationwide had initially made the decision to isolate its Linux and z/OS workloads on different physical mainframes. The company had ended up with a total of seven machines – a mixture of z9 and z10 servers – of which two were dedicated to Linux. To optimize this footprint, Nationwide consolidated all workloads to four IBM zEnterprise 196 servers and two z10 servers, and mixed Linux and z/OS workloads on the same machines for the first time.

“Our comfort levels with Linux on the mainframe and the maturity of the platform made us confident in mixing our workloads,” says Brian Callaghan. “The key benefit of this approach is that it enables us to drive higher utilization and therefore better economies of scale. It also effectively makes the mainframe into a private cloud – a single set of resources, managed with the same tools, but optimized for a variety of very different workloads.”

As a further optimization exercise, Nationwide deployed IBM WebSphere DataPower® and IBM Netezza® appliances for data messaging and analytics workloads. “The DataPower and Netezza appliances are perfectly tuned for these very specific requirements,” says Jeff Imholz. “Moving these workloads away from the z196 helps us maintain the right level of performance for our Linux and z/OS workloads. Again, this is about moving applications to the most appropriate architecture – a philosophy that is at the heart of our adoption of cloud computing.”

The new z196 has provided significantly greater capacity and performance for both Linux and z/OS workloads. With four identical production servers, the Nationwide team can more easily accommodate planned outages for system maintenance by redistributing workload.

Major savings
Nationwide’s private cloud on IBM zEnterprise has replaced thousands of standalone servers, eliminating both capital and operational expenditure. The initial consolidation exercise is estimated to have saved the company some $15 million over three years, and the more compact and efficient zEnterprise landscape means low running costs for the future also.

By consolidating to a handful of z196 and z10 servers, Nationwide has achieved an 80 percent reduction in power, cooling and floor space requirements – even as its application landscape has grown considerably. Today, the company sees 30 percent annual growth in computing requirements, practically all handled through the provisioning of new virtual servers on the existing mainframe footprint.

“The creation of a private cloud built around the z196 servers supports our business transformation goals by enabling the rapid, seamless deployment of new computing resources to meet emerging requirements,” concludes Jim Tussing. “Ultimately, the ability to develop new offerings faster and at a lower cost means that we can bring valuable new services to market ahead of our competitors.”

For more information
To learn more about smarter computing from IBM and how we can help you integrate, automate, protect and transform your IT, contact your IBM sales representative or IBM business partner, or visit: ibm.com/smartercomputing

Products and services used

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

Hardware:
System z, System z: System z10 Enterprise Class (z10 EC), System z: zEnterprise 196 (z196)

Software:
DB2 for z/OS, WebSphere DataPower Integration Appliance XI52, WebSphere Application Server, IBM Netezza 1000

Operating system:
z/OS and OS/390

Legal Information

© Copyright IBM Corporation 2012 IBM Corporation Systems and Technology Group Route 100 Somers, NY 10589 Produced in the United States of America October 2012 IBM, the IBM logo, ibm.com, Datapower, DB2, Netezza, System z, System z10, WebSphere, z/OS, and zEnterprise are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml Microsoft, Windows and Windows NT are trademarks of Microsoft Corporation in the United States, other countries, or both. Linux is a registered trademark of Linus Torvalds in the United States, other countries, or both. Netezza and Netezza Performance Server are trademarks or registered trademarks of IBM International Group B.V., an IBM Company. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. Nationwide, Nationwide Insurance, and the Nationwide framemark are service marks of Nationwide Mutual Insurance Company. The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation. Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only. Actual available storage capacity may be reported for both uncompressed and compressed data and will vary and may be less than stated.