Insurers Seek Energy Efficiency Through Virtualization
In Highmark's data center itself, the carrier is in the midst of efforts to further reduce energy consumption. According to Wood, Highmark studied where energy use was highest and found that 40 percent of the energy used in the data center was consumed on its raised floor, the location of the computing hardware.
"Once we understood how the power was allocated, we focused on the raised floor area, inventoried every piece of hardware, matched it against our asset system and then measured the power use of each piece of equipment," Wood explains. The next step was to break down energy use by platform, he adds.
Based on the exercise's findings, Highmark began an initiative to remove older, less-efficient technology and consolidate servers through virtualization, Wood relates. "Virtualization is key in our environment, and we are actually moving servers back to the mainframe in a virtualized manner under z/Linux using IBM's specialized z/10 machines," he says.
Last year the carrier consolidated about 100 servers on VMware (Palo Alto, Calif.) using blade servers, according to Wood. "We started with an environment of about 500 servers, and began a pilot last year on our Lotus Notes application using IBM z/VM. We are using Red Hat Linux [Raleigh, N.C.] on both the blades and the mainframes, and plan to do another 80 to 100 servers this year," Wood says.
"We will reevaluate where we are in 2009," he adds. "As new stuff comes on, obviously you want to virtualize that right away."
Highmark may be ahead of most carriers when it comes to a commitment to being green, but the insurance industry is following fast when it comes to appreciating the benefits of virtualization. While results are yet to be formally published, Datamonitor recently asked 200 global insurers across all lines of business how they would reduce IT operational costs within the next 12 months, on a scale of 1 to 4, 4 being most important, according to New York-based Datamonitor analyst Jonathan Steiman.
"As usual, core systems rationalization received the greatest average ranking, at roughly 2.75," Steiman says. "However, virtualization came in third place, with a 2.5 ranking. Among life insurers globally, virtualization received a ranking of 2.8."
These results place virtualization high on insurers' to-do list, according to Steiman. The relatively high ranking by life insurers may be influenced by a soft P&C market, he speculates, adding, "Even so, P&C carriers still ranked virtualization among their top-three initiatives for cost reduction."
Cost Avoidance
Highmark's Wood focuses as much on cost avoidance as cost reduction. The efficiencies associated with virtualized servers arise from avoiding the costs associated with actual physical servers, he acknowledges. "From an infrastructure standpoint, virtualization saves space, power and the human capital of installing and managing it," Wood says. "You condense more onto larger machines, so you obviously have a much cleaner environment, which should lead to greater availability, reliability and serviceability."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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