USEC Puts Energy Into Virtualization

By Samuel Greengard  |  Posted 2009-05-05

During the last few years, a growing number of IT executives have found themselves scrambling to deal with skyrocketing data growth rates and overburdened data centers. However, when an organization depends heavily on information technology to handle the business of producing and selling enriched uranium to nuclear power plants, efficiency is everything.

“Our internal IT operations are vital,” states David Vordick, CIO of USEC, a $1.6 billion nuclear fuel company headquartered in Bethesda, Md. “They determine whether or not we are a success.”

USEC, which supplies enriched uranium to more than half of the U.S. market and more than a quarter of the world market, has more than 2,900 employees scattered among five U.S. locations. The company also operates three major data centers in Kentucky, Maryland and Ohio.

The foundation for its business, Vordick says, is an ability to manage operations—including an assortment of internal processes—effectively. Agility and high availability are more than buzzwords at USEC: They’re the foundation for success.

That’s why, in July 2005, the company turned to server virtualization to optimize systems and lower costs. It now has virtualized about 36 percent of its 400 physical servers. As IT retires older systems, USEC is migrating the servers to a virtualized environment.

The gains have been substantial, according to Vordick. Previously, the company achieved only a 10 percent utilization rate on servers. Today, the figure is approaching 30 percent, and he expects it to rise even further in the months ahead.

“Virtualization is changing the way we approach IT,” Vordick explains. “We’re able to manage systems better and get new systems up quickly. It provides us with a great deal of flexibility.”

Fueling Success

Like many other companies, USEC is adapting to profound changes in business and information technology. It relies on several enterprise applications and environments—including Oracle

ERP, PeopleSoft human resources (HR), various Web applications (including several based on .NET) and a tangle of internal systems.

Underpinning IT is a philosophy of creating a clear upgrade path—including upgrading to newer servers and systems that provide performance and cost gains. At the center of this approach: server virtualization. “We’ve made a strong push to virtualize almost every server we’ve introduced over the last two or three years,” Vordick says.

So far, USEC has moved many of its homegrown applications and its test environment over to the virtualized environment. It also manages DNS servers and various infrastructure, utilities, and network and support services on the virtual machines.

Over the next few years—as USEC updates and refreshes servers—it will move its Oracle ERP and other enterprise applications onto virtual machines. It will also adapt its business continuity and disaster recovery strategies—which now use one-to-one physical backups—to harness the benefits of virtualization.

Already, USEC has been able to realize significant gains using VMware ESX running Windows Server 2003 and 2008, as well as Linux. “We are now able to manage the data center and systems far better,” Vordick says.

For example, if a server goes down or IT needs to add memory or make physical changes to a machine, it can do so without interrupting services. It is also possible to deploy new servers within minutes or hours rather than weeks.

In the past, Vordick says, IT had to wend its way through the process of identifying the need for a new server, handle the procurement process, set up the system and then get it running correctly. In some cases, a new server also meant rearchitecting applications and tweaking other servers.

Virtualizing the servers has also provided other benefits. For one thing, USEC has achieved a 40 percent drop in power consumption by moving to more energy-efficient servers that run in a virtualized environment. For another, it is trimming hardware costs significantly.

The company is currently using about seven virtual machines per physical host, but Vordick expects that ratio to climb to almost 15-to-1 in the next few years. This could push the cost savings for hardware from 50 percent today to beyond 70 percent.

At USEC, server virtualization has steadily gained momentum—despite the fact that the company has never adopted a formal strategy. “Virtualization was just something that made sense as we transitioned to new servers,” Vordick explains. “We evaluated it, we saw that we could achieve benefits and we began deploying servers.”

Not surprisingly, success has accelerated deployment of this technology. “Over the last year, we have made much more of a concerted effort to ensure that any new server that’s deployed uses virtualization,” he adds.

Thinking Outside the Box

The quest to build a more efficient IT department is at the center of USEC’s strategy. Over the next couple of years, the increased use of server virtualization will also help support a variety of other initiatives designed to reduce enterprise resource utilization.

USEC has already begun to adopt thin-client systems running under Microsoft Terminal Services. It allows as many as 50 employees to share a single terminal server. More than 400 systems across the company now run the software. “It’s a lot easier to manage and maintain one server with one installation of software than it is to manage 40 or 50 installations,” Vordick points out.

Software as a service (SaaS) is another tool that USEC has embraced. Over the last 18 months or so, the company has turned to a third-party provider to run Success Factors’ performance management and compensation management systems.

Consequently, “We have been able to deploy a consistent performance management system across the entire company,” Vordick says. “The initiative replaced a fairly manual process in which people would handle performance management tasks using Word document templates. They’re now able to access a uniform interface via their Web browser.”

In addition to ratcheting up performance management and HR tasks, the SaaS model has reduced the need for additional hardware and internal resources. What’s more, it helps USEC take applications and initiatives online in as little as 90 days.

“If there’s a high level of integration required, we will typically look at tackling the initiative in-house,” Vordick says. “For scenarios in which there’s less of a requirement for integration, software as a service makes a lot of sense. It gives us additional flexibility with existing resources.”

In the future, USEC may incorporate a variety of other tools into its IT arsenal, including storage virtualization, service-oriented architecture components and Web 2.0 tools. In every case, Vordick says, the goal is to drive improvements for both the business and IT.

“It is vital to have applications and systems available and to understand the business driver behind the IT initiative,” he says. “There’s a significant cost if a piece of hardware fails and systems go down or data isn’t available. But if, through virtualization or other tools, hardware fails and nobody notices that there’s been a failure or outage, then a huge ROI has been achieved.”