definition from Whatis.com:
DEFINITION - Server consolidation is an approach to the efficient usage of computer server resources in order to reduce the total number of servers or server locations that an organization requires. The practice developed in response to the problem of server sprawl, a situation in which multiple, under-utilized servers take up more space and consume more resources than can be justified by their workload.
According to Tony Iams, Senior Analyst at D.H. Brown Associates Inc. in Port Chester, NY, servers in many companies typically run at 15-20% of their capacity, which may not be a sustainable ratio in the current economic environment. Businesses are increasingly turning to server consolidation as one means of cutting unnecessary costs and maximizing return on investment (ROI) in the data center. Of 518 respondents in a Gartner Group research study, six percent had conducted a server consolidation project, 61% were currently conducting one, and 28% were planning to do so in the immediate future.
Although consolidation can substantially increase the efficient use of server resources, it may also result in complex configurations of data, applications, and servers that can be confusing for the average user to contend with. To alleviate this problem, server virtualization may be used to mask the details of server resources from users while optimizing resource sharing. Another approach to server consolidation is the use of blade servers to maximize the efficient use of space.
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