Like most industries, insurance has become highly dependent on information technology to manage an ever-growing load of transactions and interactions. Insiders note that effectively leveraging IT can help carriers gain competitive advantage by assisting with the ability to control costs and offer products at competitive prices.

MEM's commitment to excellence has resulted in it becoming the number one choice for workers' compensation insurance in the state. The firm stresses a WorkSAFE philosophy—offering safety programs, training and custom planning—resulting in more than 80 percent of the policyholders remaining injury free in a typical year.

In addition, MEM coordinates healthcare for injured workers though its Dimensions program, which provides a comprehensive approach to medical and disability management. It also provides claims processing, risk management, fraud detection and out-of-state employee coverage.

Make no mistake, the company strives for greater efficiency in its business and IT operations. A staff of nearly two dozen oversees IT systems that range from proprietary applications to off-the-shelf software. A wide area network connects satellite offices in St. Louis, Kansas City and Springfield via a T1 line.

"Server virtualization was on our information technology roadmap for quite some time," Sites explains. "But we wanted to introduce it at the appropriate time and in the right way so the process would unfold smoothly."

In 2009, the company found itself staring down the barrel of a major server refresh and warranty renewal. It seemed like a natural time to make key changes to the IT infrastructure. "We knew we were going to face a significant expense upgrading and refreshing systems," Sites explains. As a result, "We felt it was the perfect opportunity to jump into server virtualization and consolidate resources."

During the summer of 2009, MEM started working to identify opportunities to put server virtualization into action across the enterprise. The IT team began analyzing the company's IT infrastructure and mapping out a strategy for making the transition to the new environment.

After conducting a three-week long analysis, the IT team developed a business case for the virtualization initiative and presented it to senior level executives. The IT department received approval within about two weeks. One of the keys to this quick approval was an approach that was budget neutral because the conversion to virtualized servers was timed with what would have been scheduled server upgrades.

Over the ensuing three weeks, the company put the new servers and virtualization software in place. In the end, it completed the project one week early. By October 2009, the firm had the virtualization environment operating in a live state.

Not surprisingly, there were a few challenges along the way. MEM had to experiment with different conversion methods to determine which approach worked best. Yet, the biggest obstacle was simply sorting through the tangle of physical boxes and all the hardware and software configurations they contained.

"In some cases, it was necessary to use a trial-and-error approach," Sites says. "We would just try different methods until something worked." Initially, MEM purchased two new Hewlett-Packard ProLiant DL380 servers for its virtualization initiative. About a month later, the company purchased two additional servers and tied them into the virtualized environment, as well.

MEM opted for a VMware platform running VMware vSphere 4 Enterprise Plus. Besides the desire to address servers nearing their "end of life" state, Sites recognized a need to build a safe, self-contained testing and development environment.

A primary goal for MEM was to accommodate a new software package that could address the strategic business goals while keeping total IT operational expenses to a defined percentage of revenue. "In order to succeed, we needed to build out a mirror image of our production environment and factor in the number of servers," Sites adds.

Server virtualization simplifies IT testing of new applications by allowing systems administrators to test in a secure virtual machine (VM) environment. Once complete, they can roll back to a clean slate via the snapshot feature.

"Virtualization offered an opportunity to flesh out this environment at a much lower cost than if we were using conventional servers and building the computing environment into individual machines," Sites adds. "A self-contained testing and development environment, relying on virtualization, allows MEM to bring up developments and roll them into production in a much quicker fashion."

In addition, MEM calculated that server virtualization would provide cost savings in terms of both servers and energy costs. Its data center was running out of space and a reduced footprint offered energy savings and other advantages including reduced cabling and the need for fewer uninterruptible power supplies (UPS) systems.

When IT moved into its current data center in November 2005, it seemed like it offered plenty of room. However, "Four years later we realized we had begun to feel the crunch of a lack of space," Sites notes. "The racks were full and we had machines scattered throughout the center."

The upshot? IT wound up tossing in a new server when conditions demanded additional computing power. Although MEM attempted to reduce costs by reusing some older hardware, including workstations, it had begun to hit the wall in terms of space and performance. "We saw the data center becoming more inefficient and it was beginning to take a toll," Sites adds. "We knew we had to make a change."

Today, MEM has 56 VMs running on the four physical hosts. "The server virtualization initiative has allowed us to reduce the number of older, reused, nonserver class machines in our data center while reducing our computing footprint," he explains. In addition, IT can dynamically fire up and add new servers into the mix almost immediately.

The virtual infrastructure support is far superior to previously managing approximately 45 servers operating independently. Running multiple VMs fully exploits the compute potential of a physical server. This can offer a rapid response to shifting data center demands.

MEM's project has already provided a significant return on investment. In the past, the firm achieved a server utilization rate of approximately 10.5 percent. It has nearly doubled the utilization rate and the figure will continue to rise as the company converts additional applications and systems to the virtualized environment.

"We have only begun to tap into the opportunities that server virtualization offers," Sites explains. "We are still fairly early on the technology curve."

Missouri Employers Mutual Insurance continues to explore server virtualization and how it can benefit the company. In the past, the company had essentially relied on a one-application-to-one-server approach.

"We still have some single-purpose virtual machines out there," says Beth Stephenson, associate systems administrator for MEM. However, things are changing. "We need to undergo a reconfiguration of existing machines in order to make the environment even more efficient."

Using virtualization, MEM is able to reduce the wasted server space and low utilization rates that occur in physical machines. In fact, it has 80 percent of existing physical server space available for future growth.

The initial goal for the company was to consolidate servers and achieve cost and data center space savings. However, Sites and other IT executives now plan to reconfigure the virtualized servers in order to make them far more efficient. "It is an opportunity that will bring additional gains," he says.

Presently, MEM relies on three development environments and one production environment to manage its applications. IT keeps the different systems separated for both practical and security reasons. In fact, in some cases IT has different parts of a particular application registered to a specific environment.

The VMware vSphere 4 Enterprise Plus solution offers MEM the advantage of multiplatform support. The company uses both Windows and Linux systems within its development and production environments. The VMware virtualization software was a clear choice, Sites says, because it offers aggressive reductions in capital expenditures (CAPEX) and operational expenditures (OPEX).

Missouri Employers Mutual Insurance examined a variety of server virtualization packages during the analysis and evaluation phase. Because of the overall ease of setup and robust administrative and management capabilities built into VMware vSphere 4 Enterprise Plus, Sites and fellow IT executives opted to adopt it as the virtualization platform.

Server virtualization has helped Missouri Employers Mutual Insurance embrace some fundamental changes in the way it manages a growing IT infrastructure. But, equally important, the firm has trimmed expenses and realized a significant energy savings.

By reducing the number of servers from 40 to four, and eliminating the need for cabling and supporting equipment, MEM has set itself on a course toward greater competiveness. In some areas, it has achieved more than a 30 percent improvement in costs.

Still, the company isn't resting on its laurels. Sites notes that MEM has additional projects and improvements on the docket — including enterprise software and database implementations within the virtual environment. These will help boost OPEX savings as well.

"The quicker we can deploy each of these projects, the sooner the company realizes the benefits and the faster we can move on to handle additional projects that bring additional benefits," Sites explains. "This project really opened our eyes to the capabilities of virtualization."

The IT administrator says the server virtualization project is only the beginning for MEM. The firm's executives are now eyeing desktop virtualization, and other forms of virtualization could also enter into the picture in the months and years ahead.

For example, storage virtualization might benefit MEM by consolidating backup operations and optimizing hardware-centric processes, such as data deduplication. "At this point we will look at all options and opportunities," he promises.

In the final analysis, server virtualization has helped Missouri Employers Mutual achieve gains that wouldn't have been possible only a few short years ago. The company is more efficient, more agile and more competitive.

Server virtualization has proved to be a winning approach. Concludes Sites: "We have taken a significant step forward. Server virtualization has allowed us to maximize our IT infrastructure and become more strategic."