Valero Energy Achieves Multiple Goals with Data Center Transformation
Valero Energy Achieves Multiple Goals with Data Center
Transcript of a BrieﬁngsDirect podcast on how upgrading or building new data centers can
address critical power and cooling concerns.
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Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re
listening to BrieﬁngsDirect.
Today, we present a sponsored podcast discussion on the huge movement we're seeing around
enterprise data centers. Many enterprises, if not nearly all, are involved nowadays with some
level of data-center transformation either in the planning stages or in outright
execution. The heightened activity runs the gamut from retroﬁtting and designing
new data centers to then building and occupying them.
We're seeing many instances, where numerous data centers are being consolidated
into a powerful core view, as well as completely green-ﬁeld data centers with
modern design and facilities coming online or service providers of new and restructuring
industries in new geographies where growth has being very important for them.
These are, by no means, trivial projects. They often involve a tremendous amount of planning
and affect IT, facilities, and energy planners, as well as the business leadership and line of
business managers. The payoffs are potentially huge, as we'll see, from doing data center design
properly, but the risks are also quite high, if things don't come out as planned.
The latest deﬁnition of data center is focused on being what's called ﬁt-for-purpose, of using best
practices and assessments of existing assets and correctly projecting future requirements to get
that data center just right -- productive, ﬂexible, efﬁcient and well-understood and managed.
Today, we're going to examine the lifecycle of data-center design and fulﬁllment through
migration and learn about some of the payoffs when this goes as planned. We're going to learn
more about a successful project at Valero Energy Corporation. The goal through these complex
undertakings at these data centers is to radically improve how IT can deliver its services and be
modern, efﬁcient, and ﬂexible.
We're here with two executives from Hewlett-Packard to look at proper planning and data center
design, as well as build and migration. We'll learn from an IT leader at Valero how they managed
their project. Please join me in welcoming our guests today. We're here with Cliff Moore,
America’s PMO Lead for Critical Facilities Consulting at HP. Welcome to the show, Cliff.
Cliff Moore: Thanks, Dana.
Gardner: We're also here with John Bennett, Worldwide Director of Data Center Transformation
Solutions at HP. Hello, John.
John Bennett: Hi, Dana. Welcome back.
Gardner: Thank you. And we're also here with John Vann, Vice President of Technical
Infrastructure and Operations at Valero Energy Corporation. Welcome to the show, John.
John Vann: Hello, Dana. Thanks a lot.
Gardner: Let's go to you, John Bennett. Tell us why data center transformation is at an inﬂection
point, where data centers are in terms of their history, and what are the new requirements. It
seems to be somewhat of a perfect storm in terms of there's a need to move, and things still are
really not acceptable?
Modern and efﬁcient
Bennett: You're right on that front. I ﬁnd it just fascinating that. if you had spoken four years
ago and dared to suggest that energy, power, cooling, facilities, and buildings were
going to be a dominant topic with CIOs, you would have been laughed at. Yet,
that's deﬁnitely the case today, and it goes back to the point you made about IT
being modern and efﬁcient.
Data-center transformation, as we've spoken about before, really is about not only
signiﬁcantly reducing cost to an organization, not only helping them shift their
spending away from management and maintenance and into business projects and priorities, but
also helping them address the rising cost of energy, the rising consumption of energy and the
mandate to be green or sustainable.
The issues that organizations have in trying to address those mandates, of course, is that the
legacy infrastructure and environments they have, the applications portfolio, the facilities, etc.,
all hinder their ability to execute on the things they would like to do. Data-center transformation
tries to take a step back, assess the data center strategy and the infrastructure strategy that's
appropriate for a business, and then ﬁgure how to get from here to there. How do you go from
where you are today to where you need to be?
It turns out that one of the things that gets in the way, both from a cost perspective and from a
supporting the business perspective is the data centers themselves. Customers can ﬁnd
themselves, as HP did, having a very large number of data centers. We had 85 around the world,
because we grew through acquisition, we grew organically, and we had data centers for
individual lines of business.
We had data centers for individual countries and regions. When you added it up, we had 85
facilities and innumerable server rooms, all of them requiring administrative staff, data center
managers, and a lot of overhead. As part of our own IT transformation effort, we've brought that
down to six.
You have organizations that discover that the data centers they have aren't capable of meeting
their future needs. One wag has characterized this as the "$15 million server,"
where you keep needing to grow and support the business. All of a sudden, you
discover that you're bursting at the themes.
Or, you can be in California or the UK. The energy supply they have today is all
they’ll ever have in their data center. If they have to support business growth,
they're going to have to deal it by addressing both their infrastructure strategies, but probably
also by addressing their facilities. That's where facilities really come into the equation and have
become a top-of-mind issue for CIOs and IT executives around the world.
Gardner: John, it also strikes me that the timing is good, given the economic cycle. The
commercial market for land and facilities is a buyer's market, and that doesn’t always happen,
especially if you have capacity issues. You don’t always get a chance to pick when you need to
rebuild and then, of course, money is cheap nowadays too.
Bennett: If you can get to it.
Gardner: The capital markets are open for short-intervals.
Signs of recovery
Bennett: We certainly see, and hope to see, signs of recovery here. Data center location is an
interesting conversation, because of some of the factors you named. One of the things that is
different today than even just 10 years ago is that the power and networking infrastructure
available around the world is so phenomenal, there is no need to locate data centers close to
You may choose to do it, but you now have the option to locate data centers in places like
Iceland, because you might be attracted to the natural heating of their environment. Of course,
you might have volcano risk.
You have people who are attracted to very boring places, like the center of the United States,
which don't have earthquakes, hurricanes, wildﬁres and things that might affect facilities
themselves. Or, as I think you'll discover with John, you can choose to build the data center right
near corporate headquarters, but you have a lot of ﬂexibility in it.
The issue is not so much access to capital markets as it is that any facility’s project is going to
have to go through not just the senior executives of the company, but probably the board of
directors. You'll need a strong business case, because you're going to have to justify it ﬁnancially.
You're going to have to justify it as an opportunity cost. You're going to have to justify in terms
of the returns on investment (ROIs) expected in the business, if they make choices about how to
manage and source funds as well.
So, it's a good time from the viewpoint of land being cheap, but it might be a good time in terms
of business capital be available. It might not be a good time in terms of investment funds being
available, as many banks continue to be reluctant to loan than it appears.
Gardner: The variables now for how you would consider, plan, and evaluate are quite different
than even just a few years ago.
Bennett: It's certainly true, and I probably would look to Cliff to say more about that.
Gardner: Let’s go to Cliff then. Cliff, what's this notion of ﬁt-for-purpose, and why do you think
that variables for deciding to move forward with data center transformation of redesigned
activities is different nowadays? Why we are in a different ﬁeld, in terms of decisions around
Moore: Obviously, there's no such thing as a one-size-ﬁts-all data center. It's just not that way.
Every data center is different. The majority of the existing data centers out there today were built
10-15 year ago, when power requirements and densities were lot lower.
No growth modeling
It's also estimated that, at today's energy cost, the cost of running a server from an energy
perspective is going to exceed the cost of actually buying the server. So that's a
major consideration. We're also ﬁnding that many customers have done no growth
modeling whatsoever regarding their space, power, and cooling requirements for
the next 5, 10, or 15 years, and that's critical as well.
Gardner: We should explain the notion of ﬁt for purpose upfront for those folks
who might not be familiar with.
Bennett: With ﬁt for purpose, the question in mind is the strategic one of the data center strategy
for an organization in particular. If you think about the business services that are being provided
by IT, it's not only what those business services are, but how they should be sourced. If they’re
being provided out of entity-owned data centers, how many and where? What's the business
continuity strategy for those?
It needs to take into account, as Cliff has highlighted, not only what I need today, but that
buildings typically have an economic life of 15-25 years. Technology life cycles for particular
devices are two or three years, and we have ongoing signiﬁcant revolutions in technology itself,
for example, as we moved from traditional IT devices to fabric infrastructures like converged
You have these cycles upon cycles of change taking place. The business forecasts drive the
strategy and part of that forecasting will be sizing and ﬁt for purpose. Very simply, are the assets
I have today capable of meeting my needs today, and in my planning horizon? If they are, they’re
ﬁt for purpose. If they’re not, they’re unﬁt for purpose, and I'd better do something about it.
Gardner: We're in a bit of a time warp, Cliff. It seems that, if many were built 15 years and we
still don't have the sense of where we'll be in 5 or 10 years, we seem to be caught between not
ﬁtting into the past but not quite ﬁtting or knowing what the future is. How do you help people
smooth that out?
Moore: Obviously, we’ve got to ﬁnd out ﬁrst off what they need -- what space, power, and
cooling requirements. Then, based on the criticality of their systems and applications, we quickly
determine what level of availability is required, as well. This determines the Uptime Institute
Tier Level for the facility. Then, we go about helping the client strategize on exactly what kinds
of facilities will meet those needs, while also meeting the needs of the business that come down
from the board.
When a customer is looking to spend $20 million, $50 million, or sometimes well over a $100
million, on a new facility, you’ve got to make sure that it ﬁts within the strategic plan for the
business. That's exactly what boards of directors are looking for, before they will commit to
spending that kind of money.
Gardner: What does HP bring to the table? How do you start a process like this and make it a
lifecycle, where that end goal and the reduce risk play out to get the big payoffs that those boards
of directors are interested in?
Moore: Well, our group within Critical Facilities Services actually comes to the table with
company's executives and not only looks at what are their space, power, and cooling
requirements, but what are the strategies of the business. What are the criticality levels of the
various mission-critical applications that they run? What are their plans for the future? What are
their mergers and acquisitions plans, and so on and so forth. We help them collaboratively
develop that strategy in the next 10-15 years for the data center future.
Gardner: It was pointed out earlier that one size doesn't ﬁt all. From your experience, Cliff,
what are the number one or two reasons that you’re seeing customers go after a new design for
the data center, and spend that large sum of money?
Power and cooling
Moore: Probably the biggest reason we're seeing today is power and cooling. Of course,
cooling goes along with power. We see more of that than anything else. People are simply
running out of power in their data centers. The facilities today that were built 5, 10, or 15 years
ago, just do not support the levels of density in power and cooling that clients are asking for
going to the future, speciﬁcally for blades and higher levels of virtualization.
Gardner: So, higher density requires more energy to run the servers and more energy to cool
them, but you have a higher efﬁciency, utilization, and productivity as the end result, in terms of
delivering on the requirements. Is there a way for designing the data center that allows you to cut
cost and increase capacity or you are asking too much of this process?
Moore: There certainly are ways to do that. We look at all of those different ways with the client.
One of the things we do, as part of the strategic plan, is help the client determine the best
locations for their data centers based on the efﬁciency in gathering free cooling, for instance,
from the environment. It was mentioned that Iceland might be a good location. You'd get a lot of
free cooling there.
Gardner: What are some of the design factors? What are the leading factors that people need to
look at? Perhaps, you could start to get us more familiar with Valero and what went on with them
in the project that they completed not too long ago.
Moore: I'll defer to John for some of that, but the leading factors we're seeing again are our
space, power, and cooling, coupled with the tier level requirement. What is the availability
requirement for the facility itself? Those are the biggest factors we're seeing.
Marching right behind that is energy efﬁciency. As I mentioned before, the cost of energy is
exorbitant, when it comes to running a data center. Some data centers we see out there use the
equivalent of half of a nuclear power plant to run. It's very expensive, as I'm sure John would tell
you. One of the things that the Valero is accomplishing is the lower energy costs, as a result of
building their own.
Gardner: Before we go to Valero, I have one last question on the market and some of the
drivers. What about globalization? Are we seeing emerging markets, where there is going to be
many more people online and more IT requirements? Is that a factor as well?
Bennett: There are a number of factors apply, Dana? First of all, you have an increasing access
of the Internet and the increasing generation of complex information types. People aren't just
posting text anymore, but pictures and videos. And, they’re storing those things, which is feeding
what we characterize as an information explosion. The forecast for storage consumption over the
next 5-10 years is just phenomenal.
On top of that, you have more and more organizations and businesses providing more of their
business services through IT-based solutions. You talked about a perfect storm earlier with regard
to the timing for data centers. Most organizations are in a perfect storm today of factors driving
the need for ongoing investments and growth out of IT. The facilities have got to help them grow,
not limit their growth.
Gardner: John Vann, you’re up. I'm sorry to have left you off on the sidelines there for so long.
Tell us about Valero Energy Corporation and what it is that drove you to bite off this big project
of data-center transformation and redesign.
Vann: Thanks a lot, Dana. Just a little bit about Valero. Valero is a Fortune 500 company in San
Antonio and we're the largest independent reﬁner in the North America. We
produce fuel and other products from 15 reﬁneries and we have 10 ethanol
We market products in 44 states with large distribution network. We're also into
alternative fuel with renewables and, ,one of the largest ethanol producers. We
have a wind farm up in northern Texas, around Amarillo, that generates enough power to fuel our
So what drove us to build? We started looking at building in 2005. Valero grew through
acquisitions. Our data center, as Cliff and John have mentioned, was no different than others. We
began to run into power,space, and cooling issues.
Even though we were doing a lot of virtualization, we still couldn't keep up with the growth. We
looked at remodeling and also expanding, but the disruption and risk to the business was just too
great. So, we decided it was best to begin to look for another location.
Our existing data center is on headquarters’ campus which is not the best place for the data
center, because it's inside one of our ofﬁce complexes. Therefore, we have water and other
potentially disruptive issues close to the data center -- and it was just concerning considering
where the data center is located.
We began to look for alternative places. We also were really fortunate in the timing of our data
center review. HP was just beginning their build of the six big facilities that they ended up
building or remodeling, and so we were able to get good HP internal expertise to help us as we
were beginning our decision of design and building our data center.
So, we really were fortunate to have experts give us some advice and counsel. We did look at
collocation. We also looked at other buildings, and we even looked at building another data
center on our campus.
The problem with collocation back in those days of 2006, 2007, and 2008, was that there was a
premium for space. As we did our economics, it was just better for us to be able to build our own
facility. We were able to ﬁnd land northwest of San Antonio, where several data centers have
been built. We began our own process of design and build for 20,000 square feet of raised ﬂoor
and began our consolidation process.
Gardner: What, in your opinion, was more impactful -- the planning the execution, the
migration? I guess the question should be, what ended up being more challenging than you
expected initially? Where do you think, in hindsight, you’d put more energy and more planning,
if you had to do it all again?
Vann: I think our approach was solid. We had a joint team of HP and the Valero Program
Management Ofﬁce. It went really well the way that was managed. We had design teams. We had
people from networking architecture, networking strategy and server and storage, from both HP
and Valero, and that went really well. Our construction went well. Fortunately, we didn’t have
any bad weather or anything to slow us down; we were right on time and on budget.
Probably the most complex was the migration, and we had special migration plans. We got help
from the migration team at HP. That was successful, but it took a lot of extra work.
If we had one thing to do over again, we would probably change the way we did our IP
renumbering. That was a very complex exercise, and we didn’t start that soon enough. That was
Probably we'd put more project managers on managing the project, rather than using technical
people to manage the project. Technical folks are really good at putting the technology in place,
but they really struggle at putting good solid plans in place. But overall, I'd just say that
migration is probably the most complex.
Gardner: Thank you for sharing that. How old was the data center that you wanted to replace?
Vann: It's about seven years old and had been remodeled once. You have to realize Valero was in
a growth mode and acquiring reﬁneries. We now have 15 reﬁneries. We were consolidating quite
a bit of equipment and applications back into San Antonio, and we just outgrew it.
We were having hard time keeping it redundant and keeping it cool. It was built with one foot of
raised ﬂoor and, with all the mechanical inside the data center, we lost square footage.
Gardner: Do you agree, John, that some of the variables or factors that we discussed earlier in
the podcast have changed, say, from just as few as six or seven years ago?
Vann: Absolutely. Power and cooling are just becoming an enormous problem and most of this
because virtualization blades and other technologies that you put in a data center just run a little
hotter and they take up the extra power. It's pretty complex to be able to balance your data center
with cooling and power, also UPS, generators, and things like that. It just becomes really
complex. So, building a new one really put us in the forefront.
Gardner: Can you give us some sense of the metrics now that this has gone through and been
completed? Are there some numbers that you can apply to this in terms of the payback and/or the
efﬁciency and productivity?
Vann: Not yet. We've seen some recent things that have happened here on campus to our old
data center, because of weather and just some failures within the building. We’ve had some water
leaks that have actually run into the data center ﬂoor. So that's a huge problem that would have
ﬂooded our production data center.
You can see the age of the data center beginning to have failures. We've had some air-conditioner
failures, some coolant leaking. I think our timing was just right. Even though we have been
maintaining the old data center, things were just beginning to fail.
Gardner: So, certainly, there are some initial business continuity beneﬁts there.
Gardner: Going back to Cliff Moore. Does anything you hear from John Vann light any light
bulbs about what other people should be considering as a step up to the plate on these data center
Moore: They certainly should consult John's crystal ball regarding the issues he's had in his old
data center, and move quickly. Don’t put it off. I tell people that these things do happen, and they
can be extremely, costly when you look at the cost of downtime to the business.
Gardner: Getting started, we talked about migration. It turns out that we did another podcast
that focused speciﬁcally on data-center migration and we can reference folks to that that easily.
What is it about planning, getting started as you say, when people recognize that the time might
not be on their side? What are some of the initial steps, and how might they look to HP for some
Moore: We focus entirely on discovery early on. You’ve got to know precisely what you are
going to move, exactly what it's going to look like half a year or a year from now when you
actually move it, and focus very heavily on the dependencies between all of the applications,
especially the mission-critical applications.
Typically, a move like John’s requires multiple, what we call, move groups. John’s company had
ﬁve or six, I believe. You simply cannot divide your servers up into these move groups, without
knowing what you might break by dividing them up. Those dependencies are critical, and that's
probably the failing point.
Vann: We had ﬁve move groups. Knowing what applications go with what is a real chore in
making sure that you have the right set of servers you can move on a particular weekend. We
also balanced it with downtime from the end customers, so we’re going to make sure that we
were not in the middle of a reﬁnery turnaround or a major closing. Being able to balance those
weekends, so we had enough time to be able to make the migration work was quite a challenge.
Gardner: John Vann, did you take the opportunity to not only redesign and upgrade your data
center facilities, but at the same time, did you modernize your infrastructure or your architecture?
You said you did quite a bit with virtualization already, was this a double whammy in terms of
the facilities as well as the architecture?
Vann: Yes. We took the opportunity to upgrade the network architecture. We also took the
opportunity to go further with our consolidation. We recently ﬁnished moving servers from
reﬁneries into San Antonio. We took the opportunity to do more consolidation and more
virtualization, upgrade our bladefarm, and just do a lot more work around improving the overall
infrastructure for applications.
Gardner: I'd like to take that back to John Bennett. I imagine you're seeing that one of the ways
you can rationalize the cost is that you're not just repaving a cow path, as it were. You're actually
re-architecting and therefore getting a lot greater efﬁciency, not only from the new facility, but
from the actual reconstruction of your architecture, or the modernization and transformation of
Bennett: There are several parts to that, and getting your hands around it can really extend the
beneﬁts you get from these kinds of projects, especially if you are making the kind of investment
we are talking about in new data center facilities. Modernizing your infrastructure brings energy
beneﬁts in its own right, and it enhances the beneﬁts of your virtualization and consolidation
It can be a big step forward in terms of standardizing your IT environment, which is
recommended by many industry analysts now in terms of preparing for automation or to reduce
management and maintenance cost. You can go further and bring in application modernization
and rationalization to take a hard look at your apps portfolio. So, you can really get these
combined beneﬁts and advantages that come from doing this.
We certainly recommend that people take a look at doing these things. If you do some of these
things, while you're doing the data center design and build, it can actually make your migration
experience easier. You can host your new systems in the new data center and be moving software
and processes, as opposed to having to stage and move servers and storage. It's a great
John talked about dealing with the IP addresses, but the physical networking infrastructure and a
lot of old data centers is a real hodgepodge that's grown organically over years. I guess you can
blame some of our companies for having invented Ethernet a long time ago. But, it's a great
chance to start off with a clean networking architecture, which also helps both with continuity
and availability of services, as well as cost. They all come in there.
I actually have a question for John Vann as well. Because they had a pretty strong focus around
governance, and especially in handling change request, I'm hoping he might talk a little bit about
that process of the design and build project.
Vann: Our goal was to hold scope creep to a minimum. We had an approval process, where it
had to be a pretty good reason for a change and for a server not to move. We fundamentally used
the word "no" as much as we could to avoid not getting the right applications in the right place.
Any kind of approval had to go through me. If I disagreed, and they still wanted to escalate it, we
went to my boss. Escalation was rarely used. We had a pretty strong change management
Gardner: I can see where that would be important right along the way, not something you want
to think about later or adding onto the process, but something to set up right from the beginning.
We’ve had a very interesting discussion about the movement in enterprise data centers where
folks are doing a lot more transformation, moving and relocating their data centers, modernizing
them, and ﬁnding ways to eke out efﬁciencies, but also trying to reduce the risk of moving in the
future and looking at those all important power and energy consumption issues as well.
I want to thank our guests. We've been joined today by Cliff Moore, America’s PMO Leads for
Critical Facilities Consulting at HP. Thank you, Cliff.
Moore: Thanks, Dana. Thanks, everybody.
Gardner: John Bennett, Worldwide Director, Data Center Transformation Solutions at HP.
Thank you, John.
Bennett: Thank you, Dana.
Gardner: And lastly, John Vann, Vice President, Technical Infrastructure and Operations at
Valero Energy Corporation. John, I really appreciate your frankness and sharing your experience
and I will certainly wish you all in that.
Bennett: Thank you very much, Dana, I appreciate it.
Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You've been listening
to a sponsored BrieﬁngsDirect podcast. Thanks for listening, and come back next time.
Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor:
Transcript of a BrieﬁngsDirect podcast on how upgrading or building new data centers can
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