NZ Post’s SOA move cuts operational costs by 70%

Most of NZ Post's servers run Linux today and whatever is done in the future will be Linux-based, says infrastructure and architecture manager

NZ Post is claiming a 70% reduction in IT operating costs, after moving to a service-oriented architecture and open-source operating system — despite saying it is just 30% through its transformation journey.

Moving to a service-oriented IT environment is the only way forward, says Alan Roberts, infrastructure and architecture manager of New Zealand Post’s postal services group.

NZ Post started its journey in 2003. Today, the organisation’s service-oriented share infrastructure (SOSI) is based on Red Hat Enterprise Linux Advanced Server, Oracle Application Server 10g and the Oracle Database 10g Enterprise Edition.

“We have got a long way to go to turn our [whole] IT environment into service. We have Exchange as a service; Oracle as a service [and] we are currently building an SQL service and an internet service,” he says.

The decision to move to a service-oriented model was driven by the lack of agility of the existing infrastructure and high operating costs. These were primarily the result of the escalating maintenance costs of ageing Sun hardware and an Oracle licensing model based on price-per-CPU, “and we had lots of them”, says Roberts.

But what caused the most concern at the time of the move was the fact that Roberts’ team wanted to choose Linux, he says.

“If you go back five years — an eternity in the IT industry — Linux was still really not proven in the enterprise environment and there were a few sceptics,” he says.

“We had to prove it. We built a Linux environment on our IBM servers, we put Linux and Oracle on it and we went through some thorough testing.”

And the new solution really did prove itself. It outperformed the old one by more than 500%, while using only a third of the CPUs. The result was incredible, he says. But to be fair, says Roberts, it’s a known fact that Linux is a very lightweight operating system compared with Sun, IBM or Windows. In addition, the Linux environment was running on commodity hardware, based on Intel or AMD processors, which were gaining performance much faster than the equivalent SPARC-chip, for example, he says.

The organisation has managed to reduce IT operating costs by 70%, mainly by reducing maintenance costs, says Roberts.

“Instead of buying a $30,000-$40,000 box we buy a $5000-$7000 IBM Intel box, and we get greater performance and less maintenance cost.”

Most of NZ Post’s 350 servers run Linux today and whatever is done in the future will be Linux-based, he says.

NZ Post runs its organisation as a federated model, which means the various business units — for example, Kiwibank — can use the corporate infrastructure Roberts is responsible for, although they are not obliged to, he says.

Roberts warns that if organisations plan to run the IT environment as a service, it needs to be managed and delivered as a service. Organisations need to assign a service-owner for each service, he says. The service-owners own the relationship with customers and are responsible for service delivery and support, he says.

“The ITIL framework, for us, has been essential to actually putting the service relationship around those services,” he says.

Roberts is now starting to put multiple services on the same piece of hardware, reducing the server count by up to 40%, he says. The challenge there is that changes, such as an outage, will affect more people.

“So, you have got to be more disciplined about your disaster recovery plans. If one box goes down that has three services on it, and each service supports multiple users, instead of two people screaming I’ll have 40 people screaming,” he says.