HDFC Bank’s server consolidation move for branch-level competitive edge

Branch-level banking gets a boost with server consolidation at HDFC Bank, which wins for it the Best of vForum 2011 award for Outstanding Business Value.

The true value of innovative IT infrastructure deployment is amply evident when it serves as a business enabler and facilitates competitive advantage, growth and enhanced customer experience, while simultaneously saving costs even in the face of unpredictable customer loads. Nowhere is this more palpable than in the banking sector, where seasonal and local customer flow at individual branches routinely experiences wide fluctuations. Requesting and procuring additional hardware resources to cope with such sudden increased demand would rarely produce results in time. However, for a bank with a network of 2,150 branches across 1,141 Indian towns and cities, unsatisfactory response time is certainly not an option. With this in mind, HDFC Bank successfully rolled out server consolidation across the board, to ensure its IT  infrastructure remains scalable to meet fluctuating as well as future demands, and is up and running at all times.

This initiative won HDFC Bank the Best of vForum 2011 award for Outstanding Business Value for the savings it achieved through the successful deployment. This award was instituted by TechTarget’s in partnership with VMware. With server consolidation, the bank is now able to rapidly rollout branch offices, as well as accrue significant operational and cost benefits.

Earlier, each branch at HDFC had dedicated servers to run the core banking system. These branches were equipped with a server room, stable power supply, IT equipment and air conditioning for cooling. This infrastructure equipment had to be acquired and appropriately sized from various vendors.

Enhancement of branch-level banking

With a mission to help the bank do more with less, while simultaneously enhancing the customer experience at the branch level, HDFC’s IT team decided to shrink the branch rollout processes and IT infrastructure deployments at the branch. Apart from quick deployment of IT at the branches, the team also contemplated ways in which it could reduce the expenses in power consumption of systems/cooling, and high CAPEX for servers and associated hardware.

After much deliberation, the team finally decided to embark on a server consolidation journey. The bank decided to consolidate all branch servers at a central location using server virtualization technologies. All the desktops were consolidated onto a central location using desktop virtualization technologies and thin clients at the branch locations.

Initiated in January 2011, the rollout was completed in April. Today HDFC Bank has over 340 virtual machines (VMs) operating on eight physical servers. The bank reduced the number of servers from 340 to eight. HDFC Bank also reaped savings with power (over 60 KW), space and cooling, after the server consolidation. HDFC invested in SAN storage and licenses from VMware and Microsoft Windows server operating system (data center edition licenses).

Noteworthy in HDFC’s approach was the systematic method of evaluation and quantification of thebenefits of this server consolidation venture. The bank took incremental steps, with a check on costs versus benefits at each step even as it realized that the benefits over time increased.

Business benefits of the project

HDFC Bank claims that the business benefits achieved via this server consolidation initiative provided the organization with a strong differentiator and competitive edge. The benefits include:

  1. Better monitoring and manageability of resources with increased uptime.
  2. Quick rollout of IT resources for branches and capacity on demand.
  3. Prime real estate in branches released for other business endeavors.
  4. Savings, in terms of reduced CAPEX and OPEX of servers and related hardware.

To cater to the needs of branch business and to roll out over 300 branches in a short span of time, HDFC Bank deployed virtualized branch IT infrastructure in a central location. This setup, having scalability built into its core, was made available to branches as infrastructure-as-a-service.

HDFC can now dynamically allocate/de-allocate and resize resources as and when needed, to cope with variations in demand at the branch level. With server consolidation, this dynamic resource allocation can be done on the fly without disrupting any of the applications or infrastructure.  

As part of this service, HDFC reengineered and shortened the business and technical process involved in deploying IT infrastructure at the branches. The operational issues such as security concerns and compliance of hardware, software and antivirus are addressed as a prepackaged part of this service.

The server consolidation initiative has led HDFC to take advantage of untapped markets by rolling out branches in the rural areas quickly and cost effectively. Server consolidation at a central location has enabled a standard, secure and a controlled environment at HDFC. The bank believes that the time-to-market and provisioning of new business products will now be quicker and easier. Significantly, branches no longer have to deal with routine IT operations and hence can focus totally on the business of banking.


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