National Bank of Kuwait saves 40% cost with Virtualisation

After decades of using mainframe technology, National Bank of Kuwait wanted a scalable server infrastructure that the IT department could rely on to deliver services to employees and customers. However, because of power capacity issues, it was not feasible for the bank to use hundreds of physical servers. In 2008, National Bank of Kuwait implemented Windows Server 2008 Hyper-V technology, in addition to the Microsoft System Center family of products.

It virtualised 75 percent of a portion of its infrastructure (30 physical hosts with 125 virtual machines) and developed a private cloud infrastructure. The bank’s virtualised infrastructure costs 40 percent less than a physical infrastructure, and the licensing costs are 20 percent less. The bank improved its agility and ability to respond to business needs, and it now has an infrastructure that will help support the bank’s growth.


National Bank of Kuwait is the largest bank in Kuwait with more than U.S.$49 billion in assets. Started by local merchants in 1952, the bank has grown to be the landmark bank of Kuwait, serving more than 60 percent of the country’s banking customers with government, corporate, private, and investment banking services. National Bank of Kuwait has 72 branches located within Kuwait and another 100 branches across the globe, in places where the bank’s customers do business, such as Bahrain, Jordan, Saudi Arabia, and the United Arab Emirates. The bank also has locations in China, France Switzerland, Singapore, the United States, the United Kingdom, and Vietnam.

Since its founding, National Bank of Kuwait has experienced significant growth, acquiring regional banks in Egypt and Turkey, each with more than 30 branches. To support its growing operations, the company uses a centralized IT infrastructure with a primary data center at its headquarters in Kuwait. Eighty percent of the infrastructure comprises core banking systems built on mainframe technology. The remaining 20 percent of the infrastructure was built on the Windows Server 2003 operating system and IBM AIX, a proprietary UNIX-based operating system.

In 2009, prompted by the need for a scalable infrastructure that would support continued growth, which the mainframe technology lacked, the IT department at National Bank of Kuwait decided to redesign its infrastructure architecture. Instead of relying predominately on mainframe computing for its core banking systems, the company decided to move toward a computing model built primarily on Microsoft products and technologies, including Windows Server 2008 R2 Enterprise and Microsoft SQL Server 2008 data management software.

However, as the company started designing its new architecture, it realized that electricity constraints in Kuwait would pose a challenge to its desired server-based model. “Electricity in Kuwait is fairly inexpensive, so that was not an issue for us,” explains Muntaser Ayyash, Assistant General Manager for IT at National Bank of Kuwait. “However, capacity is very limited here. We don’t have unlimited physical outlet capacity, so we would quickly run out of places to plug in individual production servers.”

Also, as the company started relying more and more on services running on the Windows platform, the development teams at National Bank of Kuwait requested additional development and testing environments. “These teams are responsible for developing new services for customers, such as Internet banking features and automated teller machine environments, so it’s important to deliver the infrastructure they need in order to deliver the best experience for our customers,” says Ayyash. “In addition to our production server environment, they needed additional server infrastructure to support robust development, testing, and user-acceptance environments, which was straining our already-limited electricity capacity.”

Between the power capacity constraints that the bank faced and its increasing need for more servers to support both its core business operations and the needs of internal development teams, National Bank of Kuwait sought a solution that it could use to consolidate server loads. “We simply could not support a one-to-one server ratio and make the improvements we wanted to make to our IT infrastructure,” says Ayyash.

At the same time that National Bank of Kuwait reduced its dependency on mainframe technology, the bank decided that virtualisation was the best option for consolidating servers to address the challenges it faced with power capacity. So in 2009, National Bank of Kuwait implemented Windows Server 2008 R2 Enterprise with Hyper-V technology.

Implemented a Virtualisation Strategy
As the first step in developing a virtualisation strategy, National Bank of Kuwait set a goal to virtualise all of its front-end servers, such as application servers and middle-tier servers that handle the business logic. With this goal in place, the bank next decided to test just one server running in a virtualised environment. National Bank of Kuwait virtualised a print server, which represents a service that is used by all employees across the company.

“The results from virtualising that one server were very promising,” says Ayyash. “Looking at the footprint of the virtualised server, we saw that it was efficient in making the most out of the hardware infrastructure we had in place, so we decided to move forward vigorously with our virtualisation efforts at that point.”

The bank added two IBM BladeCenter server racks, each housing 15 physical servers running Windows Server 2008 R2 Enterprise with Hyper-V. With those 30 servers, the company hosts the 125 virtual servers needed for its front-end and middle-tier server environment. National Bank of Kuwait used best practices for Hyper-V on the targeted servers to ensure high availability and performance.

Deployed Interoperable Management Tools for a Private Cloud Infrastructure
In March 2009, once National Bank of Kuwait had virtualised its front-end servers with Hyper-V, the company set out to further optimize its IT infrastructure. “With the infrastructure overhaul and an increased dependency on virtualised servers, I knew that we needed a way to efficiently monitor and manage those servers,” explains Ayyash. “It is particularly important because our middle-tier stateless servers are critical to day-to-day banking operations—they are the servers that host our business logic and applications that tellers use to serve customers. This wasn’t necessary with mainframe technology because we only had to manage batch jobs for banking transactions. Now, we use a services model that requires around-the-clock monitoring to ensure our business stays up and running.”

National Bank of Kuwait turned to expit, a Microsoft Gold Certified Partner that provides tailored IT management services to meet the unique business demands of customers in the Middle East region. The company is also a Microsoft System Center Alliance member and, with particular expertise in Microsoft System Center products and technologies, helped National Bank of Kuwait to implement several technologies from the System Center family of products, which the bank licensed through the Microsoft System Center Server Management Suite Enterprise (SMSE) license.

To start, expit helped National Bank of Kuwait implement Microsoft System Center Operations Manager 2007 R2 and Microsoft System Center Virtual Machine Manager 2008, which the bank could use to monitor and manage its server environment, including server state, health, and performance. The bank enabled the Performance and Resource Optimization (PRO) feature in System Center Virtual Machine Manager, which delivers PRO tips to the Administrator Console. The IT department at National Bank of Kuwait relies on the tips to help it load-balance virtual machines between physical hosts when thresholds are exceeded and to migrate virtual machines to different physical hosts in the event of hardware failure.

Expit then helped the bank implement Microsoft System Center Configuration Manager 2007. “National Bank of Kuwait had made significant strides in transforming its IT infrastructure and virtualising a significant portion of its server infrastructure,” says Khaled Bastaki, Owner and Managing Director at expit. “The next step was to help it get control of its inventory and configuration of its virtual environment with System Center Configuration Manager.” By using Configuration Manager, National Bank of Kuwait can quickly apply hardware and server updates from one central location.

Next, the companies worked together to deploy Microsoft System Center Data Protection Manager 2010 to back up the data on its front-end and middle-tier virtualised servers. National Bank of Kuwait uses a multiple-tiered backup plan, backing up not only the virtual servers but also the applications hosted on each virtual server, for an added layer of protection. In addition to backing up virtual servers and the applications hosted on them, the bank backs up mission-critical workloads on its physical servers, such as those running Microsoft Exchange Server 2010.

Expit deployed Microsoft System Center Virtual Machine Manager Self-Service Portal 2.0, a web-based portal that enables National Bank of Kuwait to automate its virtual machine provisioning and deployment scenarios. For instance, if the bank has a virtual server to which it needs to add storage, it would need to configure the machine, configure the network, and configure for load-balancing. Traditionally, this would be a multiple-day task, but by using Self-Service Portal 2.0, the company defined the scenario and can now automate the task.

As the final phase, expit implemented Microsoft System Center Service Manager 2010 so that National Bank of Kuwait could control the change-management processes related to its virtual environment. “By using Service Manager, there is full accountability when someone wants to deploy a virtual server,” explains Bastaki. “Now, the IT department knows who the virtual machine belongs to, when it was created, what purpose it serves, and the configuration. It is tremendous visibility into the change-management process and the IT infrastructure.”

The result of implementing Hyper-V with the System Center solutions is a private cloud infrastructure model in which cloud resources are confined inside a firewall and the company controls the infrastructure. National Bank of Kuwait now has not just server management but end-to-end service management, with deep insight into its virtual server infrastructure.

By using Hyper-V technology and the System Center family of products, National Bank of Kuwait transformed its IT infrastructure into one that delivers services across the company and, by using a virtualisation solution, reduced its dependency on allocated power capacity. The bank reduced costs in a number of ways through dramatic server consolidation, minimizing both the hardware costs associated with physical servers and the server software licensing costs. The IT department has improved its agility and is able to respond to business needs more quickly. It is now prepared for the continued growth of National Bank of Kuwait.

Reduced Need for Additional Power Capacity
By moving to a virtualised server environment, National Bank of Kuwait accomplished one of its critical goals: to reduce dependency on power capacity. Its move away from older mainframe technology was projected to require more than 100 physical servers. National Bank of Kuwait reduced the number of servers needed to only 30 physical servers and 125 virtual servers. “With the capacity constraints we have with electricity in Kuwait, plus a shortage of space, we would not have been able to support the server environment that we envisioned, much less have any room to grow,” says Ayyash. “By using Hyper-V, we reduced the physical servers needed by 75 percent and have the flexible, agile infrastructure we need to support our business.”

Reduced Hardware Costs
National Bank of Kuwait also reduced its physical server hardware costs by consolidating servers. “As we continue to grow, the infrastructure that we would have needed with a conventional model of racked servers in a one-to-one ratio would have been at least 40 percent more than our virtualisation environment,” reports Ayyash. “It’s an impressive savings, given the magnitude of our infrastructure, and that is really what is encouraging us to continue our virtualisation efforts.”

Reduced Licensing Costs
National Bank of Kuwait also reduced costs for its software licensing by taking advantage of volume licensing from Microsoft. For example, in the virtualisation environment, National Bank of Kuwait can run up to four instances at a time in the Windows Server 2008 Hyper-V environment under a single server license. In addition, with one Microsoft System Center Server Management Suite Enterprise license, the bank can manage the physical operating system environment and up to four virtual ones on a single licensed server. “The licensing options that Microsoft offers for virtualisation helped make this massive undertaking more affordable,” says Ayyash. “Including license renewals over a three-year period, we anticipate that we will save 20 percent on licensing costs with a virtualisation environment compared to a similar physical infrastructure.”

Improved Business Agility
The IT department at National Bank of Kuwait is now able to respond to business needs that are specific to the banking industry in the Middle East region. Specifically, by taking advantage of virtualisation and moving more toward a private cloud infrastructure, the IT department can quickly scale up its virtual infrastructure to meet compute-intensive tasks and to handle server traffic during peak banking times.

National Bank of Kuwait reports that it can now handle busy seasons at the bank with more agility thanks to its virtualisation efforts. The holy month of Ramadan is the busiest period of the year. In the middle of the month-long observance, customers visit the bank more often, making cash withdrawals in preparation for the celebration at the end of the month, where it is common to give children gifts. This increases the demand on its banking applications and customer-relationship management software. Then, the day after the observance is over, Internet banking and telephone banking increases by up to 300 percent overnight. “With virtualisation, we can deploy servers on demand to handle the increased traffic in the branch, online, and on the telephone,” says Ayyash. “Before virtualisation, it would take at least six hours to prepare a server for production, and now it takes less than three hours—a 50-percent improvement.”

Prepared for Future Growth
By using Hyper-V technology and the System Center solutions, National Bank of Kuwait has established the foundation for a private cloud infrastructure model that helps ensure that the IT infrastructure is prepared for ongoing business growth. “We have gone through significant growth in recent years, including expansion within the Middle East region and bank acquisitions in other parts of the world,” says Ayyash. “By moving to a private cloud model, I am comfortable that we can support this growth. We can now publish services, such as Internet banking, without requiring that new branches outside of the country build an entirely new infrastructure. Branches do not have to build their own interface adapters and middleware to have their core banking system connect to our data center in Kuwait. Instead, they connect to our private cloud—something we wouldn’t have been able to accomplish under another model.”

As the bank continues to move toward a private cloud infrastructure, the IT department can focus on strategic IT efforts that help prepare the bank for success. While previously, the IT department focused much of its efforts on provisioning servers from specific requests, such as when the development teams need additional testing environment, now it can address strategic service delivery challenges. For instance, by implementing the fundamental components for a private cloud infrastructure, such as the interoperable management tools that automate provisioning and change-management tasks, the IT department is no longer inundated with requests to fill. Instead, it can change its focus to delivering new services, such as mobile banking, that not only support the business but help move it forward.