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Shaving operational costs with server blades

Growing business needs, along with rising property and power bills led Kotak Securities to opt for IBM blade servers to shave operational costs, writes Kushal Shah

Indian bourses are on a roller coaster ride—no one knows for sure the direction in which the market is heading in the near future. In such uncertain times, the last thing that investors need is an inefficient broker. All financial companies need to possess the highest quality of IT infrastructure and adopt the latest technologies. This is what makes the BFSI segment, arguably the most IT savvy of all sectors in Indian industry.

Kotak Securities, a subsidiary of Kotak Mahindra Bank, the stock-broking and distribution arm of the Kotak Mahindra Group, needed to stay abreast of new technologies and reduce its operational expenses. It recently invested in server and storage consolidation using IBM servers in order to save on space and power requirements. As part of its business, Kotak Securities provides services in the area of stock broking, portfolio management, retail broking and distribution and depository services. Kotak Securities Limited has been the largest company in IPO distribution.

Internet broking services, online IPO and mutual fund investments are also a part of Kotaksecurities.com’s offerings. The company had over Rs 3,490 crores of Assets Under Management (AUM) as of September 30, 2007. It has a full-fledged research division involved in macroeconomic studies, sectoral research and company-specific equity research, combined with a sales force, which helps deliver current and up-to-date market information and news. Kotak Securities is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein investors can use the company’s brokerage services for executing transactions and its depository services for settling them.

Growing business

The financial sector in India is growing at a rapid pace. Kotak Securities reflects the same trend. It has grown rapidly over the past few years and is now one of India’s leading stock broking houses servicing over 3,60,000 customers from 862 branches in 310 cities. An increasing appetite for equity among investors, the convenience of online trading and declining brokerage fees are the major growth drivers of the Indian retail brokerage industry. With this, the online division of Kotak Securities too has been witnessing tremendous growth. Trading is a core business activity and volumes generated during the trading hours run into crores of rupees everyday. Over time, the volume of business increased multifold and the load on the existing servers was becoming immense. The criticality of business operations and uptime meant that this issue had to be addressed quickly. Unlike other industries, large broking firms had to make considerable effort to attract customers since the top ten firms have only managed to get about less than half the market share in this highly fragmented business. The first step towards this evidently involved a better and more reliable IT infrastructure.

Despite the jump in business, the window to process each and every activity remains the same. All business activities conducted during trading hours have to be accounted for and the systems have to be up and running for the next business day. This apart, big-ticket customers expect companies to be up-to-speed with the latest technologies and systems. “Keeping all this in mind, we had to build better redundancies with investment in the latest technologies. Our trading sites were running on the old IBM Netfinity servers and, the increase in business called for an upgradation in servers and relevant technologies,” said Swapnil Patil, Manager - IT, Kotak Securities.

The real need

The company’s objective was to maintain its existing level of service excellence and efficiency in operations, irrespective of business growth. The high volume growth in business and the criticality of data called for a quick realignment in terms of simplifying the IT infrastructure and addressing overall scalability. Kotak Securities is headquartered in Mumbai at Nariman Point, which is one of the most expensive commercial properties.

Of late, the city has also started facing power shortages. In such a scenario, keeping more than 14 normal sized servers is an expensive affair in terms of space, cabling and power usage.

“Due to separate servers, we even faced the problem of cabling. Hence we moved to blades taking three things into consideration: cable clutter, power and form factor. We shifted to blade servers to save on space, electricity and cabling,” stated Patil.

The need for upgradation became paramount because they just could not afford downtime of even an hour. When you have such a large amount of business coming in, the concomitant reliance on solid and reliable IT systems increases manifold. Necessary and timely investments had to be made in the latest and best technologies. The blade server strategy is also based around the necessity to build a reliable, scalable infrastructure that helps to run the business faster. Patil pointed out that in terms of space, since the company had servers at three locations which are all expensive in terms of real estate being among Mumbai’s prime properties—Nariman Point, Worli and VSNL—they have got the benefits of optimization in cost and space.

Another challenge that Kotak Securities had to counter was storage. With strict SEBI guidelines in place for compliance, historical data had to be available for restoration at any point in time. Apart from the four SEBI audits, and occasional use of databases by auditors, there were not too many regular users of legacy data. “We were looking for the cheapest, and most effective performance-driven box. Also, the necessary solution had to be scalable as we kept adding 4 TB of data every year to the databases,” said Patil.

The right solution

Short-listing the vendor for the new technology was not really a difficult job for Kotak Securities. For the company, it was IBM all the way as it had an existing relationship from 1996 onwards with the vendor. “We have had a good experience with IBM. For the earlier servers, we thought that we would use them for a maximum of three to four years but we went on to use them till 2005 without any issues. We know that IBM is clear on their designs and our requirements. They provide high stability and support too,” stated Patil. According to him, IBM is far ahead in terms of technology than its competitors. IBM technologies offered the advantage of loading 14 servers in the same 7 U rack space as against that of its competitors. Keeping all this in mind, during the past couple of years, Kotak Securities has invested in a number of IBM technologies and solutions.

Kotak Securities’ online trading site Web servers are on fully-loaded IBM Blades behind the Load Balancer and are co-located at VSNL along with their data centers at Nariman Point and Worli. Further, they have procured IBM pSeries 550 Cluster servers for the DB2 Database and for the trading engine respectively. For Microsoft Exchange and Domain migration, they have procured IBM X346 and X226 servers.

For storage consolidation, Kotak went in for IBM DS4500 and to account for the huge historical data generated, it invested in the IBM DS4100 SATA enclosure.

The fact that Kotak Securities has more than 100 in-house developers working on innovative, homegrown applications attests to the importance given to IT. Hence, in terms of implementing these servers, the company did not require any help from IBM and believed that it had a capable team to deal with the implementation issues. “We did have some problems initially, but now everything is pretty stable and we do not require any assistance from IBM. Now we have even moved from one to 18-20 chassis and have implemented servers as and when required,” explained Patil.

Notable benefits

Kotak Securities’ emphasis on investment in the latest and most scalable technologies has resulted in all-round benefits for it. “With these new servers, we have been able to save a lot on space and have reduced power consumption. The blades do not require the same power that 14 independent servers did and manageability is far easier than managing independent servers,” added Patil.

Further, the blades have better redundancies in place and can scale as per business requirements without any downtime. According to Patil, only IBM technologies were capable of taking the kind of load that they have been witnessing in recent years. In fact, IBM blades have proven to be a good investment and have helped Kotak Securities build a cost-effective and flexible computing environment.

Most definitively, the server and storage consolidation using IBM products is helping Kotak to firm up its DR strategy. They already have onsite DR in place and are soon planning to have the offsite back-up in place. Talking about business continuity planning, he feels that it is not entirely possible as they are highly dependent on NSE and BSE and they do not use similar clients. Yet, they are sure of recovering data using their DR site.

Finally, in the age of server virtualization, Patil believes that it is essential and the company would consolidate using VMware but it would still need more servers for its IT operations.

kushal.shah@expressindia.com