Peñoles Saves 70% on Hardware, Gains 4x Performance with Red Hat Enterprise Linux

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December 18, 2012

Peñoles cut operating and indirect costs without compromising security or reliability. The migration to Red Hat® Enterprise Linux® led to hardware cost savings of approximately 70% per server, and gains of up to 4 times its prior performance.

Customer: Industrias Peñoles, S.A.

“Linux migration was the easiest large-scale migration we have ever done. It was almost transparent.” Sanchez Armas, IT research manager, Peñoles

Industry: Other
Geography: LATAM
Country: Mexico


Business Challenge:

The aim was to double system performance every 24 or 36 months.

Migration Path:

From UNIX to Red Hat Enterprise Linux

Software:

Red Hat Enterprise Linux, Oracle’s PeopleSoft ERP

Hardware:

HP, IBM, Intel, x86-processor servers

Benefits:

The migration to Red Hat® Enterprise Linux® led to hardware cost savings of approximately 70% per server, and gains of up to 4 times its prior performance.

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Background:

The world’s largest producer of refined silver and other metals, Industrias Peñoles, S.A. comprises 50 companies with nearly 7,000 employees throughout Mexico. Traded on the Mexican Stock Exchange since 1968, Peñoles places great emphasis on increasing their value to shareholders. One way they do so is by strictly controlling costs company-wide. This meticulous fiscal responsibility is increasingly important given the strong effect that the international market for silver and other metals has on the price Peñoles can charge for its products. Because they have little control over market fluctuations, Peñoles must keep its operating costs to a minimum in order to maintain profitability.

Business Challenge:

Cost effectiveness, security and reliability

One of the biggest concerns for the Peñoles Information Technology (IT) division is containing overhead and operating costs. The high cost of hardware for their legacy UNIX-based infrastructure combined with increasing maintenance costs to make aligning with Peñoles’ corporate-wide goal of minimizing expenses difficult, if not impossible.

Data security is also a top priority. 85% of Peñoles’ business comes from a small number of customers. As the IT team investigated cost-saving alternatives, the security of each transaction and the systems themselves could not be compromised.

Because mining operations are often located in remote areas of the country, traditional data transfer can be unreliable. For this reason, Peñoles views maintaining current technology as extremely important. To achieve this, they maintain 24-month lease arrangements for hardware with both HP and IBM. Any solution Peñoles considers must operate with the latest hardware, emphasize new features, and allow an easy upgrade path.

Solution:

Migration to Red Hat solution meets all challenges

Peñoles looked to Intel-based hardware solutions as a way to significantly and quickly cut costs. Because their IT employees had a UNIX background, Linux quickly emerged as the most viable solution.

Peñoles ran several performance tests with multiple Linux distributions, but found that none matched the results they achieved with Red Hat. “It simply tested better,” said Pedro Luis Sanchez Armas, IT research manager for the mining division. “We knew after our testing that it would meet our needs of cutting costs while maintaining high levels of security and reliability.”

After six months of testing, Peñoles migrated a DNS server from UNIX to Linux, followed by their security firewall and external email application. Pleased with the results, the IT staff looked at more mission-critical applications as candidates for migration. Portions of Sybase, the database used by Peñoles for a number of different applications, were also migrated to Linux.

“Linux migration was the easiest large-scale migration we have ever done. It was almost transparent,” said Sanchez Armas.

On average, Peñoles recognized a cost savings in excess of 70% per server when they migrated from proprietary UNIX to commodity Intel-based servers with Linux. “The company was originally interested in the cost savings we could achieve,” said Sanchez Armas. “When we started testing, we found additional impressive performance benefits as well.”

On average, server performance increased by a factor of 4, though certain tasks improved even more. For example, processing time for one of Peñoles’ most processor-intensive reports was reduced from 27 minutes to 7 minutes, a 74% time savings. Such performance improvement translates to better overall system reliability and more uptime for Peñoles.

Additionally, the Linux environment offered improved control over the functionality of their network in-house. They no longer had to depend on third-party providers. Sanchez Armas realized that the flexibility of Linux, combined with the fact that the open source code was freely available for modifications, would let him run the DNS server outside of the DNL network.

Benefits:
Future

Peñoles’ mining division uses Linux for the majority of its infrastructure. They are now evaluating expanding the use of the Red Hat family, including Red Hat Enterprise Linux Desktop. Recent tests have shown that migrating some core applications could result in a cost savings of up to $2.5 million. They’re also evaluating Intel’s Itanium processor and are seeing strong indications that Red Hat Enterprise Linux on Itanium will offer higher performance at a lower cost than UNIX on the same platform.

“Soon, our equipment leases will be up for renewal,” said Sanchez Armas, “and if current tests are successful, we will begin migrating more of our operations. We look forward to the cost and performance benefits that further use of Red Hat Enterprise Linux will bring to Peñoles and our shareholders.”

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