Archive for the ‘Virtualization’ Tag

Cutting the cost of IT

In most organizations today, IT is firmly planted near the top of the strategic agenda.  Businesses continue to require new software and hardware to interact with customers, manage supply chains, and process transactions. However, the bygone days of CIOs getting a blank check for the latest IT application is long gone.  Infrastructure and operating (I&O) cost reduction is now an important priority. Even after multiple rounds of cost cutting over the past few years, many CEOs and CFOs continue to look hungrily at IT budgets that could now approach 15-20% of total spending in many companies. Fortunately, opportunities abound. A proactive and systematic cost reduction initiative could reduce IT expenditures in the short term by 10%, and 25% over the following 3 years.

According to Gartner Research, I&O costs make up 60% of the typical enterprise IT budget.  These costs encompass all the activities that deliver IT to the organization, including: facilities, hardware, software, services, labour and network costs.  Up to 80% of these costs fall into 3 omnibus areas:  data center operations, network fees and supporting the lines of business.    Shaving these expenditures is a major opportunity area in most firms.  In a 2011 survey of IT executives, Gartner found that only a minority of companies were more than halfway down their IT cost savings path.

There is no magic bullet to reducing IT expenditures while ensuring ‘always on’ computing remains responsive to dynamics business needs. Our work with savvy CIOs has identified many cost reduction best practices, some of which include:

Consolidate IT

Significant savings of 15-20% can be garnered by consolidating IT through server rationalization, moving to standardized software platforms, negotiating better IT provider terms and by optimizing the data center.   For example, many IT managers out of habit or risk aversion put all their computing needs in the most robust and secure data centers.  This not need be the case.  Lower tier requirements (e.g., development, testing environments) and applications (e.g., training, HR) can be placed in lower-tier facilities with minimal business impact. Furthermore, lower-tier facilities can still be used for hosting production environments and critical applications if they use virtualized failover— where redundant capacity kicks in automatically— and the loss of session data is acceptable (as it is for internal e-mail platforms for example).

First virtualize, then buy

Most IT infrastructures operate at less than 15% capacity on average due to uneven demand, decentralized purchasing and “siloed” resourcing.  Driving up utilization through grid or virtualized computing is a cheaper and easier option than buying expensive hardware & software and building new data center to handle the new assets. “Dedicated infrastructure will usually be an order of magnitude lower in utilization than an intelligently shared infrastructure,” said Gary Tyreman CEO Univa Corporation. “Using grid computing to share infrastructure across multiple applications is more efficient, saves money and simplifies capacity planning and governance.” We have seen many companies use server virtualization and grid computing to boost IT utilization rates in excess of 75% while reducing energy, facilities and operating costs.

Target power and cooling efficiencies

Power and cooling are significant cost centres and barriers to higher IT utilization.  Many companies can cut 5-20% in operating costs by deploying energy-efficient power and HVAC equipment and making simple infrastructure upgrades. Furthermore, augmenting cooling can also boost scalability.  In many cases, older data centers have dated air-conditioning systems that limit the amount of server, storage, and network equipment that can be placed in these sites.  Capacity can often be inexpensively and quickly improved by upgrading infrastructure cooling efficiency, using free cooling and installing energy management systems.

Troubleshoot better

Adding hardware, software and facilities isn’t always the most direct or effective way of making applications more available. The vast majority of IT downtime is the result of architecture, application or system design flaws not hardware or software problems. Instead of looking first to upgrade the infrastructure, smart firms are adopting integrated problem management capabilities that gets to the root cause of problems, significantly reducing infrastructure costs and maximizing application up-time.  Additionally, major cost savings can be gained by pushing IT support down from expensive tiers to lower, less expensive tiers that are able to satisfactorily resolve the user’s issues.  Right-sizing IT support should include the deployment of low cost, self-service portals to handle issues like password resets and ‘how-to’ queries.

These days, the cost of IT is too big to be ignored.  CIOs can quickly increase IT’s returns on assets and operational performance without increasing business risk by: thoroughly understanding their cost base (and how it compares to their peers); diligently pursuing ‘low hanging’ cost reduction opportunities and; deploying new architectural and virtualization schemes that deliver more IT for less money.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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