The past few days have seen some extraordinary financial market activity. Obviously, these situations tend to make CEOs and CFOs nervous. This nervousness often translates into budget cutting (or slashing as might be the case), cancelled initiatives, or even layoffs. As IT folks, we can’t control these factors, so worrying about them is futile, but, as trusted advisers to our executive management, it’s our job to recommend the best course of action in the IT world. We must realize that its our job to do more than keep the company running, we must find ways to return real value to the business…to give them that competitive advantage that will help the company grow, even in trying times.
That’s why I thought we’d talk about some of the technologies and initiatives that can be used to obtain that competitive advantage, here in the DCS blog. All of these technologies require some investment. There is no free lunch here. We’re looking for technologies that can demonstrate a high return on investment (pay for itself) in the shortest time possible. But sometimes, demonstrating ROI can be difficult because the payback is not as straightforward or direct. For example, we all know that server virtualization is a high ROI technology and easy to justify since the benefits are evident through server reduction. But some technologies may pay indirect ROI such as decreased operational costs, or some may actually prevent spending additional capital later.
Let’s take a look at a few:
· Server Virtualization – It’s the gift that keeps on giving. Server virtualization benefits include: a reduction in the current server farm that consumer power and space, reduction in the number of servers needed to be purchased. Caution: Management might be a wash. There are few physical servers to manage, but virtualization can increase workload mobility, which needs to be managed.
· Storage Virtualization – Perhaps I should say, the features of storage virtualization such as thin provisioning, data tiering, and data deduplication. These technologies have some of the same effects as server virtualization (reduction of energy costs, space, and new hardware), but storage virtualization can also simplify data management. Caution: Some of the storage virtualization vendors can be small, while larger vendors can use it for vendor lock-in.
· Data Center Consolidation – Data center consolidation can reap large benefits because the cost to own and operate a data center is quite large. Shutting down a facility can save on site costs such as security, upkeep, leasing costs, and taxes (if owned). Consolidation can also save on operational costs such as energy and personnel. Caution: Consolidating data centers can be hard to justify at first because the initial investment to consolidate can be high. Besides the amount of time and effort necessary to consolidate, there are tough decision to be made about location, whether to outsource a portion of your IT, and potential downtime associated with movement of equipment or personnel. If a new data center has to be built to consolidate the other data centers, the whole value proposition for consolidating can go right out the window. If possible, consolidate using existing data centers.
· Business continuity, security and compliance – Business continuity is one of those IT initiatives that may not save money, but may keep the IT organization from losing money. If a server or storage platform goes down that houses a critical application the company can lose revenue quickly. Some companies may decide to reduce the number of times they test business continuity plans, which can save costs and downtime. However, IT organizations must keep in mind that they are incurring more risk by doing so. Old business continuity plans are likely to not incorporate a new business process and/or IT equipment necessary to support these processes. Caution: It’s easy to overspend (or not invest in the appropriate places) on business continuity. Business impact analysis is required to determine the right place to spend money…and it will help you know your business better.
· Co-location and hosting: Like Business continuity, co-location and hosting facilities may not save money as much as they keep IT organizations from spending money. It is far better to spend a few thousand dollars on a hosting or co-location facility than spending tens of millions on a new data center. Caution: Service level agreements must be carefully reviewed for business continuity requirements. When the inevitable downtime happens, abatement and compensation should be spelled out in the SLA.
Things that won’t fly with the CIO
· Enterprise Management – Even though management might save IT operational expenses, the flip side is you can always manage using the existing set of consoles. It’s a shame, because there's the potential for real cost savings, but these savings are hard to quantify and take much longer to realize…especially when the same functionality can be achieved using the device specific tools. In times like these CIOs will ask, "Can we achieve the same result using the existing tools?"
· Operating System Upgrades (unless you need some new functionality for a critical business function) – A tight cash-flow situation is not the time to start an operating system upgrade, unless absolutely necessary (functionality required or maintenance is costing more than the upgrade). If the OS works, and meets application needs, leave it alone until a better time. However, if the operating system vendor or hardware vendor won’t support the operating system, the cost to stay with an older OS deteriorates over time. It’s more of a stretching exercise…stretching the OS and HW resources until the cost for support and maintenance doesn’t make sense any longer.
Regarding servers, storage, networking and capital expenses – This one can go both ways. Obviously, if a server or storage is on its last legs, don’t scrimp just to save a buck. If business depends on it, buy the new equipment. But realize that CIOs will scrutinize every dollar spent on capital expenditures. Also, buying more efficient or virtualization HW is a good move, but the best way to justify these expenses are to tie them to a cost saving initiative.
Obviously your mileage will vary with these initiatives, but the key is to focus on business value.
[posted by: Drue Reeves]