KEEPING AHEAD OF THE GAME IT Spending Priorities in a Cost Cutting Era September 2010
Keeping Ahead of The Game IT Spending Priorities in a Cost Cutting Era
With the downturn in the economy IT
to demonstrate the real value of the service
projects have been shelved or put on hold,
they provide to the business.
with many capital-intensive projects being scaled back. Even maintaining budget levels can equate to a decrease when inflation is taken into account.
action for a number of days. This can lead to losses from multiple sources which may include:
Change from Previous Year
5.0% 4.1%
– Loss of brand reputation. – Lost employee productivity.
4.0%
– Delays in receiving payment leading to additional interest charges.
2.5%
– Delays in making payment leading to being put on “stop”.
2%
2005
2006
2007
2008
0.0%
0.0%
2009
2010
Source: Computer Economics, 2010
Can companies really afford to cut corners with IT? Should organisations be embracing new technologies or refraining from spending until budget constraints are lifted? This White Paper will highlight the top 5 strategies for IT infrastructure spending that
– Failure to meet contracted deadlines incurring penalties. – Customers seeking alternative suppliers for urgent orders. Data protection tools not only protect against loss of Intellectual Property, they keep the organisation safe in the knowledge that the information was encrypted. Preventing breaches of this type also help organisations avoid ICO penalties of up to £500,000.
organisations need to adopt if they are to reap
It is clear that business leaders increasingly need to be
the benefits of new technologies whilst maximising
given supporting information on how much productivity,
existing IT investment.
profit and compliance is positively affected by the
There is much to consider when assessing how to approach the ever moving challenges of IT and the infrastructure around it.
STRATEGY 1 – OBTAIN AND RETAIN BUDGETS Many enterprises are still operating within budgetary constraints and requests for funding for new IT initiatives are being challenged more often with existing budgets set to be cut for the foreseeable future. As a result CIOs or IT departments frequently need
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if the solution wasn’t in place. Consider security tools network could potentially leave the business out of
6%
0%
answered in simple terms of the cost to the business as an example. Malware entering an organisation’s
Median Annual Growth of IT Operational Budgets
4%
The question “Do we really need that?” needs to be
introduction, improvement or continuance of individual IT services rather than justifying their existence on the basis of functionality alone.
STRATEGY 2 – PARTNER CONSOLIDATION With various types of software and hardware required to run a business, organisations commonly work with multiple suppliers. However, savings of up to a third could be achieved by reducing the number of technology partners a business works with to provide its IT services. Although it
is rare to find a partner that can deliver
– Reduced project management costs – individual
every service from connectivity through to
suppliers to a contract will all want their own
IT services and all that sits in between, true
project manager assigned to the project – the fewer
partnerships with strategic suppliers do
suppliers the lower the project management costs.
provide real value in being able to:
– Fewer project meetings – with fewer suppliers to
– Understand what a business does.
deal with, brief, monitor and review, IT time is freed
– Comprehend what it needs to achieve.
up allowing greater coverage with fewer staff.
– Provide solutions that solve issues.
– Greater solution responsibility – using a single
– Enable the business to grow unhindered.
supplier removes any excuses around who is
– Allow the business to respond to change.
responsible for what and any associated costs and
There’s nothing worse than taking a solution that gives the business what it needs now only to find
time dealing with resolving issues arising.
flexibility to move with business requirements.
STRATEGY 3 – EMBRACE THE CLOUD
A technology solution partner can often provide more
With the reduction in headcount
objective recommendations, third party skills and
experienced by many IT departments it is
expertise to support an IT department which has been
worthwhile considering provision of IT by
forced to shrink its numbers during the recession.
way of a managed service or in the cloud.
in 2 years time that is doesn’t scale or provide the
This provides greater long term benefits on the investment you make and reduces the need to spend more money to correct a deficient solution. In the short term partner consolidation also offers the following possibilities for savings: – Volume discounts – partners are likely to reduce
Gartner has commented that “During the next 6 to 12 months, products delivered as SaaS and appliances will continue overtaking traditional software licensing as the preferred purchasing methods. Delivery as a suite in sub segments such as enterprise endpoint security, identity and access management (IAM),
their charges if offered the whole deal rather than
and Web security will be the most prevalent product
a smaller part of it.
delivery type.”
CIOs Want A Defined IT Cost Model 49%
Lack of an explicitly defined IT cost model
47%
Difficulty getting detail breakdown of IT costs Difficulty in mapping IT assets to IT services
46% 46%
Data is spread across multiple systems 39%
Gaining IT cost visibility takes too many man hours
38%
Prevalence of “shadow IT” projects Difficulty in collecting service usage/demand data
37%
Lack of well-defined list of IT services Data quality is poor
34% 30%
Source: IDG Research, Sept 2009
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Keeping Ahead of The Game IT Spending Priorities in a Cost Cutting Era
The appeal lies in the savings of both cost and IT
It is worth considering that a one year managed
time together with the comfort of having the solution
contract may be more expensive than providing the
managed by dedicated professionals. CIOs and
solution in-house whereas a 3 year contract may give
CFOs may especially like the certainty provided by
significant savings using cloud delivered solutions.
the fixed periodic cost of the service with low or even
Many are still reticent, but think back to the early
zero upfront costs.
2000’s when hosted email was still in its infancy and
Consider the small business with a small number of
often mistrusted. Now many people outsource their email malware scanning capabilities by default. It is
servers. Ensuring that someone is on site each day to
only a matter of time before organisations turn to other
swap out backup tapes even when the usual person
managed IT services, whether it is because there is no
is on annual leave, checking backups are working,
expertise in-house, for the appeal of better reporting
putting in the cleaning tape, ordering new tapes,
and delivery or even to match expense directly to cost
archiving periodic backups, performing complex
centre, site, department or even individual user.
restores, tracking tapes, taking them off site and remembering to encrypt the backup all take up time, add cost and mean even simple operations
STRATEGY 4 – VIRTUALISE
such as this can prevent the smaller organisation Maintaining Infrastructure
from concentrating on what they do as a business
Power & Cooling
and may not even result in a rigorous and valid
New Initiatives
backup routine. Hosted applications tend to be greatly simplified in their navigation and operation with more emphasis being put on reporting and instant access to real-time data, making them an ideal choice for the smaller
Current
Future
operation. The ability to add resource at a moment’s notice (add multiple additional mailboxes to a hosted
Our research has found that around
service for example) is proving more and more
80% of an IT department’s spend goes
attractive to larger organisations that need the ability
on maintaining what they have now
to expand services in a rapid manner with minimal
(keeping the lights on) with around 20%
effort and no large step costs.
being allocated to new initiatives. In these
It is often the cost of unforeseen upgrades to hardware, operating systems and software that can cripple an IT budget, whereas a financial commitment to a 3 year managed service is more transparent. This ensures businesses have instant access to leading edge technology which is automatically updated
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challenging times, IT departments may even have been told “There is no money to do anything new, just keep everything going”. This strait-jacket that prevents IT from being a true enabler for the business can be removed by releasing funds from constantly maintaining what you have and working
without the need for extra staff training or additional
smarter, allowing you to take those savings
investment. This removes the time to test and the risk
either as a reduction in cost or to fund new
of change and places them firmly with the provider.
initiatives that enable further reductions.
Many businesses still provide IT services using legacy methodologies such that each service runs on a stand-alone server and users are assigned an individual computer. These working practices come with high running and maintenance costs, not only in terms of money but in terms of time to correct and
Your Journey
Today Stand Alone Servers Users tied to a machine High Cost High Maintenance
1.
Server Virtualisation /Storage Virtualisation
2.
3.
Application Presentation Virtualisation Virtualisation /Desktop Deployment
4.
Virtualised Desktop
5.
Private Cloud
Low Security
maintain the environment. Virtualisation is changing this situation bringing organisations to a place where they can deploy new servers at the flick of a switch. Where, if a user has an issue with their machine IT
New Initiatives
can automatically rebuild it remotely with no need to visit the user. Where, if a user needs new software,
reduced costs for real time replication technologies
they can just request it and have it automatically
in a virtualised environment and it is easy to see how
installed on whatever machine they happen to be
server virtualisation is enabling more and more IT
on and enable them to do this not just from in
departments to meet their disaster recovery needs
the office but do it securely from anywhere in the
without the high cost of expensive equipment.
world so that weather, transport disputes or national security alerts are no longer a barrier to continued high performance.
The money released by this simple strategy provides real savings in terms of deployment, running and support costs. These can then be invested in further
CEOs and users want to improve their performance,
improvements and cost savings at the next stage
to meet targets and to drive the business forward.
(presentation virtualisation) and onwards through the
This requires that IT be highly available and if
process. This continues until you reach a point where
someone wants to connect to organisational resources
your server and desktop environments are easily
out of hours they expect that the systems will be up
managed with users able to self-service. The costs of
and available to them. CIOs want to do this whilst
IT provision become transparent and are therefore
maintaining security and CFOs want to do this whilst
easily attributable to internal departments, projects
reducing cost.
and initiatives.
The first point on the journey to IT Utopia is to
Many organisations start on the server virtualisation
consider the server estate and what could be saved in
journey in order to make reductions in hardware
reducing the number of servers required to deliver the
purchases but these savings can then be an enabler
same services. The majority of servers are idle most
to future or further improvements. Efficiencies in
of the time with an average CPU load of 12% or less.
IT cost and time can also come from virtualising
This can lead to a consolidation ratio of around 8:1
end user applications, the user environment, the
or better in terms of virtual devices to one physical
desktop and even your delivery systems as well as
device. Server virtualisation is also an easy first step
from increasing the amount of systems automation,
up to disaster recovery by using some of those now
reporting and self-service. As a general rule of thumb
redundant servers to provide application and server
the more that is virtualised the greater the benefits.
failover. Combine this with the ease of replication
The benefits need not be limited to saving IT time
of quiesced virtual machine images and vendors’
and cost. They also enable the business to be more
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Keeping Ahead of The Game IT Spending Priorities in a Cost Cutting Era
responsive to change while meeting user expectations
even greater amounts. For example, DDR3 SDRAM
to connect at any time, from almost anywhere, to
not only provides increased performance but also
be productive when they choose and when the
provides an opportunity to cut memory power. DDR3
business demands.
memory provides a reduction in power consumption
This journey can be taken step by step and in any order, against individual timescales depending on the funding available, the time the business wants to devote and the other competing projects in the workflow. The sooner the journey begins, the sooner the business can start saving and making
1.5 V supply voltage, compared to DDR2’s 1.8 V or DDR’s 2.5 V. This drop in memory supply voltage together with careful selection of other server components can produce overall savings of 38% or more in server power consumption.
that difference.
Remember:
STRATEGY 5 – GO GREEN
– Don’t add additional processors if they are not
As organisations have grown and deployed more and more infrastructure the cost of powering and cooling the server room
necessary. – Don’t add additional power supplies if the server is fully redundant.
has risen not only in line with additional
– Do use energy efficient processors.
equipment but with increasing fuel costs. In
– Do use DDR3 memory which has a lower power
addition to being a good corporate citizen, helping represent the organisation in a good light and meeting corporate objectives around carbon footprint reduction, Green IT can be a fabulous way of reducing spend in one area so that funds can be allocated to another. It may be that the budget for power for the building rests with the Facilities Manager but by demonstrating and detailing planned savings against power costs it is possible to have those savings diverted to the IT budget to drive further initiatives to reduce cost more and help deliver an increasingly agile and responsive IT service.
draw and superior performance. When choosing to upgrade or replace old UPS systems choose wisely. Old UPS equipment may be contributing as much as 20% to a server rooms power bill, particularly if the UPS is over 10 years old. Ask suppliers what temperature their equipment should run at. Accepted wisdom is that, for data centres, cooler is better. However, cooling your data centre too much represents a waste of energy and turning down the air conditioning can lead to huge savings. Many data centres are overcooled with ambient air temperatures as low as 18C° (65°F). Most IT equipment is capable of being
Many organisations realise the benefits of power
run in a warmer environment closer to 25C°
reduction through virtualisation of their server
(77°F) and specialised servers can run at far
infrastructure allowing them to not only reduce
higher temperatures.
prime power costs but also avoid the need to provision extra power phases to cope with growing demand. Good server design and correct choice of components can help reduce power draw by
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of 30% compared to DDR2 modules due to DDR3’s
For larger organisations, taking time to design the data centre for flow of warm air, introducing liquid cooling to the racks and utilising power managed
storage can all lead to even greater reductions in
Our bonus strategy is to ask your hardware,
running costs.
software and solution advisers to provide their sizing
Savings can extend beyond the server room. Use power management tools to power off PCs and laptops when not in use. Turning off machines from 8pm until 8am, say, can halve their power consumption at a stroke. Average energy savings for power managed user workstations range between £25 and £50 per machine per year. For a 1,000 user fleet that adds up to a considerable saving for a very small investment. Arrange for all equipment to have energy saving modes enabled and power them down when the office is closed. To put it in perspective a PC monitor left on overnight uses enough energy to laser print 800 pages and a photocopier left on overnight takes the same amount of power as printing 1,500 A4 copies. Green isn’t just about power in the data centre and on the desktops. Take the opportunity to recycle your
calculation for your solution and state clearly why they are recommending each part of the solution. – Does your domain controller for 200 users really need 4GB RAM? – Does the printer in a single user office really need to print 150 pages per minute? – Does your web server need redundant power supplies when the server itself is redundant by way of network load balancing? – Does your file server really need dual quad core processors? – What are the alternatives around licensing and is this the right licensing model for me? – Do I need the email archiving option for my backup solution “just in case”? Organisations that do not work closely with their partners (see strategy 2) may be surprised at the
old computers, memory chips, backup devices. Many
reductions that can be made by a close review of any
companies seek to purchase equipment as spares for
proposed solution and the opportunities to free up
legacy equipment which can create an additional
funding for other initiatives this year.
source of valuable funding.
BONUS STRATEGY – RIGHT SIZE THE SOLUTION
CONCLUSION Can companies really afford to cut corners with IT? The IT department is the home of evolution and change and helps organisations innovate and improve, to
There has been a trend in recent years
take advantage of opportunities as they arise and
to over-specify any solution to ensure it
service and supply their customers in a differentiated
will work. Many server rooms and data
way which delights them and retains their business.
centres are filled with x86 servers with
As people who welcome and facilitate change CIOs
dual processors, 4GB RAM and dual
and IT Managers will understand that it’s not a case
power supplies with software suppliers
of cutting corners in an attempt to stand still with the
recommending this configuration for their
service they provide. By ensuring their budget, seeking
solution as they know that the server will
sources of additional income and being careful and
have maximum resources.
innovative with the budget they do have then it is possible to keep ahead of the game.
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Offices in Birmingham, Cambridge, London and Stoke-on-Trent t: 0845 201 0026
www.redstonemanaged.co.uk 16.09.10