10 key actions to reduce IT Infrastructure and operations costs
IT infrastructure and operations costs represent 60 percent of total IT spending worldwide. Here are 10 key actions that can help you bring down the expenses by 10 percent in a year
During the recession, many major IT infrastructure and operations (I&O) upgrade projects were deferred, slowed or cancelled. Many IT organizations believe these projects need to be resurrected soon, whether to meet business needs or to ensure that I&O does not create serious downtime situations. But although growth in the demands placed on I&O organizations has nearly returned to pre-recession levels, I&O budgets have not, and nor are they expected to anytime soon. With I&O representing about 60 percent of total IT spending worldwide, and IT budgets remaining tight, it is no wonder that pressure to cut I&O costs remains intense.
When it comes to reducing I&O costs, there is no single area where businesses should focus their efforts. The best results can be achieved by performing, as fully as possible, by 10 key actions recommended below. We predict that, by 2014, organizations that perform these actions fully will be able to reduce their I&O expenses by 10 percent in 12 months, and by as much as 25 percent in three years.
Defer Non-Critical Key Initiatives
I&O leaders need to re- examine their key initiatives to determine which ones to focus on as short-term priorities. There are three major questions to ask: Does the I&O key initiative strongly support a highpriority business initiative that needs to be completed in the short term? Does the I&O key initiative lower the I&O cost structure in the time frame required? Does the I&O key initiative lower risk by upgrading I&O to prevent major outages or severe performance deterioration?
Review Networking Costs
When it comes to I&O spending, the data center and the network claim the lion’s share. As nearly half the network expenses go to telecom service providers, network managers must renegotiate contracts with these providers to ensure their contracted rates are market-based. Substantial steps can also be taken to optimize network costs by refining the design and sourcing of networks.
Consolidate I&O I&O consolidation is closely related to standardization, integration and virtualization. In the past, the rise of distributed computing and other trends drove the decline of large data-processing sites. Now, however, data center are growing in importance, and we expect this trend to continue throughout this decade as server rationalization, hardware growth and cost containment drive the consolidation of enterprise data-processing sites into larger data centers.
Virtualize I&O Servers run at a very low average utilization levels (less than 15 percent). Virtualization software increases utilization, typically by four times or more, which means that, for any given workload that can be virtualized, a company can typically reduce its number of physical servers four-fold. Conservatively, this means hardware and energy costs can each be more than halved. As with consolidation, virtualization can be applied to many I&O platforms: Unix
servers, storage, networking and client computing.
Reduce Power and Cooling Needs
In the past, newly built data centres contained huge areas of pristine white floor space, consumed large amounts of power, and had uninterruptible power supplies and water- and air- coolant systems. Given the cost of mechanical and electrical equipment, as well as the price of electricity, this type of design no longer works. Fortunately, new approaches to design mean that new data centres can now use significantly less space and power and cost much less.
Contain Storage Growth
Computing, networking and storage capacities are growing at double- digit rates annually, with storage capacity growing by far the fastest. Gartner predicts that by 2016, organizations will install 850 percent more terabytes than they had installed in 2011. But throwing terabytes at the problem is no longer a viable solution. With capacity growth far outstripping cost declines, tighter control is required. Multiple approaches need to be taken, including the use of storage virtualization, automated tiering and storage resource management tools.
Push Down IT Support
IT support for end users and the organization typically accounts for about 8 percent of IT spending, and most I&O organizations have at least four tiers of support, each with a different cost point and level of expertise. To reduce costs, organizations need to drive support calls down to the lowest tier that can satisfactorily resolve users’ issues. Streamline IT Operations
I&O accounts for approximately 50 percent of the total enterprise IT head count, and most I&O staff are involved in operational processes of a day-to- day and tactical nature. To contain head count and associated costs, these processes need to be streamlined and made as efficient as possible. This typically entails implementing ITIL, the de facto standard framework for IT operations. The principal goal of ITIL is to improve service management and quality, but it has also been known to reduce operating expenses.
Enhance IT Asset Management
By itself, IT asset management (ITAM) does not reduce I&O costs. However, it is a very effective tool for identifying and assessing cost reduction opportunities. ITAM can help determine the life of certain assets, defer upgrades, and eliminate or combine software licenses, as well as replace certain maintenance service contracts with a time-and-materials approach. IT asset repositories are generally the most effective tools to help in this endeavor. These tools can maintain dates, manage changes to assets, and send reminder e-mails to ensure the life cycle process is managed proactively.
Sourcing is perhaps the most strategic decision I&O leaders are facing today. The decision is not as simple as whether to outsource or insource all I&O. IT leaders can make separate sourcing decisions for virtually any I&O component, system or function. The key decision criteria are those controlling aspects of strategic and critical importance to the business, playing to the strengths of available staff, defining clear lines of demarcation, keeping the number of vendors to a small, manageable number, and determining what makes solid financial sense.
Virtualization software increases utilization by four times or more, which means that, for any given workload that can be virtualized, a company can typically reduce its number of physical servers four-fold. This means hardware and energy costs can each be more than halved