In our last episode we discussed the fact that it is very likely that either the IT department’s responsibilities grew and the budget stayed the same or the budget was reduced while the responsibilities stayed the same. This has been a way of life for IT for the last decade. This has caused IT departments to be increasingly creative in how costs can be lowered.
Over the years a number of different approaches have been deployed to reduce costs while maintaining previous levels of service or find ways to add new services while keeping overall costs in line with previous years.
If we look at the state of most organization’s IT department, just about every obvious type of cost reduction has already been taken. Here are a few of the steps most organizations have either considered or actually adopted.
Typical cost reduction approaches
Some or all research and development has been moved offshore to a lower cost geography. While this has reduced staff-related costs, it often increased communications cost and application lifecycle management complexity.
Helpdesk functions have also been moved offshore to a lower cost geography. As with R&D, this move has resulted in lower direct staff costs and higher communications costs. Another, somewhat similar approach, has been to hire a third party that specializes in helpdesk services. This move also has resulted in lower customer satisfaction ratings from staff and customers due to language and timing issues.
Systems, applications, database, network and storage management functions were another place organizations have sought lower staff costs by moving staff members to lower cost geographies. This is another area in which some organizations have sought outside help rather than simply moving staff functions to another country. As with the other approaches to staff cost reduction, the direct staff costs have been reduced, but other costs have increased. It is also true that IT issues may take longer to find, isolate and address if the problem is on one side of the planet and the staff are on the other side. This, by the way, is an area in which a set of tools, like that offered by Zenoss, could be very helpful.
Windows, Linux and UNIX workloads have been consolidated onto a fewer number of physical servers in the hopes of reducing hardware and hardware maintenance costs. Software licensing costs, on the other hand, may not have reduced much at all. In fact, this approach has forced organizations to invest in virtual machine software, virtual machine migration software, orchestration software for virtual environments and management software for virtual environments. Surveys show, however, that organizations have found this a useful approach if consolidation and optimization are goals.
In some cases, organizations have adopted lower-cost open source software for web-based applications, high performance or technical computing and productivity.
What else can be done to reduce costs?
Having gone through all of these exercises, some organizations are looking for other ways to reduce costs. Some organizations have started to outsource entire applications or workloads.
These companies start this journey by placing some workloads into a service provider’s data center. This has allowed organizations to sell real estate and re-deploy some management, operations and security staff members and still achieve the same goals.
Another common step is to replace private point-to-point or dial-in communication links with virtual private networks running over the public Internet.
Tip toeing into the cloud
After all of the different methods to outsource or replace functions, some applications have begun to carefully examine their application portfolio. Where possible and reasonable, some organizations are exploring the idea of replacing in-house applications, such as Email, calendar management, maintaining contact lists, task management, project management and document sharing with Software as a Service (SaaS) offerings.
Organizations are also exploring the idea of replacing R&D data centers with virtual data centers built upon Infrastructure as a Service (IaaS) offerings.
Business and mission critical workloads are not being moved into the clouds by large organizations. They are concerned about performance, regulatory compliance and security issues. Smaller organizations, on the other hand, have begun using IaaS as a replacement for their own data centers for some time.
We’ve not yet reached a time in which cloud computing can be considered a replacement for all data center functions. It simply can not be considered a panacea. It can, however, lower some costs, increase the organization’s agility and help IT be more cost-efficient if cloud computing is used wisely.
One of the key challenges organizations must overcome in their quest to use cloud computing is maintaining management control. IT must learn how to mange its infrastructure when some or all of the resources reside in other data centers.
The selection of the proper management tools can be a key decision in this transformation. Each IT function has a complete lifecycle. Tools that make it possible to observe the operational characteristics are needed regardless of whether they execute on-premise or off-premise on physical, virtual or cloud-based systems. IT systems that have been outsourced or moved into the clouds might come home to roost someday.
What’s clear is that it is time for organizations of all sizes to start considering cloud computing solutions.