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IT Cost-Cutting: Consider Virtualization, Look to the Cloud, Check Out Open Source

IT Cost-Cutting: Consider Virtualization, Look to the Cloud, Check Out Open Source

Many enterprises are looking to cut costs in all departments, and IT is no exception. E-Commerce Times contributor Dana Gardner, principal analyst of Interarbor Solutions, brought together a group of analysts to offer a few tips on how IT can contribute.

By Dana Gardner E-Commerce Times ECT News Network
03/30/09 4:00 AM PT

Doing more for less in IT? Sure, easier said than done. But who said it couldn't be done?

We took the question of how to cut information technology costs in the downturn to five analysts and consultants, who can both say and do. The result is the latest BriefingsDirect Analyst Insights Edition, Vol. 38, a periodic discussion and dissection of IT infrastructure related news and events.

In this episode, our analyst guests make their top five recommendations for cutting enterprise IT costs amid the economic downturn. How does IT adapt and adjust to the downturn? Is IT to play a defensive role in helping to slash costs and reduce its own financial burden on the enterprise?

Other Roles

Or, does IT help most on the offensive, in transforming businesses, or playing a larger role in support of business goals, with the larger IT budget and responsibility to go along with that? Can IT lead the way on how companies remake themselves and reinvent themselves during and after such an economic tumult?

Or is IT good both for economic offense and defense, and therefore the indispensable business function?

We ask our panel to list the top five ways that IT can help reduce costs, while retaining full business -- or perhaps even additional business -- functionality.

Please join noted IT industry analysts and experts Joe McKendrick, independent IT analyst and prolific blogger; Brad Shimmin, principal analyst at Current Analysis; JP Morgenthal, independent analyst and IT consultant, and Dave Kelly, founder and president of Upside Research. Our discussion is hosted and moderated by me, BriefingDirect's Dana Gardner. I also offer my 5 cents on the topic.


Listen to the podcast (51:35 minutes).

So here are the lists:

McKendrick's Top Five Recommendations

  1. SOA remains viable: Service oriented architecture (SOA) is alive, well and thriving. SOA solutions promote reuse and developer productivity. SOA also provides a way to avoid major upgrades, or helps with additional major initiatives in enterprise systems such as enterprise resource planning (ERP).
  2. Virtualize all you can: Virtualization offers a method of application and infrastructure consolidation. You can take all those large server rooms -- and some companies have thousands of servers -- and consolidate into more centralized data centers. Virtualization paves the path to that.
  3. Cloud computing: Cloud offers a way to tap into new sources of IT processing, applications, and IT data. Cloud allows IT to pay for such new capabilities incrementally, rather than having to make large capital investments.
  4. Open source software: Look to open source solutions. There are open source solutions all the way up the IT stack, from the operating system to middleware to applications. Open source provides a way to, if not replace your more commercial proprietary systems, then at least to implement new initiatives and move to new initiatives that fly under the budget radar. You don't need budget approval to establish or begin new initiatives using OSS.
  5. Enterprise 2.0: These tools and methods offer an incredible way to collaborate and to tap into the intellectual capital throughout your organization. Enterprise 2.0 offers a way to bring a lot of thinking and a lot of brainpower together to tackle problems.

Shimmin's Top Five Recommendations

  1. User-generated IT: Give your users a really wide "pasture." There's an old saying that if you want to mend fewer fences, have a bigger field for your cattle. You can see that in IT with some experiments with BYOC (Bring Your Own Computer) -- programs that folks like Citrix and Microsoft have been engaging in. IT no longer manages the device, just the virtual image that resides on servers and "visits" the client machine. Mobile devices are also ... extending desktops and laptops. You need to have some faith in your users to manage their own environments and to take care of their own equipment, something they're more likely to do when it's their own property, and not the company's.
  2. Don't build large software, buy small software: SOA is well-entrenched within enterprise IT, or in clouds. You can buy either software as a service (SaaS) or on-premise software that is open enough that it connects with and works with other software packages. No longer do you need to build an entire monolithic application from the ground-up. An example is PayPal. This is a service, but there are on-premises renditions of this kind of idea that allow you to basically build up a monolithic application without having to build the whole thing yourself. Using pre-built packages, smaller packages that are point solutions like PayPal, which lets you take advantage of their economies of scale, and lets you tread upon the credibility that they've developed, something that's especially good for consumer-facing applications.
  3. Build inside but host outside: You shouldn't be afraid to build your own software, but you should be looking to host that software elsewhere. Enterprises, enterprise IT vendors and independent software vendors (ISVs) ... are leaping toward putting their software platforms on top of third-party cloud providers like Amazon EC2. That is the biggest game-changer in everything we've been talking about here. There's a vendor ... and they've been moving toward shutting down the data centers and moving to Amazon's EC2 environment. They went from multi-multi thousand dollar bills every month to literally ... a couple of hundred bucks a month. It was a staggering savings they saw ... because the economies are scaled through that shared environment.
  4. Kill your email: Email has seen its day, and it really needs to go away. For every gigabyte you store, I think it's almost $500 per user per year, which is a lot of money. If you're able to, cut that back by encouraging people to use alternatives to email, such as social networking tools. We're talking about IM, chat, project group-sharing spaces, using tools like Yammer inside the enterprise; SharePoint obviously, Clearspace and Google applications. That stuff cuts down on email. ... Look at software or services like Microsoft Business Productivity Online Suite (BPOS). You can get Exchange Online now for something like $5 per user per month. That's pretty affordable. So, if you're going to use email, that's the way to go.
  5. Turn off the printers: By employing software like wikis, blogs and online collaboration tools from companies like Google and Zoho, you can get away from the notion of having to print everything. As we know, a typical organization kills 143 trees a year -- I think was the number I heard, which is a staggering amount of waste. There's a lot of cost to that.

    5.5. Walk away from Microsoft Office: It's the big, fat cow that needs to be sacrificed. Paying $500-$800 a year per user for that stuff is quite a bit. The hardware cost is staggering as well, especially if you are upgrading everyone to Vista. If you leave everyone on Windows XP and adopt open source solutions like OpenOffice and StarOffice, that will go a long, long way toward saving money. Why I'm down on printing is that the time has gone when we had to have really professional, beautiful-looking documents that required a tremendous amount of formatting. Everything needed to be perfect within Microsoft Word, for example. What now counts is the information. It's same for 4,000-odd features in Excel. I'm not sure if any of us here have ever even explored a tenth of those [features].

Morgenthal's Top Five Recommendations

  1. Vendor management: Companies mismanage their vendor relationships. There is a lot of money in there, especially on the IT side -- for telecom, software, and hardware. Get control over your vendor relationships. Stop letting these vendors run around, convincing end-users throughout your business that they should move in a particular direction or use a particular product. Force them to go through a set of gatekeepers, and manage the access and the information they're bringing into the business. Make sure that [buying decisions] goes through an enterprise IT architecture group.
  2. Outsourcing: With regard to outsourcing noncritical functions, I'll give you a great example where we combined an outsourced noncritical function with vendor management in a telecom company. Many companies have negotiated and managed their own Internet and telco communications facilities and capability. Today, there are so many more options for that. It's a very complex area to navigate, and you should either hire an expert consultant ... to help you negotiate. Or you should ... take on as much bandwidth as you need on average, and when you need excess bandwidth ... go to the cloud for that additional bandwidth.
  3. Utilization analysis: Many organizations don't have a good grasp on how much of their CPU, network and bandwidth is actually utilized. There's a lot of open capacity in that [poor] utilization, and it allows for compression. In compressing that utilization, you get back some overhead associated with that. That's a direct cost savings.
  4. Data quality: I've been trying to tell corporations for years that this is coming. When things are good, they've been able to push off the poor data quality issue, because they can rectify the situation by throwing bodies at it. But now they can't afford those bodies anymore. So now they have bad data, and they don't have the bodies to fix up the data on the front end. ... Invest the money, set it aside, get the data quality up and operate more effectively without requiring extra labor on the front end to clean up the data.
  5. Desktop alternatives: It's a great time to explore desktop alternatives, because Windows and the desktop has been a de-facto standard. It's a great way to go -- when things are good. When you're trying to cut another half million, million, or two million dollars out of your budget, all those licenses, all that desktop support, start to add up. They're small nickels and dimes that add up. By looking at desktop alternatives, you may be able to find some solutions. A significant part of your workforce doesn't need all that capability and power [on the desktop]. You can then look for different solutions, like lightweight Linux or Ubuntu-type environments that provide just Web browsing and email, and maybe OpenOffice for some lightweight word processing. For a portion of your user base, it's all they need.

Kelly's Top Five Recommendations

  1. Optimize, optimize, optimize: All organizations, both on the business side and the IT side, are going to be doing more with less. ... That makes a great opportunity to step back and look at specific systems and business processes. At the high level, go through business process management (BPM)-type optimization and look at the business processes. Also look at things like data center optimization ... save money and defer capital investment. Increase utilization of storage systems. ... You have all this redundant data out there. There are products from Symantec and other vendors that allow you to "de-duplicate" email systems and existing data. There are ways to reduce your backup footprint. Do single-instance archiving and data compression. ... Just look at existing processes and say, "How can I do individual components more efficiently." Look at specific automated tasks and see how you can do more with less in those tasks.
  2. Don't forget the people: The most effective way to have an efficient IT organization is to have effective people in that IT organization. As an IT manager, one thing you need to do is make sure that your people are empowered to feel good about where they're at. They should not hunker down and go into a siege mentality during these difficult times, even if the budgets are getting cut and there's less opportunity for new systems or technology. They need to redirect that stress to discover how the IT organization can benefit the business. You want to help motivate people through the crisis and work on a roadmap for better days ... . Provide a positive direction to use their energy and resources.
  3. Re-evaluate commercial software use: You may have investments in Oracle, IBM, or other platforms, and there may be opportunities to use "free" products that are bundled in those platforms that you may not be using. Oracle, for example, bundles Application Express, a rapid application development (RAD) tool, as part of the database. I know of organizations that are using it to develop new applications. Instead of hiring consultants or staffing up, they're using existing people to use this free RAD tool to develop departmental applications or enterprise applications.
  4. Go green: Now is a great time to look at energy sustainability programs and try to analyze them in the context of your IT organization. Going green not only helps the environment, but it has a big impact, as you're looking at power usage in your data center with cooling and air conditioning cost. You can save money right there in the IT budget and other budgets by going to virtualization and consolidating servers. Cutting any of those costs can also prevent future investment capital expenditures, too. Look at how you're utilizing the different resources and how you can potentially cut your server and energy costs.
  5. Go to lunch: It's good to escape stressful environments ... IT can take the business stakeholders out to lunch, and take a step back and reevaluate priorities. Clear the decks and re-align priorities to the new economic landscape. This may be a time to re-evaluate the priorities of IT projects, re-examine those projects, and determine which ones are most critical. You may be able to prioritize projects anew, slow some down, delay deployments or reduce service levels. The end effect here allows you to focus on the most business-critical operations, applications and services.

Gardner's Top Five Recommendations

  1. Harsh triage: Go in and kill the waste by selectively dumping the old that doesn't work. IT needs to identify the applications that aren't in vigorous use, or aren't adding value. They should either kill them outright or modernize them.

    Extract the business logic and use it in a process, but no longer at the cost of supporting the entire stack or server below each application. IT needs to identify the energy hogs and the maintenance black holes. Outdated hardware robs from the future in order to pay for a diminishing return on the past.

    Look for the low-lying fruit and the obvious wasteful expenditures and practices. Reduce the number of development environments. Look at something like Eclipse, Microsoft, or OSGi and work toward more standardization around a handful of major development environments. Replace costly IT with outside services and alternatives for your email, calendar, word processing, and baseline productivity applications. Put an emphasis on self-help.

    Empower the users. That means more use of SaaS and on-demand applications. It's really about acting like a startup. You want to have low capital expenditures. You want to have low recurring costs. You want to be flexible.

  2. Build a cloud computing skunkworks: Create a parallel IT function that leverages cloud attributes. Focus on the value of virtualization. That means looking to standardized hardware on-premises, and using grid, cloud, and modernized and consolidated data center utility best practices. More use of appliances, too, and looking at open source software anew makes sense. This is another way of saying do SOA using cloud and compute fabric alternatives. Also look at outside offerings for where other people have created cloud environments that are very efficient for baseline functions that don't differentiate,and for new greenfield applications.
  3. Reduce client costs: It's time to simplify and mobilize the client tier. You can use mobile devices, netbooks, and smartphones to do more activities, to connect to back-end data and application sets and Web applications. It's time to stop spending money on the fat client. Spend it more on the lean server, and get a higher return on that investment. That includes the use of virtual desktop infrastructure (VDI) and desktop-as-a-service (DaaS) types of activities. It means exploring Linux as an operating environment on the desktop, where that makes sense.

    Look at what the end users are actually doing with these clients. Find workers that can exist using only browsers, and give them either low-cost hardware or deliver that browser as a virtualized application through VDI on a thin client. Centralize more IT support, security, and governance at the data center. Reduce the number of data centers. Use acceleration, remote branch technologies, and virtual private networks (VPNs) to deliver Web applications and VDI clients across wide area networks. Act like a modern startup ... build the company based on what your needs are now, not on what IT was doing 15 years ago.

  4. BI everywhere: Mine the value of all the data you can. This includes business intelligence (BI) internal to IT, such as server and network equipment log files. Know what the world is doing around you, and what your supply chain is up to, too. It's time to join more types of data into your BI activities, not just your internal relational data. You might be able to actually rent data from a supplier, a partner or a third-party. Bring that third-party data in, do a join, do your analysis, and then walk away. Then, maybe do it again in six months.

    It's time to think about BI as leveraging IT to gain the analysis and insights, but looking in all directions -- internal, external, and within IT. Also use BI across extended enterprise processes. It's also good to start considering tapping social networks for their data, user graph data, and consumer preferences metadata, and using that as well for analysis as well. There are more and more people putting more and more information about themselves, their activities, and their preferences into these social networks.

  5. Elevate IT to the board level: The IT executive should be at the highest level of the business decisions in terms of direction, strategy and execution. The best way for IT to help companies is to know what those companies are facing strategically as soon as they're facing it, and to bring IT-based solutions knowledge to the rest of the board ASAP. IT can be used much more strategically at the board level. That way IT can be used for transformation and problem-solving at the innovation and business-strategy levels, not as an afterthought, not just as a means to an end -- but actually factoring what the end can be and what can be accomplished. That is, again, acting more like a startup. If you talk to any startup company, they see IT as an important aspect of how they are going to create original new value, of how to get to market cheaply, and how to behave as an agile entity on an ongoing and continuous basis.


Dana Gardner is president and principal analyst at Interarbor Solutions, which tracks trends, delivers forecasts and interprets the competitive landscape of enterprise applications and software infrastructure markets for clients. He also produces BriefingsDirect sponsored podcasts.


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