IT Cost Optimization is an emerging discipline that ensures innovation and support for merger and acquisition (M&A) events are not compromised by the continual downward pressure on it budgets. IT departments that implement effective IT Cost Optimization are able to easily maintain total cost transparency in terms that can readily be understood by line-of-business executives. This cost transparency enables those same executives to participate in efforts to reduce IT costs by optimizing configurations, thereby freeing resources for innovation and M&A support.
An IT Cost Optimization definition would be incomplete without a discussion of several constituent elements that come together to provide the visibility and collaboration necessary to sustain innovation investment based on IT.
IT Cost Transparency
At the heart of any cost optimization project is the precise understanding of the existing cost baseline, something like an “IT Bill of Materials”. The consumerization of IT has led to heightened expectations regarding IT cost transparency, as costs for increasingly powerful mobile-based applications and hardware are easy for non-technical people to understand. This level of transparency is now the new normal.
IT Cost Elasticity
One of the biggest challenges to ensuring IT cost transparency is to identify the units by which charges occur. Unlike mobile devices, which are simple to understand, when datacenter costs are under the microscope the charging models are almost unintelligible. Distilling elastic cost metrics such as Service Units, Clustered Cores, Transactions, and similar metrics into terms upon which non-technical management can make quality decisions is a fundamental part of establishing cost transparency.
IT Asset Baseline
Even in a modestly sized organization the number of IT assets that are chargeable would defeat any manual attempt to discover and categorize them. However, no form of cost optimization can occur without an understanding of what IT assets are in place, their configuration, and how they are used. For maximum transparency the scope of this information must encompass workstations, mobile devices, servers, networking, storage and software. Importantly the information must also define the interplay between these elements in order to support the next item; business system correlation.
Business System Correlation
Transparency is about more than just being open. It is about being able to express facts in ways the recipient can understand and use. Making IT costs transparent is a perfect example of this. Line of business executives fully understand their business systems and the value they bring to the organization, therefore truly transparent IT costs must be defined in such terms. This includes grouping the various technical components together that make up a business system.
Once a solid IT cost baseline is established, one that is is fully understood by all interested parties, the move to optimization can occur. IT cost optimization is fundamentally about maintaining the “lights on” operational service (sometimes referred to as MOOSE—Maintenance of Organizations, Operations, Systems and Equipment) at a lower price point, thereby freeing budget to support innovation and M&A expenses.
It’s just not enough to understand the baseline configuration of the IT estate. It is equally important to be sensitive to the relationship between configuration and the deployment of software. For example, the movement of a database onto a server that is part of a cluster may well increase costs by an order of magnitude. Understanding the interplay of licensing, virtualization and clustering is essential if “lights on” IT costs are to be driven down.
The final piece of the puzzle is in understanding the extent to which the chargeable IT assets are used. It is not uncommon for larger organizations to have numerous servers, holding expensive licenses, supporting non-existent workloads. Being able to identify by whom and how each of the components of business system are used is essential if a more optimized implementation is to be designed.
Decision Enablement and Modeling
When configuration and usage of existing systems are understood, it becomes possible to model new configurations to assess the potential impact on future expenditure. For example, knowing that a particular dedicated database service is used rarely would enable an informed decision to move it onto a shared machines instance, thereby freeing up the originating machine–but the target implementation would need an optimized license configuration in order to avoid triggering unexpected license charges. Decisions concerning these permutations can be managed in an automated fashion using IT cost optimization modeling tools.
Technology can play a critical role in securing long term competitive advantage and improving customer service. Innovation driven by IT is an imperative for competitive success, but too often the investment in innovation is sacrificed to “lights on” expenditures. The significant savings offered by precision IT cost optimization can fund the innovation organizations need.