Although IT budgets may grow somewhat in 2006, the search for savings will undoubtedly continue. From a hardware perspective, what choices do you think could deliver the best place to look for savings? Leasing? New technology? New purchasing options? Outsourcing equipment with the people?
QUESTION POSED ON: 03 JAN 2006
QUESTION ANSWERED BY: David Foote
The quick answer to where to look for savings in IT budgets quickly comes down to the largest line item, salaries. If you can do as much, or more, with fewer people or cheaper labor, you will save. Arbitraging labor via offshoring to reduce labor costs has its advantages in the short-term, but for long-term opportunities for companies to save costs, the argument is in favor of automation. For data centers, that means a 7-by-24, lights-out environment that is monitored, run and controlled remotely. With server consolidation and virtualization, you can increase the ratio of technicians-to-servers to one for every 200 servers instead of every 20 servers. A recent survey of 400 companies worldwide found an average cost savings of 16% from server consolidation projects. Savings from consolidation projects can vary considerably, depending on the size of the company and the scope of the project. More than half of the savings realized by users that consolidate servers typically revolve around hardware, with smaller savings resulting from staff reductions or reassignments, decreases in facilities costs and software changes. Internal politics can be a major hurdle with consolidation projects, however.
Check out a series of columns in Computerworld entitled Ten Steps to Modifying User Behavior and Reducing IT Costs.
These pieces focus on several approaches to measuring, controlling and managing IT resources and investments, with the idea of empowering users to make the right decisions with information and choices and providing financial incentives and penalties that motivate changes in patterns of behavior. Among the steps are:
- Demand management through cost allocation
- Document workflow
- Measure usage
- Appropriately pricing services
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