Five Steps to Greatly Reduce IT Costs

Even the most traditionally well-funded clients we have are now revisiting their IT budgets. As you may expect, they are undergoing the very difficult process of having to enforce a series of unprecedented budget cuts, which amount to cutting much deeper than ever before.  To a large degree, a company’s IT infrastructure deserves to be in the spotlight. Unless the facility is a manufacturing plant, data centers typically consume  the most power and normally require an extensive amount of cooling.

The 5 steps listed below provide a roadmap that will help decision makers, functional managers, or support personnel to reduce overall IT costs.

1.       Determine data center power costs.  This may require some organizational changes, but as an IT manager, you have to be equipped with all the facts in order to make informed decisions. A recent Microsoft study discovered that 85% of IT managers have no idea of what it is actually costing the organization to power the data center.  As I perform presentations and talk with clients, that percentage appears to be pretty accurate, and it may even be a bit higher in larger organizations with traditional management. You may even have to add some sub metering in your data center to determine the power costs, but it is a fundamental component of valuable information that you really need in order to make an informed management decision regarding your IT infrastructure.

2.       Perform an inventory to analyze your current data center IT equipment to determine an actual set point temperature that that will allow the data center  to properly function. For example, at New Age Technologies, we performed an equipment study and determined we could easily raise our data center set point temperature to 78 degrees – a full 10 degrees from a frosty 68. According to the McKinsey Report, a recent study on data center power usage, you can save 4% for every degree the temperature is raised in the datacenter. For us, we expect to see somewhere near a 40% savings.

3.       Make educated assumptions if real measurements aren’t readily available. They will give you a good indication of how much you can save. The distributed computing model that was established as the standard for the last few years created incredibly inefficient IT enterprises that are costly to support and to manage. Because we specialize in services that focus on efficiency, and on aligning business needs with IT requirements, we unfortunately see many organizations actually throw money away virtually every minute of every day (just think about how much waste occurs in a 24 hour period of time). However, since most organizations don’t have a clue about what the actual power costs their data centers actually require, we have to prepare cost models using standard assumptions, just to achieve a feasible ball park baseline for discussion.

4.       If you don’t have a significant virtualization implementation already underway, you are simply wasting money. However, there is an upside, because if you approach a virtualization project  using the steps I’ve laid out here, you can earmark the savings virtualization achieves to deliver funding for your virtualization projects. At the core, properly designed virtualization projects can attain substantial savings.  In fact, and depending on the organizational situation,  it is possible for savings up to 80% in power and cooling to be achieved in the data center.

5.       Organizational silos contributed to this difficult situation, and they may be the largest obstacle to overcome with  business managers. You simply have to be armed with available facts and figures, and a detailed roadmap to support the idea of redirecting  funds that an organization will spend on power and cooling anyway in order to  systematically boot strap your new virtualization projects and methodology. As a consultant, I advise that you do not to try this on your own. The worst thing you can do is to attempt to sell this internally, without all the detailed facts.  Additionally, such an innovative approach can be tough for an IT person to sell to the business. It is easier to break through the silos with an outside consultant who can articulate   a logical and deep understanding of the virtualization benefits to both IT and  business organizations.

One sustained trend I believe will be around for awhile is cost cutting, and businesses will put even more pressure on IT to reduce overall costs. At this point, the steps outlined above may provide a new approach to solving the cost cutting problem.  But going forward, both business and IT departments will have to successfully align to address the economic pressures that will probably continue to increase, or until IT is effectively  positioned as a business asset, instead of a perceived liability.

Thanks to  Jon.Ward@newat.com for your input.