DEALING WITH UNCERTAINTY – IT COST OPTIMIZATION STRATEGIES | BLOG 3

In the near future, when the current health crisis subsides, all businesses will get back to business.  For many industries, it will be time to sort through a level of uncertainty.  Many companies will be developing plans to reduce IT Operating Costs to cope with the uncertainty. The Solutions II Adaptable Data Center® approach to IT Cost Optimization is based upon IT Leaders developing a detailed understanding of three business dynamics that will govern their decisions:

  • Current Challenges
  • Strategic Guidelines
  • Desired Business Outcomes

There are two broad approaches to IT Cost Optimization.  One approach is to focus on actions that will yield short term cost reduction/optimization.  That approach, which is important, should be combined with an additional approach of focusing on actions that will yield medium term and longer-term cost reduction/optimization.

In our previous two blogs, we have focused on eight focus areas that can yield near term and medium-term real cost reductions in an IT Cost Optimization Effort. The first blog discussed three strategies to reduce costs in the near term:

  • Cut Software Licensing Costs
  • Optimize/Reduce Maintenance Costs
  • Implement Revised Resource and Skills Allocation

The second blog discussed five strategies that can reduce costs in a longer-term horizon:

  • Automate Processes and Automate IT Service Management and Security Response
  • Reduce Technical Debt
  • Optimize Service Delivery Model
  • Reduce Security Complexity
  • Do Things Right the First Time

In this blog, the final part of the three-part blog series on IT Cost Optimization Strategies, we offer two medium-to-longer term focus areas along with a little guidance on how to frame the IT Cost Optimization Effort:

  1. Virtualize Data to Realize Cost Savings
    Data virtualization reduces the complexity of traditional data management systems to provide a unified virtual layer of data from disparate sources and presents it to users as if from a single source. Rather than needing access to separate servers and different applications that store data, all data is readily accessible to end users.  It is infrastructure-agnostic that eases integration with existing systems which lowers operational costs.  Data Virtualization can help drive application licensing and storage costs by effectively reducing and simplifying the numbers of copies of data across your enterprise infrastructure.
  1. Reduce Storage Complexity
    Many IT organizations source storage through a single vendor to increase convenience and Procurement.  That approach has its benefits, but it can come at a price premium.  Other IT organizations source multiple vendors that can reduce acquisition and maintenance costs but can increase complexity and internal labor requirements.  In today’s world nearly all IT organizations also are including Cloud Data Storage as part of their overall enterprise data strategy.  Many enterprise workloads are not cost-effective to run in the cloud and in many cases, it creates yet another data silo that cannot be serviced effectively by the ‘Enterprise Data Fabric’ (which includes storage management, data protection, backup/recovery, data security, etc.).  In today’s world, the careful storage selections of the past have built a complex collection of data to be managed.

Eliminating that complexity is a great focus area for IT Leaders to drive down costs and significantly increase efficiencies and improve outcomes.

COST OPTIMIZATION PROGRAM FRAMEWORK

Enterprise Information Technology has changed dramatically since our last economic downturn in 2008.  Most IT Organizations were largely managing transactional systems of record with some data analytics and, as a result, were seen as a prime cost reduction target.  In today’s world, the IT Organization in many enterprises is the key enabler for desired business outcomes.  Simply look at the “Work From Home” model of today that did not exist at this size and scale two months ago – and our business world would look very different today if Enterprise IT was not able to pivot quickly to this new model.

Take advantage of the recent key successes of your IT Organization and make sure that your colleagues, the Executives across the company, and even the Board truly recognize the vital importance of IT and the risk of cutting costs too substantially.  IT enables the business to operate in today’s modified business climate and IT will be the key enabler of future business capabilities and models that will allow businesses to excel in the future.

Beyond being the “Chief Marketing Officer for IT”, be sure to benchmark current service levels.  Whatever IT does that is important to your business (Uptime and Availability, Response Time, eCommerce User Experience, Service Desk Response, etc.) – measure and record current service levels.  Any cost reduction decision you make could degrade those service levels in the future and you should (a) use that as a business guide for planned cost reductions and (b) be able to compare future performance to past performance.

If you have any comments or suggestions, feel free to let us know at info@Solutions-ii.com.

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