Consolidation efforts are most effective when undertaken within an overall portfolio management discipline. Portfolio management tracks and assesses existing applications and the demand for new functions, with the goal of rationalizing the set of applications to remove redundancies and maximize value.

Manage Your Data

Most organizations are inundated with data, with more flooding in every day. This exacerbates an already difficult problem: how to manage data and extract meaningful information from it. Users typically find ways around this by generating extracts, massaging data in secondary tools, proliferating copies, and sometimes "correcting" the copy so it disagrees with the original. Ever-increasing regulatory pressures force retention for compliance purposes, so data deprecation becomes an important consideration that impacts storage requirements. Reducing the number of data sources and de-duplicating the data in those sources will lead to fewer errors, greater efficiency, and reduced maintenance costs. Organizations should take advantage of advances in database management systems (DBMSs), which provide extended capability for managing and securing data, data analysis, and reporting.

Business intelligence (BI) is used to analyze and report on multiple data sources (both data at rest and in motion) to enhance business processes and inspire changes to the organization's business model. Effective BI should keep the organization from missing opportunities for business innovation. In the heightened competitive pressure that accompanies a constricting economy, BI is a wise investment. Make sure you know what you desire to know, however; otherwise, what appears to be great data mining may tell you nothing at all.

Rent When It Makes Sense

Cost-sensitive organizations are taking a hard look at commodity—those functions and capabilities that add no competitive edge or value, but cost a lot to maintain—in their IT shops. Enter cloud computing and SaaS.

Cloud computing is best understood as "dumb" utility computing. That is, it provides compute power but without any business applications or processes provided by the hosting partner. SaaS, on the other hand, combines both external hosting with externally provided business processes and applications. Salesforce.com is perhaps one of the best-known SaaS applications, although many others provide a host of common enterprise functions.

The rationale behind cloud computing and SaaS is this: It is cheaper to rent capabilities from a provider rather than to build, staff, and operate those capabilities within the enterprise.

As tools to manage dynamic computing in virtual environments improve, Burton Group expects that more organizations will eventually take advantage of moving load around within and outside their data centers in response to transaction requirements. Today, only about 25 percent of enterprises use virtualization. The benefit of highly dynamic resource allocation is that the organization pays only for what it uses. The more automated this allocation, the more cost savings can be realized.