How to Reduce the Burden on Your IT Budget

Servers and storage services take up a “significant portion” of most IT department budgets, according to Info-Tech Research Group Inc.

The London-based firm released a report outlining specific techniques IT managers can use to reduce server and storage costs and improve performance of technologies already in place.

The report, “Reducing Cost-to-Serve: Server & Storage Services,” provides 18 recommendations organized according to short-, medium- and long-term goals.

Immediate tactics include wrapping up in-progress server consolidation projects, applying “quick-fixes” to cooling costs and extending the life of servers.

“For organizations that have not started to virtualize, do not replace old servers before their useful life is over. If network bandwidth or storage throughput is bottlenecked, but the CPU operates at less than 80 per cent utilization, then this server does not yet need to be replaced,” states the report.

Another short-term suggestion is “removing extended warranties and maintenance agreements on non-critical servers,” which can save C$700 (US$577) to $800 per server, according to Info-Tech.

Mid-term tactics focus on hardware purchases and vendor contracts.

Recommendations include purchasing equipment that is “good enough” for business needs and opting for refurbished hardware that can save “up to 80 per cent of the price of new gear.”

Other mid-term suggestions include redeploying mid-life servers, right-sizing IT equipment and using a storage area network.

“A SAN (storage area network) extends the useful life of servers as it allows for rapid migration of data and applications to new servers and reduces the risk of data loss from failed disk drives on aging servers. Use Host Bus Adapters (HBAs) to offload CPU file processing,” states the report.

Nine long-term tactics are also presented, but unlike the other techniques, they involve upfront costs. “These savings may be interpreted as cost avoidance rather than actual reduction,” Info-Tech points out.

The tactic most often overlooked by IT departments is purchasing refurbished equipment for servers, networks and workstations, said Jennifer Perrier-Knox, senior research analyst at Info-Tech.

According to a recent Info-Tech survey, 68 per cent of IT respondents have not considered refurbished gear as a cost-cutting opportunity.

“That was a surprise because there are excellent deals to be had from vendors who sell refurbished equipment. Some stuff hasn’t even come out of the box and these things are at a 50 per cent discount,” said Perrier-Knox.

Another technique enterprises tend to ignore is downsizing the application portfolio, she pointed out. Enterprises have so many applications and a lot are redundant and some aren’t used very often, she said.

“One of the most surprising results of the study was how little variation there was between different organizations in terms of the priorities of cost reduction,” said Perrier-Knox.

While enterprises with varying revenues, numbers of employees and size of IT departments typically apply different tactics to reduce costs, Info-Tech found very little variation based on size, she explained.

The most popular cost-reduction techniques tend to be those which IT can change “behind-the-scenes” without entering extensive negotiations with the business, while those requiring interaction with individuals outside of IT seemed to be less popular, she said.

“Areas that are not being explored very much carry what we would call a ‘high hassle factor,'” said Perrier-Knox.

According to the report, IT managers should avoid the following four mistakes: redeploying the wrong servers, deduping without testing, taking an ad-hoc approach to virtualization and harbouring false hopes for virtualization — such as expecting to save on licensing costs.

“One of the things that can happen in times of economic downturn, especially if there is a rush to make cost reduction changes, is mistakes can get made and the impact of the changes being made are sometimes unforeseen,” said Perrier-Knox.

Harbouring false hopes for virtualization is a definite concern, according to Dave Pearson, senior analyst, Storage, IDC Canada. “A lot of people hear virtualization and immediately think that’s a cost reduction technique.”

But in the short term, virtualization generally requires more resources in terms of people and dollars, he explained. “For the most part, virtualization is really more of a business process optimization technique right now than a cost-cutting technique,” he said.

Companies that are able to either retire or no longer replenish a lot of equipment because they are able to virtualize those servers can certainly see immediate cost savings, said Pearson.

“But for the most part, the difficulty in finding really great talent in virtualization as well as the learning curve that every corporation goes through getting into a new technology means they are not really saving a lot of money up front,” he said.

According to the report, the deciding factor for virtualization is the number of physical servers supported by the enterprise. “As a rule of thumb, 30 servers or more leads to the greatest and most demonstrable cost savings,” states Info-Tech.

One popular cost-cutting technique, from a policy standpoint, is extending storage equipment lifecycles from four years to five and a half or six years, said Pearson.

“From the technology side, there are quite a few technologies that are getting a lot of acceptance right now in terms of reducing the amount of data in the workplace,” Pearson continued.

“A lot of people still aren’t totally familiar [with deduplication],” according to Pearson. “It looks for commonalities between files — either actual duplicate copies of files themselves or duplicate sections of data within those files — and removes them just leaving pointers in their place.”

Another technique is the adoption of lower cost technologies themselves, Pearson continued. “A lot of people are putting off Fibre Channel SAN purchases because they can’t invest in the overall infrastructure required to support it. Maybe in the short term they’re going to invest in a NAS or an iSCSI solution,” he said.

Seventy-four per cent of IT respondents consider server and storage services an area of focus for cost management, according to a recent Info-Tech survey.

“When mandated to hit specific cost reduction targets by senior management, 79 per cent of respondents increased their efforts to consolidate and virtualize servers and 53 per cent raised the priority of storage virtualization,” states the report.

Part of a new research notes series, the report uses a methodology produced by Info-Tech called Reducing Cost-to-Serve.

“It’s more of a top-level approach on the method behind exploring each service area, looking for ways of managing costs and expenses within each of those spaces,” said Perrier-Knox. “We have that as an umbrella over those these documents.”

The eight-part series will cover the following areas: servers and storage, staffing and discretionary spending, networks and telephony, workstations and peripherals, application maintenance, application development, disaster recovery and end-user support. Info-Tech also plans to release a series of podcasts that mirror the documents.