IT executives need to make investments that enable their business to gain competitive advantages. However, after years of reducing budgets and streamlining operations, most IT organizations struggle to fund new investments.

Requesting new funding to enable these investments is often either dead on arrival, or a process which consumes the window of time available to complete the project and gain the competitive advantage. So IT executives are left seeking ways to reduce costs and re-allocate those funds to drive new business growth.   

Finding even more IT cost reduction opportunities is not easy.

The hardships of the recent economic downturn forced many IT organizations to employ a number of traditional approaches to cutting costs such as reducing head count, outsourcing, consolidating data centers and replacing high-quality software products with cheaper alternatives. Anyone involved with P&Ls over the past three years understands the need for these “whatever it takes” methods of reducing costs, but the reality is that each of these old-style methods adds risk — and hidden costs, especially for organizations with complex environments.

Many IT executives now find themselves at the tail-end of these brute-force approaches to cost cutting, spending more and more time managing  situations caused by simplistic reduction methods. As a consequence, those managers find it nearly impossible to stop the death spiral and secure the budget necessary for IT to again become a growth driver for the business.

To overcome this “rock or hard place” scenario, savvy IT executives are demanding “win-win” methods to reduce cost and free funds for growth opportunities.

One example is to locate opportunities to reduce MIPS usage. This low-risk approach to cutting costs frees up funds and improves responsiveness while requiring minimal investment to locate MIPS reduction opportunities, counteracting the rise of MIPS.

According to a January 2011 report titled “IBM System z MIPS Shows Increased Centralization and a Return to Growth,” research firm ITCandor Limited estimates that from 2009 to 2010, while IBM’s price per MIPS declined 16 percent, MIPS usage grew by 35 percent.1

But how does this translate into gaining competitive advantages?

The answer starts with understanding this process:

•    Mainframe costs are driven by MIPS consumption.
•    MIPS consumption is driven by CPU usage.
•    CPU usage is driven by applications.
•    Poorly performing applications increase CPU usage.
•    Simplistic cost-cutting measures unintentionally bleed poorly performing applications into your systems.
•    Poorly performing applications increase MIPS, costs, and redirect productive IT resources for defensive fire-fighting.

Even if an organization’s legacy systems are classified as static, MIPS consumption slowly accrues over time due to routine changes to environments and databases and especially “fix to run” application changes. These incremental increases often go undetected, but the cumulative effects can drastically increase MIPS expenditures for both hardware and software.

Top-notch shops find MIPS reduction opportunities by measuring application performance and faults to discover where CPU is being used – the old axiom that you can’t improve what you can’t measure has never been truer.

An effective performance measurement process must be efficient. Organizations should be able to control measurement tools like a faucet – turning them on when savings are needed and off when applications are running well. Taking that concept a step further, the best tools will turn themselves on and off as needed.

Typical organizations find some “low-hanging fruit” for MIPS reduction through a quick assessment of their systems and stop there. However, the best run shops are always on the lookout for resource waste and recognize that even a two-percent improvement adds up when compounded daily. In either case, a good portion of the cost reduction opportunities found require only simple application changes to yield significant results with minimal expenditure of resources.

In the end, the combination of little effort and great savings enables the savvy IT executive to focus more time, money, and resources on developing new services that provide competitive advantages for the business . . . and career advantages for the executive!