The realities of managing an IT center today are far more difficult than ever before. From 1998 to 2000, the driving force behind the dot.coms, Year/2000, and enterprise system growth fueled the economy and budgets to soaring record highs. In fact, according to the management consulting firm, McKinsey & Co., the total IT expenditures during that time rose from $374 billion to $455 billion, a handsome 10 percent Compounded Annual Growth Rate (CAGR). The money was rolling and people were buying. In fact, they were buying large amounts of hardware to mask the more complex issues of managing the storage they already had, a far more onerous task.
In 2000, the economic engine began to falter and slow. Of course, September 11th was a massive catalyst, as were the faltering dot.coms. Suddenly, the nature of getting the IT job done became far more complex and difficult. Today, with current spending projections flat lining or showing a decline (roughly about a 2 percent overall decrease [$440 billion] in IT spending for 2003), this creates some interesting dynamics for prioritizing and rationalizing how IT must accomplish the job of growing the storage infrastructure annually.
This has created a new set of issues for IT management. First and foremost, nobody seems to have any money. Yet, executive management continues to look for ways to differentiate the company’s products and services from its competition to achieve top line growth. They understand that is the secret to shareholder value and stock price growth. Therefore, the business objectives create an interesting set of requirements within the IT organization. However, growth in the company translates to growth of server and storage requirements. According to Fred Moore, president of Horison, Inc., today’s average growth for storage in the commercial market segment is typically from 50 to 70 percent. However, how can you address this increase if you don’t have the budget?
This is the dilemma that has created another interesting dynamic. The half-life of a CIO is often less than 18 months, and then they expire. Why? Because if the CIO tries to use the same tools and tactics to run the IT center that were viable three or four years ago, he or she will fail to meet the current objectives of the corporation — to grow at no cost. Is it possible to grow the infrastructure at no cost? Yes. Is that an easy thing to do? No, it’s tricky and it’s hard work. However, that is the task facing many IT managers. Although there are many initiatives that will have to be started to get there, here are some guidelines to help you.
To Spend or Not To Spend , That Is the Question
It is nearly impossible to know how much you should spend to sustain an IT-supported function if you don’t know what the value of that process is to the organization. Vendors love that, and you will nearly always overbuy. The sad truth is that most organizations have more than enough storage available to meet their business growth needs. Unfortunately, for many companies, they don’t know how to use this existing storage.
To understand this, let me provide an example: Every enterprise has a senior leadership team who creates a set of business objectives that includes such items as top line growth, bottom line disciplines, market penetration, etc. To achieve these goals, there is a business engineering effort that results in a set of processes, procedures, and protocols. To implement all of these items, the IT organization implements architected solutions. They buy large quantities of hardware, software, and services to make it all work. So far, so good.
However, things often fall short prior to the implementation phase, which of course, is where most organizations are today. What these companies need is a business value analysis that provides an economically based descriptor of the value that each IT-implemented process contributes to the organization when it is running properly; in other words, for every process you support, you would have an objective basis of rationalizing your spending to sustain the process. Elements to consider include capacity, performance, scalability, management, support, and operating expense. These elements account for about 20 percent of the purchase decision for storage (and server) hardware.
The remaining 80 percent of the decision is based on protecting the process; i.e., requirements for replication, re-creation, management, legal, and operating expense. Just look at how primary storage has been purchased for many years. Leading disk storage vendors have all been in a similar technology boat from the point of view of maintaining an application’s Service Level Agreement (SLA). However, one vendor realized that the majority of the selection criteria was based on protecting the data and catered to that need in a way that no other vendor could for years. Many customers didn’t like this vendor, but felt they had no choice. Protecting the data became their priority.
What does this mean to you ?