The June issue of CFO Magazine explores IT spending trends (anticipating a slight decrease) and efforts to better understand total cost of ownership for IT. The article also features a sidebar on cutting IT costs and energy costs simultaneously, thus doing good for both the bottom line and the environment:
Standardize on products wherever possible. According to The
Hackett Group, companies with less-complex IT infrastructures are more
effective and efficient, and spend less on IT as a percent of revenue.
Often, complexity breeds more complexity: a vast applications
portfolio, for example, typically requires a more complex
infrastructure. Companies that standardize desktop computers, pool
application-development efforts, and consolidate vendors have cut their
IT operating costs by as much as 50 percent over four to five years,
IT asset-management software can help companies get a better
handle on how much hardware and software they have and whether they are
overbuying software licenses or hardware upgrades. The software creates
an inventory of software and hardware assets and measures which
applications are actually being used. Asset-management tools can help
eliminate expensive licenses and maintenance contracts.
For a time, the ever-lower cost of computer servers prompted
companies to buy them in droves, but that resulted in overcapacity and
attendant management problems. Now, many companies are using fewer,
more-powerful servers to tackle multiple tasks, a feat made possible by
virtualization software that allows one server to do the work of many.
Delaware Electric Cooperative, a Greenwood, Delaware, electric utility
that provides electricity in southern Delaware, launched a
virtualization project last year and reduced the number of servers it
needed from 20 to 6, says CFO Gary Cripps. In the process it reduced
server power usage by 80 percent and disk-maintenance time by 90
Virtualization is a key part of broader efforts to make
computer data centers, which consume huge amounts of electricity, more
efficient. Eaton, a diversified industrial manufacturer in Cleveland,
deployed energy-efficient blade servers and virtualization software and
now saves more than $1.5 million annually in power and lease costs,
according to CIO Bill Blausey. The company also developed programs to
automate its data centers, so it can better manage capacity and shut
off idle servers. The company also benefits by meeting the criteria of
a "demand response program" sponsored by a local utility, saving it
another $40,000 per year in one facility alone. CFO Rick Fearon credits
a close partnership between finance, IT, and facilities with helping
the company develop a greener data-center strategy.
Less Bleeding, More Edge
Runaway IT spending is out, creative cost control is in.