Cutting IT Costs and Conserving Energy (CFO Magazine)

by Erin McCune on June 16, 2008

in Technology

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,
Hackett says.

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.

Read more:

Less Bleeding, More Edge
Runaway IT spending is out, creative cost control is in.
Bob Violino
CFO Magazine
June 2008

One Response to “Cutting IT Costs and Conserving Energy (CFO Magazine)”

  1. Kurt Weisenberger says:

    Environmental concerns aside, I am surprised that you didn’t mention Application Portfolio Management and only referenced asset management. According to Gartner Research, 40-80% of IT budgets are spent on the maintenance and enhancement of software applications. With Application Portfolio Optimization you can dramatically reduce application maintenance spending in a matter of months. Successful optimization can cut application spending by 30% in as few as 12 months. Also, If you are managing an IT organization, you are running a business. Developing IT financial management capabilities is a must. Taking a portfolio driven approach will help reduce costs without sacrificing productivity. A role of “IT Financial Manager” or “IT CFO” is emergeing to meet these needs. Especially with the economic situation today, more and more CFOs and those in charge of IT will have to have transparency into all financial aspects of IT.

Leave a Reply

Previous post:

Next post:

Clicky Web Analytics