News & Views

5 ways that the world’s best CFOs use IT for cost reduction

by John Lane - Aug 26, 2016

Over the past few decades, IT has been responsible for driving down costs and increasing efficiencies in a huge number of industries. The way that the evolution of technology is heading, it's unlikely to slow down any time soon, but that doesn't mean outfitting your organisation with the latest tech will result in instant and irreversible cost reduction or radically increase efficiency. In fact, the results of poorly managed IT can do far more harm than good to your bottom line. So, what makes the difference between good and bad IT, and how can you make sure you're on the right side of the fence? In this post, we'll look at four ways the world's best CFOs use IT to drive down costs and increase efficiency in their organisations.

1. Consolidate and virtualise Infrastructure and Operations (I & O)

While the proliferation of distributed computing (as well as a few other trends) spearheaded the decline of large data processing sites in the past, server rationalisation, hardware growth and cost containment are all contributing to the consolidation of enterprise data processing facilities into larger data centres. According to Gartner's research, this trend is set to continue.

I & O consolidation goes hand in hand with standardisation, integration and virtualisation and makes it possible to virtualise everything from servers, to storage, to networking and client computing. The utilisation levels of physical servers typically don't exceed 15%, while virtualisation software can increase this figure by a factor of four or more - meaning organisations can reduce hardware and energy costs by more than 50%.

2. Re-evaluate networking costs

Hefty Telecoms Service Provider (TSP) and Internet Service Provider (ISP) costs are par for the course when it comes to I & O budgets, since the data centre and the network tend to constitute the bulk of the expenses. But network managers and CFOs alike need to take a proactive stance on their networking costs. Rates and contracts should be continually revised and renegotiated in order to ensure that they are market-based and alternative service providers who might offer better rates or service should always be considered. Re-evaluating the design and sourcing of your networks also presents significant opportunity for optimising network costs - in other words, your SLAs should be kept as open and flexible as possible.

3. Streamline IT Operations and minimise IT support cost

Typically, I & O staff constitute about half of the total enterprise IT headcount and, as a result, a significant portion of IT spend. However, the majority of IT staff spend their time on day-to-day operational processes, which can easily be streamlined for increased efficiency. This means implementing ITIL - the de facto set of practices in IT service management - which aims to improve the management and quality of services in principal, but has significant potential for cost reduction too.

Another area that presents opportunities for cost reduction is end-user support. While support isn't negotiable - and many businesses use good support services as their differentiator - it's possible to reduce costs substantially without impacting your level of service. Most I & O organisations have four tiers of support or more, and each has its own cost point and expertise level. Driving support calls down to the lowest tier wherever possible is an effective way of minimising support costs, but ensure that you're still able to solve your customers' problems to their satisfaction.

4. Get smart about storage

Storage capacity is growing much faster than any other IT consideration. According to Gartner, the average enterprise will install around 850% more storage this year than they did in 2011. And with capacity growth exceeding price drops, more frugal use of capacity is an essential part of driving down IT storage costs. Throwing capacity at the problem is no longer a viable option. Consider adopting storage virtualisation, automated tiering and Storage Resource Management (SRM) tools for maximum cost savings.

5. Minimise power and cooling requirements

Data centres in the past were often lavishly outfitted with huge open floor areas, Uninterruptable Power Supply (UPS) backup, and cooled by state-of-the-art water and air cooling systems. However, the cost of electrical and mechanical equipment, along with the increasing price of power and growing concerns around sustainable power consumption, mean this model has become obsolete. Data centres today should rely on different design approaches that use substantially less power, occupy less physical space and ultimately, have less impact on your budget.

If you're looking for a cloud platform that can cater to your needs as they evolve, PowerCLOUD may be the sensible choice for your business's cloud services. Find out more about it on PowerNet's Cloud for Business page.

 

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