Posts Tagged ‘cost savings’

3 Questions That Every CIO Should Be Asking About Clouds

Wednesday, January 18th, 2012
Image Credit Get over your excitement about clouds and start asking questions

Get over your excitement about clouds and start asking questions

I love clouds, you love clouds, we all love clouds. It seems like everyone in IT is talking about cloud computing and how it’s the next big thing. Cloud computing has almost become a part of the definition of information technology. Look, I think that there’s a lot of good things about cloud computing, but I’m not convinced that it’s the right solution for everyone. This brings up the question of how a CIO can find out if cloud computing is right for his or her IT department. It turns out that there are three questions that just might provide the answer that you are looking for.

How Much Will This Save Me?

A lot of the excitement about cloud computing comes from the simple fact that most CIOs view the cloud as a way to reduce the cost of running an IT department. However, before visions of cash savings start dancing in your head, you need to answer some questions first.

Roger Cheng over at the Wall Street Journal has taken a look at where the expenses in running an IT department come from. What he’s discovered is that servers run about $2000 – $6,000. This capital expense can be avoided if instead of buying more servers a CIO simply subscribes to more cloud computing resources when it’s time to expand the company’s IT infrastructure.

In addition to saving on buying more servers, there are potentially other savings that a CIO can realize by moving to the cloud. Buying more servers would require more IT staff to act as systems administrators – no servers means no hiring of additional administrators.

Are Cloud Services Reliable Enough?

It seems as though every other month or so there is another story in the paper about some cloud provider having an outage. One time it’s Amazon, the next it’s Google. Given the importance of information technology, as a CIO you need to be asking yourself if this cloud computing stuff is really reliable enough for you to be trusting your company’s IT infrastructure to.

It turns out that the analysts have taken a look at the overall reliability of the clouds that are being provided and they are as, if not more, reliable than most company’s IT infrastructure. One reason for this is that providing a cloud is all that the providers do and so they hire and staff in order to ensure the reliability of their product.

What Don’t I Know About Clouds?

The wise CIO knows to ask “what don’t I know enough to ask about?” One key issue has to do with your company’s most precious asset – its corporate data. When you move this data to a cloud, you are asking another company to take care of it. Are you comfortable doing this?

Is your company really going to save money by moving to the cloud? Not every company will – it all depends on how your IT department is set up now and what it’s going to look like in the future. You have other options for saving money – virtualizing the servers that you have today is one way to accomplish this.

What All Of This Means For You

Cloud computing is all the rage these days in the IT sector. CIOs are getting more and more pressure to introduce cloud computing into their IT departments. Before they take this step, they need to get some questions answered.

The promise of cloud computing is that it will save the IT department money. Do you know where these savings will come from? How does the reliability of the cloud compare to your IT department’s current level of reliability? Finally, what other options besides cloud computing do you have for boosting your IT department’s performance?

Cloud computing appears to be here to stay. However, that doesn’t mean that every CIO should race out and jump into the cloud today. Take your time and get the answers to the important questions and your next step will become clear to you.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that the company’s finance department should be involved in determining if the savings of moving into the cloud would be worth the effort?

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Everything A CIO Needs To Know About Desktop Virtualization

Wednesday, December 8th, 2010
Image Credit Can CIOs Virtualize Desktops That Look Like This?

Can CIOs Virtualize Desktops That Look Like This?

Darn that 80/20 rule. CIOs realize that they are spending way too much money just keeping the IT systems that they’ve already deployed up and running. If only this task didn’t cost so much: then they could spend that money on bold new initiatives that would benefit the entire company. One of the most expensive parts of any company’s IT infrastructure is all of those desktop systems that every employee is using. Hmm, maybe there’s something that we can do about those…

Welcome To The World Of Desktop Virtualization

Sure, by now every CIO is familiar with the idea of virtualizing servers. That’s where you use some fancy software to allow multiple “instances” of software to run on a single CPU. Within each of these instances you can run one or more applications and each application will believe that its running on its own dedicated server. In the end, this allows you to better utilize your underlying physical servers.

When it comes to virtualizing the desktops that are used within your company, pretty much the same concepts come into play. Matthew Sarrel has been looking into desktop virtualization and he has discovered that although there are a lot of advantages to doing it, there are also some downsides.

Can We Talk About Cost Savings?

When you virtualize a user’s desk top, what you are really doing is allowing their desktop operating system and their enterprise applications to run on a virtual machine that is located somewhere in the company’s data center. What this means for the user is that they can get away with using a so-called “thin client” – it no longer matters what type of computer they are physically using (PC / Apple / Linux) since the heavy lifting is being done in the data center.

By implementing such a system, the CIO is able to separate the software that your users are using from the hardware that they are running it on. This can greatly reduce your IT costs.

It is currently estimated that on average a single user’s desktop costs the company between $3,000 to $6,000 to manage and maintain each year. Hold on a moment: if you’re starting to picture $6,000 / user showing up in your budget if you virtualize everyone’s desktop, you’re wrong. Half of this cost comes out of the IT budget but the other half comes from the lost user productivity that physical desktop system maintenance causes.

Implementing virutalized desktops will reduce the costs of management updates and other IT tasks. The best guess right now is that moving to virtual desktops can reduce your total cost of ownership (TCO) for your desktops by 15% – 35%.

The Downside To Desktop Virtualization

As with all things in IT, there are no silver bullets. The same is true when it comes to desktop virtualization – it does have its drawbacks.

The first challenge is that by virtualizing desktops you can slow down the end user’s experience. Since the applications that they are running are no longer local on their computer, all of the data transfer delays and remote storage loading issues can combine to significantly slow down how they interact with their applications.

In order to prevent (or at least minimize) the amount of delay that you end up introducing into everyone’s life, you are going to have to spend some big bucks to upgrade your enterprise networks. This will include boosting storage to support all of those desktop operating system / application images, upgrading the link between your storage area network (SAN) and the servers that use the data, as well as potentially upgrading the data pipe that comes into your data center.

What All Of This Means For You

Desktop virtualization is the next great frontier that CIOs will have to cross. The advantages are great: cost savings and less effort. However, there is a downside to using this technology.

Switching to virtual desktops poses the risk of introducing delay in how each user interacts with their applications. In order to minimize this, CIOs are going to have to spend to upgrade the corporate IT infrastructure.

Desktop virtualization is something that every CIO needs to keep an eye on. The time may not be right now to move in this direction right now, but the time is coming and you’ll want to be ready to make the leap when the time is right.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that slowing down user’s desktops would be worth the cost savings of desktop virtualization?

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Practical IT Clouds: What To Do AFTER The Hype

Wednesday, May 20th, 2009
Cloud Computing Will Require A Whole Different Set Of IT Skills

Cloud Computing Will Require A Whole Different Set Of IT Skills

Talk about your latest buzz word overkill! Just when the “Web 2.0″ madness had just about hit its peak, along came “Cloud Computing” and took its crown. It’s looking like cloud computing is here to stay, so what’s an IT department to do once they get done studying the whole thing?

Your IT department will eventually use cloud computing. There, I’ve said it. If you don’t believe me, then go back and read those words to yourself out-loud several times until you do. It’s coming and there’s nothing that you can do to stop it. Just like outsourcing, it makes good economic sense and so all other objections will be worked out over time.

The idea that organizations can increase their computing power without having to buy, install, maintain, power, and cool more and more boxes is just too attractive to the bean counters to ignore. This puts IT in a tricky spot: our world is getting ready to be turned upside down – are you ready?

Here’s the problem: a lot of the support jobs that IT does today will go away along with “the boxes”. What nobody seems to realize is that they will be replaced by new IT jobs. If you’re running an IT shop, you’d better be ready!

Here are the new Cloud Computing tasks that are coming your way that you’re going to have to find ways to staff:

  • Extend: you’re going to have to come up with ways to create bridges between your existing network environment and the cloud. Oh, and then you’re going to have staff to maintain those bridges.
  • Pick: you’re going to have to pick a couple of cloud service providers. Once you’re in bed with them, you are going to have to have staff to monitor how they are performing and to provide the human interface to fix the issues that always show up.
  • Monitor: forget outages, what about day-to-day issues? You are going to need staff to monitor and mange the apps that you have running “in the cloud”.
  • Identify: who on your staff is allowed to do what? Since the old rules about getting access to boxes no longer apply, you’re going to need new rules and new staff to enforce and update them.
  • Encrypt: since you are now going to be storing data off site and “out there”, encryption becomes more than a nice-to-have, now it’s a necessity. Somebody on your staff is going to have to be double checking everything all the time to make sure that it REALLY IS encrypted.
  • Plan: for the worst. Data link outages are going to be a much bigger deal then they ever used to be. How will you handle being disconnected from your cloud for an hour, a day, a week? Somebody had better be put in charge of solving this problem and keeping this solution updated.
  • Mange: your bandwidth. Now that the link between you and your cloud has become critical to how the business runs, you had better have someone on it at all times.

We’re looking at a brave new future. Do you have the right staff with the right set of skills in order to make the most of it?

Is your IT shop currently using cloud computing or just thinking about it? How does the rest of the business feel about this? Do you have any plans on retraining your staff to work in a cloud computing world? How do they feel about this? Leave me a comment and let me know what you are thinking.

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7 Wrong Ways To Outsource Your IT Department

Monday, December 1st, 2008
There Are Many More Ways To Do Outsourcing The Wrong Way...

There Are Many More Ways To Do Outsourcing The Wrong Way...

Outsourcing, off-shoring, call it what you will, it’s been with us long enough that you’d think that the rules for how to do it correctly would be well known, right? It turns out that this isn’t always the case.

The current down economy is probably going to have most IT shops looking for ways to further trim costs and, of course, outsourcing MORE will be an attractive option. Geraldine Fox and Nigel Hughes work over at Compass and they’ve got a few words of caution for the rest of us when it comes time to consider IT outsourcing.

It’s all too easy to do this stuff the wrong way…

Skip The Planning, Dive Right In:

This is how all to many firms approach the outsourcing of their IT operations. All too often, firms view outsourcing as an opportunity to simply replace their expensive onshore headcount with less expensive offshore staff.

This view is not only short sighted, but just flat out wrong as lots and lots of firms discovered during the first wave of outsourcing in the 1990′s. It takes time and lots of planning in order to move IT functions from inside the firm to an outsourcing shop. Once they are there, you’re going to need more management resources than you have right now in order to stay on top of how the work is going.

“Lift & Shift”:

Many firms attempt to just pick up their existing IT operations and move them over to the outsourcing operation hoping that lower salaries there will automatically deliver the savings that they are looking for. What’s missing from this thinking is the simple fact that it will always take MORE people at the outsourcer to do the same job.

A good rule of thumb is to expect a 15% increase in headcount. Sure, you can probably move your ineffective IT operations offshore and experience some immediate short-term savings. However, very quickly these will vanish as outsourcing salaries continue to go up and staff turnover rates range annually from 25%-80%.

Out Of Sight, Out Of Mind:

Just dropping the work off and then not paying any attention to the people who are now doing the work is a clear recipe for disaster. Your firm is going to have to take on a whole new set of responsibilities.

These will include retaining outsource staff, investing in outsourced resources (training, orientation, retention), and making sure that they have a clear career path. Oh, and by the way, you had better be doing all of these things for your onshore / in-house staff or else they will become very jealous very quickly!

More, More, More:

One well known reality of outsourcing is that that productivity will drop. This means that it’s going to take more bodies to accomplish the same task. When you couple this with a high rate of turnover, you can pretty much wave goodbye to any outsourcing cost savings that you were counting on.

Smart firms realize that the solution to low productivity is not to throw more bodies at the problem; instead, you need to work with the outsourcer to fix the productivity problem at its source.

Everyone Else Is Not Doing Better At This Than You Are

No matter what your competition may be telling the press, don’t worry. No firms are really seeing monster discounts because of their outsourcing efforts. Many firms claim that they are achieving 40% cost saving when the reality is that at best they really are seeing cost savings in the 20% range.

Hold Those Horses:

When you decide to outsource more of your IT operations, keep in mind that this will have a major impact on your firm. Companies don’t do a good job of dealing with change and outsourcing part of your internal processes most definitely is change. Take some time to create the right mix of in-house and outsourced operations and then use a measured approach to implement it.

It Takes Two To Tango:

There is always the possibility that an oursourcing effort won’t work out. If this happens, you need to realize that both your firm and the oursourcer are to blame.

Don’t waste everyone’s time pointing fingers at the oursourcer and expecting them to fix everything. Instead, acknowledge your part in creating the problem and then sit down with the outsourcer and get to work finding a way to fix it.

Has your firm already started to use outsourcing firms to perform IT operations? How has it gone so far? What is the most important thing that you know now that you didn’t know when you started outsourcing? Leave me a comment and let me know what you are thinking.

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