Thursday, January 08, 2009

Cloud Computing & IT Cost Reduction & Simplification Strategies…

Growing concerns and jitters over the economic outlook have forced most companies to tighten spending for the foreseeable future. Spending is scrutinized and investments are only approved for absolutely critical needs. At the same time, budgets are reviewed across all departments to identify opportunities for cutbacks without disrupting the business or lowering quality or productivity.

Over the last few years, hardware vendors have made continuous improvements in chip technologies and multi-core processors which have benefitted customers in server consolidation. These projects have brought value by reducing both the IT costs and operational complexities. Advancements in virtualization technologies have enabled new possibilities for cost reduction and operational excellence. It's important to note that if software vendors had not changed their pricing models (i.e. instance-based vs. CPU based), customers would not have been able to realize the full benefits - which would have delayed the adoption of these technologies…

Customers have tried different cost cutting strategies as follows:

  • Outsourcing
    • Complete or partial outsourcing
    • Managed Service Providers (MSP)
  • Application decommissioning
  • Server consolidation
  • Virtualization (desktop, server)

and the quest continues….

Now, some customers are looking at transformation and virtualization at the datacenter level. They are exploring ways to either extend their existing investments to build private clouds or leverage public clouds.

There are multitudes of options, service and technology providers, and decision points. If the approach is not methodical, the transition will be bumpy and new complexities will be introduced.

I was talking to a colleague yesterday and asked her to what extent (if any) environmental & values such as Green IT or energy independence will have an impact on technology adoption in the enterprise? She said she'd think about it….

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