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IoT
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Commentary
6/19/2018
02:00 PM
Tim Dixon is CEO of InterOptic
Tim Dixon is CEO of InterOptic
Commentary
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Cut Data Center Costs Without Sacrificing Performance

While organizations are placing greater demand on data centers, IT managers do have ways to work within tight budgets.

If you feel like the budget for your data center is shrinking even as performance expectations are increasing, you’re not imagining things. While IT spending overall is expected to grow 4.5 percent this year, data center spending is projected to see increases of just 0.6 percent – and 2019 projections actually show decreasing budgets. Meanwhile, demands on data center capacity are only increasing, especially as new technologies like IoT, blockchain, and AI become more common in business settings.

The good news here is that most data centers can actually cut costs without sacrificing performance if they know where to look. Here, I’ll outline four strategies that can keep your budget down and your output high.

Get smarter about maintenance

Vertiv estimates the average cost of downtime for a data center is $9,000 per minute, meaning that keeping your machines up and running is essential for maintaining a positive ROI. But following a manufacturer’s recommended repair or replacement schedule can hurt you in two ways: If you update too early, you unnaturally shorten the lifespan of viable equipment; but if you wait too long, you could trigger an outage, which is almost always more costly than the work that would have prevented it.

The solution: adopt smart trackers that offer proactive alerts when equipment needs attention. For example, real-time monitors for UPS batteries can ensure that you maintain a more reliable data center with reduced maintenance efforts and cost.

Consider brand-agnostic equipment

No matter how well you maintain your equipment, of course, you’ll eventually need to replace it. There are two specific cost-savings strategies to consider when you do:

  1. Look beyond the big-name hardware providers. It’s possible to save 30 to 50 percent of the retail cost by buying from a brand that’s not yet a household name. Much of this equipment is brand-agnostic and even brand-equivalent, so it will fit into whatever infrastructure you currently have. Optics equipment is just one technology that can have significant impact on your speed and networking capabilities,
  2. Know common markup practices. This piece from Gartner offers a breakdown of how enterprise hardware providers sometimes mark up transceivers as much as 350 percent. Understanding this practice as you negotiate overall discounts for hardware can save significant money.

Try virtualization

Virtualization is kind of the Mary Poppins’ bag of data center technology. Instead of running just one application per server, virtualizing lets you optimize underused servers by running virtual instance of machines. The potential upside here is significant: You’re able to run more applications while decreasing the amount of hardware you have to maintain. An estimate from 2008 suggests that data centers can reduce overall costs by up to 40 percent through virtualization.

The caveat here is that transitioning to a virtualized or para-virtualized environment requires a careful review of the data center. Some servers aren’t good candidates for virtualization (e.g., if they have regulatory or security restrictions). If you go virtual, take the time to group servers logically. Energy Star also offers some energy-focused guidelines on how to think about this transition and the savings it can bring your company.

Boost employee retention

The cost of employee turnover has been calculated to be between 16 and 213 percent of the employee’s annual salary. Costs rise with a worker’s education and experience level. IT workers in a data center fall at the high end of the range, which is important to remember if leadership is looking to “go lean” on salaries to keep costs in check.

In some cases, reminding leadership of the cost of replacing a valuable worker can be enough to empower you to counter a better offer and prevent an employee from leaving.

Ideally, you won’t even get to the point that your team is looking for other jobs. Even if you can’t offer the highest salary or best benefits out there (and let’s face it, the competition in tech is pretty stiff), you can foster an environment and culture that people love.

The following efforts can increase retention rates, which can lead to noticeable savings at your data center:

  • Offer opportunities to grow and develop. This can be anything from supporting an employee who’s in night school for an additional degree to paying partial tuition costs or training your team on new skills. Find out what they want and help them achieve it, and they’ll have reason to stick around.
  • Compensate competitively. You don’t have to be the top of the stack, but you have to be within range of what your team can make elsewhere. Paying too little will breed resentment and high turnover.
  • Offer the benefits your team wants. Whether that’s flexibility, great healthcare, catered lunches, or something else, figure out what your team wants and work with leadership to get it.
  • Avoid micromanaging. It drives people in every industry out the door.
  • Check in and communicate. Don’t wait for an exit interview to find out what went wrong. Make regular check-ins part of your routine and aim to find out how satisfied your employees are with the company. If they request changes, be honest about what you’re doing to make those changes happen.

Manage up: Educate the C-suite about the cost of downtime

Cutting costs in a data center is an achievable and often necessary goal. But, as the saying goes, to everything there is a season. When you see an absolute need to spend money on new hardware or an additional team member, be ready to communicate the value of the data center to leadership.

Knowing that downtime costs $9,000 per minute can strike fear into the heart of even the most budget-conscious CEO. Remember: data centers are not a cost, they’re an investment. Showing leadership how properly funding yours is the only way to support larger business goals is the key to getting what you need (though probably not a penny more).

Tim Dixon is CEO of InterOptic, a data interconnect company that helps Fortune 500 and government institutions manage the bandwidth, interoperability, and complexity in their IT networks.

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