In Depth: In Slaying Legacy IT Costs, The Data Center Is A Good Place To Start

Companies typically spend 80% of IT budgets on maintenance. Attacking data center costs can let companies shift more of that spending to new projects. You know the drill--you're spending way too much on maintenance, not enough on what really matters. Here's one way to get on the innovation stick.

Darrell Dunn, Contributor

July 21, 2006

2 Min Read

chart: Manage Better -- Percentage of large companies implementing configuration management databases and basic ITIL services.The Outsourcer's view
IT outsourcing vendors are particularly sensitive to their operations and maintenance costs, since their contracts provide a fixed income, says Shahin Pirooz, CTO at CenterBeam, which manages IT infrastructure operations for small and midsize businesses with 100 to 2,000 servers. "The only way I make more money is to increase margins by increasing operational efficiency," Pirooz says.

CenterBeam focuses on key metrics such as the ratio of administrators to servers, networked devices, PCs, and e-mail accounts served. Working with HP to move to a virtualized blade server environment, CenterBeam has improved its admin-to-server ratio from 1-to-20 three years ago to 1-to-150 today. Pirooz is shooting for a 1-to-200 ratio by year's end, with a long-term goal of 1-to-400.

Most IT leaders can relate to living on a fixed income. Their companies aren't keen to pump a lot of new dollars into technology, especially if it isn't producing much of a return. So the pressure is on to lower IT maintenance costs in order to free up funds for innovation.

The data center's a critical place to start; the tools exist to gain efficiencies by consolidating, virtualizing, and automating the management of servers and extending and automating the management of desktops and remote users. Most IT departments are spending around 70% of their budgets on personnel, and that probably won't change. But, at many companies, the work those IT staffers are doing can and should change. Instead of simply keeping the computer lights blinking, they need to be developing and deploying new features and capabilities, providing new tools and resources to the company, and--ultimately--generating new revenue. Once that happens, IT will get the respect it deserves.

-- with Paul Travis

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