Tag Archives: budgets

Device Population Rising, Support Not So Much

Posted on by gregl

IT industry-analyst firm IDC sees a massive growth in the number of devices CIOs must oversee, but far less corresponding growth in services to support the devices, according to a recent white paper on the topic.

As far as device growth, IDC sees a 66 percent growth in the number of devices for which CIOs are responsible, climbing from 1.3 billion in 2007 to 2.2 billion in 2012. Support services, meanwhile, will grow 37 percent, to $728 billion, over the same period.

“While the number of devices that CIOs will be responsible for will increase dramatically over the next five years, most enterprises do not expect to see a dramatic increase in their external spending on support services,” states IDC. “However, focusing on only the external costs neglects the additional costs associated with supporting these devices. In addition to the external support costs, enterprises need to consider the internal staff required to support and manage these devices.”

Outsourcing IT was one of the potential solutions IDC says CIOs often consider.

“To address the concerns of managing and supporting an IT environment, many enterprises have chosen to outsource all or some of their IT operations to a dedicated services provider,” the report noted.

You can click here to download the white paper. (You’ll have to register for the download.)

Evaluate your IT services provider on more than price

Posted on by Karen Karger

According to several analysts in this NetworkWorld article, “When looking to strike a deal with a service provider, enterprise IT executives need to take a step back from the need to reduce expenses immediately and think about IT needs a year or more from now. Outsourcing in a tight economy can represent a classic case of ‘You get what you pay for’ to enterprise IT executives.”

You know, EasyStreet believes in providing good value for our customers. We recognize that IT budgets are tighter than ever, but after 14 years in this business, we also know what it takes to provide the level of reliability and support our customers require — and don’t want to degrade our best-in-the-business SLA just to get the sale.

After all, the goal is for ALL of us to stay in business, isn’t it?

The article quotes Ben Pring, research vice president at Gartner, who says, “Oftentimes, you are going to be disappointed with the level of cost reduction you can achieve in an outsourcing deal, and if that is all you are focused on, inevitably, it will produce a bad deal. Historically customers get lousy quality of service when trying to squeeze an outsourcer. In the short term the deal may help a company’s bottom line, but long term, enterprise companies need high-quality services to better compete.”

The article goes on to say analysts advise enterprise IT decision makers to research service providers’ financials, product road maps, deal flow and turnover. “Outsourcers are not safe from the current economic conditions and may not survive the storm any better than others. There has to be a big focus on vendor risk and vendor viability. The deal may sound great now, but if the vendor goes south in six months, where does that leave you?”

You can read the whole article here. End of lecture.

Are Data Centers a ‘Utility’?

Posted on by Karen Karger

I ran across this recent InfoWorld article that discusses how IT jobs — especially those of data center managers — might permanently change because of today’s tight budgets. “There’s an incredible focus this year on driving efficiency,” says Rick Villars, vice president of storage systems at IDC. “What this means is reducing capital expenditures and trying to cut operational expenses wherever possible.”

The article points out that many small and midsize companies are beginning to think of the data center as a utility. “Such thinking would ultimately lead upper management to realize that hosted data centers could serve customers tremendous scale with such little effort and cost that CIOs simply have to start buying professionally managed services rather than spending resources to do it themselves. The writing is on the wall. Small and midsize data centers won’t exist very long as companies take a look at why they’re managing data centers themselves.”

We’re seeing this trend from the other side, which is why EasyStreet continues to focus on providing reliable data center and managed services for the increasing number of northwest companies that decide to move their data center responsibilities “outside.” (OK. End of commercial.)

Of course, the article concludes, “Internal IT operations will still be responsible for the last 10 feet of cable, so they’ll have to be even more aware of their users’ needs… This might be a rebirth of the jack-of-all-trades who can interface with users, make the software do what they want, talk to the back-end guys. Those jobs will be around for a long time.”

You can read the entire InfoWorld article here.

Is That An Echo I Hear?

Posted on by gregl

Since 1995, EasyStreet has been coming up with good reasons why companies should outsource their IT infrastructures. Now, technology giants including Google, Microsoft, Amazon and Yahoo are echoing a lot of what we’ve been saying for 14 years. They too want to convince companies to move from costly and inefficient corporate data centers to the benefits of a cost-effective, shared environment.

The big difference, of course, is that the technology giants are talking about giant data centers shared by millions of users. Their lures are cloud computing and utility computing, which provides on-demand server capacity. But whether the message is coming from a giant company or from a considerably smaller EasyStreet, it’s clear that more and more companies are suffering from their own vastly overbuilt data centers, recurring upgrade costs and the dramatically escalating price of power.

TechRepublic.com’s editor-in-chief Jason Hines, writing on this topic, recently observed: “For governments, large financial institutions, and other high-security environments, outsourcing the data center will probably never make sense. For virtually everyone else, it’s going to become a very attractive option in the next 3-5 years. I suspect that a decade from now running your own data center will be the exception and not the rule, and IT departments will need a strong business case to justify the existence of a private data center.”

He notes that the Googles, Microsofts, et al, are arguing they can save companies from overprovisioning and overspending on server capacity while adding 24/7/365 monitoring, scalable load management and IT service management — same as you-know-who in Beaverton.

“Of course, the trade-off is that IT departments give up some control, and usually some staff positions as well,” Hines writes. “Many companies will be fine with that since IT is probably not one of their core competencies. They will welcome the expertise from a third party and will be happy to find a new way to control IT costs.”

Amen.

News Flash: IT Budgets Are Flat

Posted on by gregl

According to a recent worldwide survey of CIOs by Gartner EXP, budgets in IT organizations are stagnant in the US and Europe, down somewhat in Asia/Pacific and up a bit in Latin America, for a worldwide net increase of only 0.16 percent for 2009.

“In 2009, executives face challenging global economic conditions that have not existed for more than 50 years,” says Mark McDonald, head of research for Gartner EXP, a group that includes 3,600 CIOs from around the world. “This environment is reflected in IT budgets, priorities and strategies as one-third of CIOs reported no change in their budget from 2008, while 46 percent reported a slight increase, and 21 percent reported a cut in IT budgets.”

The CIOs surveyed represent more than $138 billion in corporate and public-sector IT spending, encompassing 1,527 enterprises across 48 countries and 30 industries.

“All CIOs will face the need to restructure their budgets, cutting in some areas and investing in others, including those reporting no change in their overall spending level,” McDonald added. “Enterprises expect IT to contribute results in an uncertain economy. CIOs need to be decisive and resourceful in building an effective enterprise that can meet current and future challenges. Leading enterprises recognize the seriousness of economic conditions, but they are not paralyzed by them.”

Indiscriminate Cost-Cutting Hurts Innovation

Posted on by gregl

More IT departments could be more successful if it weren’t for the mindset of the people managing them, according to Ilya Bogorad of Bizvortex Consulting Group, located in Toronto. “I often encounter situations where I can’t help but feel that an IT department could be a runaway success within its organization if it weren’t for the beliefs that their leader seems to hold,” he says.

Ironically, some of the ideas holding down IT (and one suspects other parts of the organization as well), seem on the surface to simply make sense. But Bogorad encourages organizations to examine these ideas at a deeper level. Here, for example, are three of them:

1. We are under-resourced.

“This is a universal complaint,” Bogorad says. “You can never have enough time, staff or money if your priority system is out of order. The key is in using the resources you have in such a way that they produce the best ROI possible.

2. Projects must save costs or generate revenues.

“If you merely concentrate on the financial side of costs and benefits and require that all projects have a positive immediate ROI to be pursued, you’re killing innovation in your organization,” he contends. “Think about it. How innovative would you want to be if every suggestion you make is immediately evaluated in respect to financial benefit?

3. In difficult times, we must cut costs

“Prudent financial management is a must at all times, good and bad. But consider this: it’s impossible to become successful by pinching pennies,” Bogorad warns. “It just doesn’t happen. The best value generated by an IT department today does not lie in trivial and often mindless cost-cutting but in innovation, business alignment and strategic thinking.”

Bogorad has this advice for executives in these difficult times: “Invest – not cut – time, money, and executive support into business-critical projects, while completely abandoning projects that are no longer relevant. You must constantly challenge your people to critically examine the ways you do business and to improve them.”

For more of Bogorad’s observations and ideas, visit his column at TechRepublic.

Advisor Urges More IT Stimulus Spending

Posted on by gregl

Investments in Information and Communication Technology (ICT) are greatly responsible for the nation’s productivity gains over the past decade, and a key advisor to President Obama is encouraging more investment via the government’s economic stimulus package.

“If you invest in ICT infrastructure in an economic downturn, you not only get better short-term job-creation effects but you get better long-term productivity impacts,” says Robert Atkinson, founder and president of the Information Technology & Innovation Foundation, a Washington, D.C. think-tank, and member of Obama’s transition team.

Atkinson notes that the current stimulus plan invests $7.2 billion in broadband networks, “but the market could have absorbed at least $15 billion.” And with the world economy so mired, it’s important that new technology get into place ASAP. “You want these projects to hit the ground running over the next 18 months, and ideally sooner than that,” he told IDG News Service.

Explaining that stalling on stimulus-related technology projects could result in diminished economic output and increased budget deficit, he said: “If you make these investments and you make then right, you can certainly have long-run economic impacts, which can be very sizeable.”

And the Top 3 IT Investment Areas Are . . .

Posted on by gregl

Want to know where the top CIOs are really spending their IT dollars — assuming they have any IT dollars to spend?

Some insights are in a recent IDG Research Services tally of major corporations done for AT&T. They found that the top three technologies that companies are most likely to invest in during the next 18 months are:

1. Wireless networking
2. Business continuity planning, and
3. Remote access

This correlates closely, IDG says, with CIOs’ “perceived benefits for productivity, collaboration and innovation.”

Next on the list were investments in compliance, encryption and VoIP.

“Surprisingly, the more hyped technologies show only average investment potential,” says IDG. “For example, VoIP may have rated low for future investments because companies have already deployed it. And the terms ‘Web 2.0’ and ‘unified communications’ are relatively new and could be too nebulous for some respondents.”

Least likely investments in the next 18 months are RFID and utility computing.