6 Ways to Reduce IT Expenditures in the Next 3 Years


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IT budgets that were reduced or remained flat in 2010 are set to rebound, a bit, in 2011. That means that IT managers are able to refocus on technology investments they’ve wanted to make. However, conservative spending directives remain firmly in place. IT has to find a way to save money over time to support new investment and continual improvements. This paper outlines six ways to reduce IT expenditures. They are linked by their relationship to virtualization, a technology that a majority of companies have begun to implement, but that offers further pay back. How each investment will impact IT budgets will vary from company to company so IT managers and executives need to carefully weigh their costs and benefits. Dell, through its relationships with Intel®, VMware®, Microsoft®, and other leading technology developers is well-positioned to help IT departments identify investments that support business goals and save IT dollars.

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6 Ways to Reduce IT Expenditures in the Next 3 Years

  1. 1. 6 Ways to Reduce IT Expenditures in the Next 3 Years Contents Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 IT Budgets are Getting Smaller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six Ways to Trim IT Budgets Over tTime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Choosing and Deploying the Best Cost-saving Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Brought to you compliments of: Introduction IT budgets that were reduced or remained flat in 2010 are set to rebound, a bit, in 2011. That means that IT managers are able to refocus on technology investments they’ve wanted to make. However, conservative spending directives remain firmly in place. IT has to find a way to save money over time to support new investment and continual improvements. This paper outlines six ways to reduce IT expenditures. They are linked by their relationship to virtualization, a technology that a majority of companies have begun to implement, but that offers further pay back. How each investment will impact IT budgets will vary from company to company so IT managers and executives need to carefully weigh their costs and benefits. Dell, through its relationships with Intel®, VMware®, Microsoft®, and other leading technology developers is well-positioned to help IT departments identify investments that support business goals and save IT dollars.©2011 Dell and Intel
  2. 2. Back to top IT Budgets are Getting Smaller IT will remember 2010 as the year budgets did something they’ve never done before — trended down. Of course, not every company reduced its IT budget. Some budgets remained flat. 2011 is hardly the days of wine and roses, but a survey by a TechTarget IT Profiles survey shows that many companies are returning to investment mode. In fact, 32% of the IT shops surveyed reported that their budgets will grow by 5% this year. Even as IT managers inside SMBs eye new investments, the directive to save money, whenever possible, remains firmly in place. Initiatives that can show positive return on investment in the shortest time frame are making their way back to the front burner. What are those budget-friendly IT initiatives? This paper considers six strategic technology investments that position SMBs for ongoing cost savings. The list isn’t comprehensive — there are many more ways to save money in IT. Neither is the list prescriptive. IT managers are always responsible to justify their investments and implementations in the context of business plans and goals. There is a general theme that runs through these cost-saving strategies. Virtualization. Compa- nies that are moving through virtualization in the datacenter with servers and storage and then out to the end-user community with virtual desktops and private clouds will not only transform their IT infrastructures, but also their budgets. Six Ways to Trim It Budgets Over Time Many companies have already begun to move from traditional to virtual infrastructures. In the fourth quarter of 2009, 18% of all new servers were virtualized (IDC press release, April 28, 2010, “Virtualization Market Accelerates Out of the Recession as Users Adopt ‘Virtualize First’ Mentality”). The move toward virtual servers, and then storage and desktops, has been driven by corporate directives to trim IT budgets. A CDW survey, “CDW Server Virtualization Live Cycle Report: Medium and Large Businesses” (January 11, 2010), reports that 78% of 387 companies surveyed gave their IT managers an “A” for virtualization implementations that had successfully saved money and increased IT productivity. If companies have not begun to deploy virtual servers and desktops, those are both great ways to reduce IT costs over the next several years. Assuming that virtualization is in place or underway, the list below suggests ways to move beyond those initial savings by leveraging virtualization investments. Private Clouds Commissioned by Microsoft and conducted by 7th Sense Research, an October 2010 survey of 2,000 IT decision makers found that 26% of small companies (less than 250 employees) and 48% in large companies (250 employees or more) agreed they need to “shift to cloud based solutions” in 2011. “Cloud based solutions” is a broad category that can include public, private, or hybrid clouds. Given the risks associated with public clouds, many SMBs are looking to private clouds as a means of facilitating provisioning, increasing agility, and saving money.2 ©2011 Dell and Intel
  3. 3. Back to top The first big private cloud-related savings are realized through the virtualization of servers that deliver applications, data, services, and even entire work environments in the cloud. By con- solidating traditional servers companies immediately save on power, cooling, and floor space. Savings extend to IT overhead that includes a reduced number of servers to upgrade, secure, backup, and maintain. Private clouds deliver applications, operating systems, and data from the datacenter relieving end-user devices from heavy system requirements. Using thin clients, end-users log into per- sonalized work environments or application sets that are maintained on virtual servers. IT gains much more control over platoons of end-user devices such as laptops, smartphones, and tablets by focusing management efforts on datacenter servers and storage systems. Standardized work environments further increase control and decrease overhead. Help desk calls are also reduced as end-user issues can be proactively handled inside the datacenter. IT gains tremendous flexibility with private clouds. Resources such as disk space, CPU, RAM, etc., can be reallocated in minutes to support shifts in processing requirements. Processing loads are balanced across virtual servers to fully use available capacity which is much more cost- efficient than deploying application-specific servers that often use no more than 20% of their processing power. Chargeback capabilities help IT track departmental use of private cloud services and even create internal billing. That doesn’t decrease costs to the organization, but by making IT a true service provider through internal charges for the private cloud encourages management throughout the company to fully assess service and help IT justify and prioritize new investments. Storage Virtualization As companies grow and virtual servers increase in number and more and more people access data and applications, I/O bottlenecks become a problem. One way to address the ever-increasing need for data storage is to continually buy storage devices. It’s a simple strategy, but hardly cost effective. The price of storage continues to rise, as do associated costs such as IT management overhead, power consumption, cooling, and floor space. Like servers, storage can be consolidated through virtualization. Costs are reigned in and performance is increased. Dedicated storage is typically purchased and deployed in anticipation of future growth, which means that datacenters can be filled with unused storage. Storage virtualization allows disk resources to be pooled and dynamically provisioned when needed instead of tied to a specific application or service. Utilization of storage resources is optimized. IT’s ability to streamline storage management by consistently applying backup, data protection, disaster recovery, maintenance and other procedures across the storage pool saves a lot of time. It also saves money as IT effort is decreased and management gaps are reduced. Disaster Recovery/business Continuity IT management tools are giving technicians greater visibility into server performance. Rather than waiting for servers to slow to a crawl or completely fail, IT staff can proactively tune servers that are exhibiting performance issues.3 ©2011 Dell and Intel
  4. 4. Back to top By keeping servers up and running, IT helps preserve end-user productivity levels. Of course, if servers have to be taken off line in order to accomplish maintenance tasks, productivity is lost. Scheduling maintenance for evening hours or weekends preserves end-user productivity, but increases IT overtime costs. The price of service outages can easily justify investment in a storage area network (SAN) that’s connected to a private cloud. IT is able to shift virtual servers to other physical servers in the cloud whenever off-line maintenance is required. End-users retain full access to applications, operating systems, data, and services. Maintenance can happen during regular work hours; IT does not have to announce or plan for a service outage or incur overtime costs. Business Intelligence/analytics/data Warehousing Here’s a sobering Gartner prediction: through 2012, more than 35% of the top 5,000 global companies will fail to make insightful decisions about significant changes in their businesses and markets. One explanation is that companies aren’t attempting to find and implement go-ahead strategies. Another is that the complexities of efficiently analyzing huge amounts of internal and external business data makes god-ahead strategies hard to find. IT often plays a huge role in business analysis by searching for the corporate data business ana- lysts’ requirements and then creating reports that help the analysts use the data. That forces IT to take on the job of business analysis. Not only does increasing IT’s already overloaded task list with data-mining and report writing cost money, but it also gets in the way of efficient analyses. Self-service business platforms like Microsoft’s Business Intelligence Platform that includes Microsoft Office 2010, SharePoint 2010, and SQL Server 2008 R2 return the job of business analysis to the hands of trained business analysts. These trained professionals use familiar applications, advanced search, and collaboration tools to conduct and present analyses. IT focuses on maintaining and delivering the platform. Self-service business analysis creates a strategic resource without adding significantly to IT staff costs. Backup and Data Protection for Virtual Servers IT managers in both traditional and virtual environments are on the hook to backup and protect data so that it is available for recovery and allows companies to comply with data retention policies and regulations. It’s a big responsibility that keeps getting bigger as corporate databases grow. In traditional and virtual environments the backup and data protection challenge centers on getting the job done without negatively impacting performance or reliability, or significantly increasing costs. Backup is typically accomplished with solutions that require an agent to be installed on every virtual (or physical) server. It’s a straightforward solution with two downsides. First, there’s a performance hit when backup processes are running. Second, as virtual servers proliferate, IT has a lot of agents to track and manage. Hypervisors including Microsoft Hyper-V and VMware ESX allow agents to be installed on the virtual host or physical server. That greatly reduces the number of agents in the datacenter but virtual servers have to be shut down in order for the agent to run, which can interrupt service.4 ©2011 Dell and Intel
  5. 5. Back to top Solutions like vStorage from VMware perform backup at the image, block or file level. Backup processes run continuously without impacting performance. Data restoration is also faster, more complete, and less labor intensive. With an increased number of restoration points, IT technicians grab data that was backed up just minutes before a server failed. At most, the restored data might be missing a few changes. That’s in contrast to losing half a day’s worth of data because the last backup was run twelve hours ago. Poor server performance and lost data negatively impacts productivity; hours of IT time spent on backup processing or data restoration is an overhead burden, especially when it leads to overtime. Improvements in backup and data protection for virtual servers yields cost savings by both preserving performance and reducing IT overhead. Windows 7 migration via desktop virtualization Desktop virtualization is saving companies money by moving processing requirements off end-user devices and into the datacenter. Rather than accessing applications and data that are stored on their own hard drives, end-users can log into servers from their desktop, laptop, or mobile device and start using a work environment that has been tailored to them and their work responsibilities. As is the case with server and storage virtualization, IT gains control, lowers administrative overhead, improves service, and reduces costs. Now that SMBs have reached a decision point about migration to Microsoft Windows 7, desktop virtualization is set to deliver even greater cost efficiencies. Microsoft has announced that support for Windows XP will end in 2014. That seems like a long way off but with Windows XP providing the operating platform for entire employee populations, planning for migration to its successor, Windows 7, is beginning now. Cost is a huge concern with any migration. Gartner estimates that the cost of a Windows 7 migration in a traditional (non-virtualized) environment is $1,274 – $2,069 per PC. Those figures include the price of the upgrade licenses as well as hardware upgrades, or in some cases, PC replacements. (Window 7 requires a PC with a 1GHz or faster 32-bit (x86) or 64-bit (x64) processor, I GB 32-bit RAM or 2 GB 64-bit RAM, 16 GB hard disk space (32-bit) or 20 GB (64-bit), and a Direc7X 9 graphics device with WDDM 1.0 of higher driver.) Virtual desktops can be much thinner, have a 1 GHz processor, 512 MB of disk space, and 1 GB of flash memory, for example, and still allow end-users access to their applications. Of course, thin clients are not appropriate for all end-users. Performance issues linked to network latency or inability to run certain applications in virtual environments preclude programmers, designers, analysts, and others from relying solely on datacenter-delivered resources. Part of the migration planning process has to include careful consideration of where thin clients can be effectively deployed and where more capable machines will deliver the performance, processing capabilities, and functionality required. The combined cost-effect of lower hardware requirements, reduced (or eliminated) software conflicts, and easier deployment can bring the cost of a Windows 7 migration down to $100/PC in a virtual environment (according to Gartner). For companies that haven’t implemented desktop virtualization, significance of that savings could justify the move.5 ©2011 Dell and Intel
  6. 6. Back to top It’s important to note that not all users can be productive with a thin client. Performance issues linked to network latency preclude some end-users — programmers, designers, analysts — from using thin clients. Choosing and Deploying the Best Cost-Saving Technologies A theme runs through the cost-saving ideas listed above — virtualization. Virtualization of servers, storage, and desktops is often inspired by the need to control IT costs now and into the future. Many companies have made a foray into virtualization by deploying at least a handful of virtual servers, but enhancing virtual environments through private clouds or storage virtu- alization, not only increases the return on investment but offers companies greater IT resource flexibility and streamlined IT management. It’s not hard for IT managers to understand how virtualization will help their companies manage expenses. Figuring out how to start, how to apply current hardware resources to the creation of a virtual environment, how to select new investments with the biggest pay-offs, and how to implement those investments in the least disruptive manner, is a challenge. Over-subscribed IT managers inside SMBs are deriving great value from their single-vendor relationship with Dell. Through partnerships with leading virtualization developers including Intel, Microsoft, and VMware, Dell provides consulting and implementation services along with a broad portfolio of hardware and software that can be configured to meet the business and budget goals of any SMB. Dell Services Dell consultants work closely with IT managers and staff to identify, specify, and configure new investments that will increase performance and reliability while setting the company up for IT savings. They understand how to supplement current server and storage capacity, fully utilize virtual servers and maximize consolidation, and what particular server and storage combinations will deliver the performance required. Dell also provides expertise and guidance in private cloud implementations. Desktop, laptop, and mobile device options also give IT managers access to end-user devices that will leverage private clouds and support any model of desktop virtualization deployed. Configured and tested at Dell, servers, storage devices, and end-user computers are packaged for out-of-the box implementation. Dell consultants provide continued support on-site or via telephone. Dell Servers with Intel Processors Virtualization aims the spotlight at the datacenter, which delivers the applications, data, operating systems and processing power that drive the entire infrastructure. High-performance, high-availability virtual servers are the secret to success. Dell’s family of PowerEdge servers, available in tower, rack, and blade models, are designed to support virtualization. Configured to support current requirements, all servers scale easily to support growth. Performance is assured by Intel Xeon processors 5600 series that offer 6.36 times better perfor- mance per watt than single core processors. Even intense data retrieval or graphics creation and6 ©2011 Dell and Intel
  7. 7. Back to top manipulation processes run fast. Intel Xeon processors 5600 series further boost performance and savings through: • Intel® Turbo Boost Technology – Server performance is automatically maximized by increasing core frequencies, which enables faster speeds for either specific threads or very heavy workloads. • Intel® Intelligent Power Technology – The processor and memory don’t always need the same amount of power. Intel Intelligent Power Technology automatically shifts both CPU and memory to the lowest power state that still delivers the performance required. That not only saves on energy used to run the server but also reduces the heat output, which in turn, reduces cooling requirements. Given the energy, power, and cooling costs of data centers, all increases in workload and capacity should be tempered with energy efficiency; a strong suit of Intel Xeon processors 5600 series. Power consumption is scaled to workload. Even if servers are left on to accommodate around the clock workers and off-hours processing, less energy will be used at off-peak periods. That adds power savings benefits above those gained through server virtualization and consolidation. Additional energy savings is gained through: • Automated energy efficiency – Idling cores (those that are not needed to support current workloads) are powered down to near zero consumption independently of working cores to reduce overall power consumption. • Automated low-power states – Processor, memory, and I/O controllers are automatically reduced to the power state that will support performance needed by the current workload. Redundant components — no single points of failure — make Dell PowerEdge servers highly reliable. Should a fan, power supply, or other component fail, its backup unit will take over until the broken primary unit is replaced. On top of being redundant, components are hot pluggable; they can be removed and replaced while the server is up and running. Reliability is also assured with dual internal SD (Secure Digital) modules for storing virtualization hypervisors. End-users do not lose access to applications when fixes are being made. Redundancy and hot pluggability create a safety net that protects access to the critical line of business applications. Dell EqualLogic Storage Dell EqualLogic and PowerVault™ storage series are both used to create high-performance iSCSI storage area networks (SANs) inside an SMB’s virtualized data center. All devices assume growth and can scale out performance and capacity. SMBs purchase only the storage they need knowing that expansion can easily happen at any time. This prevents over purchasing and under- utilization. Configured with solutions from Microsoft, VMware or other third party developers, Dell SANs also offers the cost benefits of continuous backup, streamlined disaster recovery, and data compression. Like PowerEdge Servers, EqualLogic storage devices have redundant, hot-swappable components (fans, power supplies, disk drives with hot spares). Those features along with a fault-tolerant, re- dundant controller and enterprise-class RAID protection enable devices to offer 99.999% availability.7 ©2011 Dell and Intel
  8. 8. Back to top Dell Desktops and Laptops The trend toward mobility is requiring more and more employees to work with a laptop. Mobile workers favor devices that are lighter (in weight) and virtualization allows devices that are outfitted with smaller hard drives and less memory. Dell’s catalog of netbooks, Latitude™ laptops, and smartphones (Dell Venue Pro™, Dell StreakÙ) and Android-based pocket tablets allow IT departments to provision end-users with the tools they need to get their work done without over-investing in power. Conclusion While IT budgets are projected to increase a bit over 2010, it’s important to note that they actually dipped in 2010. The increase is welcome, but not overwhelming. IT managers are still pressed to save money. SMBs are looking for ways to tightly manage budgets over time. This paper considers six ways SMBs can trim IT costs: private clouds, storage virtualization, disaster recovery, business intelligence, backup and data protection, and Windows 7 migration via virtu- alization. Choosing between those cost saving methods can be difficult. Through its partnerships with leading virtualization developers including Intel, Microsoft, and VMware, Dell is able to provide a single vendor relationship for exploring virtualization options, specifying and sourcing infrastructure components, and simplifying implementation.8 ©2011 Dell and Intel