Businesses today are operating in some of the most challenging financial conditions — little access to credit, soaring energy costs, and record declines in consumer spending and confidence. And while some businesses are closing their doors, for those that stay open this is an opportunity to employ some survival techniques, whether they need it or not. Now is the time for businesses to reassess their landscape, particularly their information technology infrastructure, and determine what’s helping — or hurting — the bottom line.
While servers often account for a large portion of a company’s IT budget, many companies are only utilizing 10 percent of the server space — not exactly the best return on investment. Furthermore, it’s estimated that for every dollar companies spend on server hardware, they also spend anywhere from $7-12 on maintenance. This includes software licenses and power to run the servers, air to cool the servers, and employees to manage the servers. It may also include maintenance fees to cover broken or damaged equipment. It’s easy to see how expensive unused server space can be.
Therefore, it’s recommended that businesses move toward server consolidation, which not only decreases operating costs, but also aids in disaster recovery operations. By hypothetically reducing 50 servers to five, companies increase the storage usage while minimizing operational costs, and in the aftermath of a disaster, rather than duplicating 50 servers with minimal usage, companies only have to duplicate five at near full capacity.
Less is more
There are several options for managing a company’s servers, including physical and virtual consolidation. It’s not uncommon for a business to have multiple servers in remote locations. Some companies can opt to physically take all servers and move them to one central location, thereby reducing storage fees and costs to maintain data centers.
Data center costs are compounded heavily by IT power costs, making it likely that power and cooling costs will overtake hardware fees in the next few years. So virtualization is often the next step beyond physical consolidation, unlocking untapped server storage and networking resources.
Through virtualization, a company can take 50 servers running one application each, and consolidate to five servers with 10 applications on each. Such consolidation sets the stage for cost savings moving forward including reduced hardware expenditures and server management. However, not only have companies utilizing virtualization processes reported savings on operational expenses, they’ve also reported reduced manual errors, increased new application deliverables for business mobility, and less manual maintenance.
Most importantly though, virtualization allows companies to reduce capital expenditures and focus on what they do best — encouraging robust competition, improving customer experience, and reducing risk. Multiple servers sprawled across multiple locations increases the difficulty of managing data and the accompanying large network connections that can compromise network security.
Whether a company seeks to physically consolidate its servers or establish a virtual network, the key is to partner with a vendor that works with companies that are the size of where they want to grow to, rather than the size they are. These vendors can aid in keeping costs down by charging for what you need today, while providing the ability to expand to where you will be in the future.
While challenging economic conditions may complicate long-term planning, there are always ways for companies to add value, especially within the company’s IT infrastructure. The key is ensuring that the company’s infrastructure remains flexible enough to adjust to any potential change. Moving forward with effective IT simplification measures prepares companies to cut costs and improve efficiency. In addition, by effectively cutting costs, IT departments can now focus on leveraging emerging technologies that may previously have been unattainable because of budgetary restrictions. Now is the time for business leaders to take a good look at their business landscape and determine what’s helping — or hurting — the bottom line.
Mike Gorsage is the National Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership to businesses of any size.