It seems every IT vendor on the planet offers the highest possible return on your technology investment with them, which, if it were true, would be wonderful. We could simply pick a vendor from the herd, implement their solution, then sit back and watch the ROI roll in.
Dream on, right? Not only does the definition of ROI/TCO vary depending on which vendor you’re talking to (they all have ROI calculators, don’t they?), there also isn’t an industry-wide set of standards or processes for determining return on technology investments. As a result, the onus is on your organization to decide how you’re going to measure cost savings, increased productivity, total cost of ownership (TCO), and other important features.
According to Gartner, the biggest mistake is trying to optimize costs by performing the periodic ROI analysis in an IT vacuum, regardless of the variables you choose to measure. “All organizations attempt to optimize IT costs, but those that do it best focus on cost optimization as an ongoing discipline and not a one-off exercise.”
Of course the true measure of the value of IT is business performance. Whizbang technology is worthless if the organization still can’t make its numbers, even if the technology itself shows strong ROI. A cost optimization approach, built into the fabric of the business, incorporates regularly scheduled cost analyses of discrete technologies within IT that are then factored into the bigger picture.
When looking into specific ways to optimize IT costs, several factors should be considered:
- Potential benefit
- Customer impact
- Degree of organizational risk
- Degree of technical risk
- Investment of time and money requirement
Of the various decision support tools provided by IT vendors, the TCO analytics tool developed by Alinean helps IT decision makers compare the total cost of ownership for the IBM PureFlex System versus a traditional dedicated or virtualized infrastructure.
The Frugal Networker describes some of the data points: “Given in the analysis are costs from capital outlay such as hardware, software, licensing, and storage. There’s a section outlining estimated operating costs from support contracts, support labor, and facilities. There are also sections that calculate employee productivity and revenue impacts.” The report also includes a break even analysis that shows when the new system will start paying for itself.
Success stories that describe how the IBM PureFlex System cuts costs are plentiful. One Swiss company managed to reduce physical server systems by 70 percent and cut maintenance costs by 30 percent.
While such numbers are impressive, they are only one piece of the IT cost optimization puzzle. The goal is to look at cost management as a discipline, not simply a reaction to expense targets being handed down from on high. As you dig deeper you’ll see that an approach that is integrated with business objectives isn’t some unattainable pie-in-the-sky state of nirvana. Rather, it’s a change in behavior that any organization, over time, can achieve.
As the Gartner gang puts it: “IT cost management should never be a No. 1 priority, but delivering and maintaining IT solutions that add business value should be.”
You can learn more about integrated and streamlined processes that will help you save money and boost ROI through the IDC white paper, which will guide you through how to succeed in your IT environment.IBM BP Network today.