The latest BriefingsDirect panel discussion centers on improving
data-center productivity by leveraging all available sourcing
options and moving to modernized applications and infrastructure.
IT leaders now face a
set of complex choices, knowing that discretionary and
capital IT spending remain tight, even as demand on their systems
increases. Economists are now seeing the recession giving a way
to growth, at least in several important sectors and regions.
Chances are that demands on IT systems to meet this growing
economic activity will occur before IT budgets appreciably go up.
So what to do? A panel of experts examines here how to
gain new capacity from existing data centers through both
modernization and savvy exploitation of all sourcing options.
And—by outsourcing smartly,
migrating applications strategically, and modernizing
effectively—IT leaders can improve productivity while still
under tightly managed costs.
One choice that may be the least attractive is to stand still as
the recovery gets under way and demands on energy and application
support outstrips labor, systems supply, and available
Learn more on managing for growth by examining three
data-center transformation examples that uncover how
effective applications and infrastructure modernization improves
enterprise IT capacity outcomes. The panel also examines
modernization in the context of outsourcing and hybrid sourcing,
so that the capacity goals facing IT leaders can be more easily
and affordably met, even in the midst of a fast-changing economy.
Please welcome the panel: Shawna
Rudd, Product Marketing Manager for Data Center Services at
Larry Acklin, Product Marketing Manager for Applications
Modernization Services at HP, and Doug
Oathout, Vice President for Converged Infrastructure in
HP’s Enterprise Services. The discussion is
moderated by Dana Gardner, principal analyst at Interarbor
Here are some excerpts:
Oathout: When you look at the budgets still
being tight, but business is starting to grow again, IT leaders
really need to look strategically at how they're going to tackle
their budget problems.
What they need to do is to start to think about how, and what,
major projects they want to take on, so that they can improve
their cash flow in the short-term while improving their business
outcomes in the long-term.
In the past, companies have looked at outsourcing as a final
step, versus an alternate step in IT. We're seeing more clients,
especially in the tight economy that we have gone through,
looking at a hybrid model.
There are multiple sourcing options, there are multiple
modernization tasks as well as application culling that they
could do to improve their cost structure. At HP we look at
modernization of the software and we look at outsourcing
options and cloud options as ways to improve the financial
situation and to improve the long-term cost structures.
There is a model evolving, a hybrid model between outsourcing and
in-sourcing of different types of applications in different types
Acklin: If you look at your current spend and
how you are spending your IT budgets today, most see a steady
increase in expenses from year-by-year, but aren't seeing the
increases in IT budgets. By doing nothing, that problem is just
going to get worse and worse, until you're at a point where
you're just running to keep the lights on. Or, you may not even
be able to keep up.
We call that "the cost of doing nothing." That's the real
The number of changes that have been requested by the business
continues to grow. You're putting bandages on your applications
and infrastructure to keep them alive. Pretty soon, you're going
to get to a point where you just can't stay ahead of that
anymore. This is the cost of doing nothing.
If you don’t take action early enough, your
business is going to have expectations of your IT and
infrastructure that you can't meet. You're going to be directly
impacting the ability for the company to grow. The longer you
wait to get started on this journey to start freeing up and
enabling the integration between your portfolio and your business
the more difficult and challenging it's going to be for your
Rudd: Clients or companies have a wider variety
of outsourcing mechanisms to choose from. They can choose to
fully outsource or selectively out-task specific functions that
should, in most cases, be able to provide them with substantial
savings by looking at their operating expenses.
It's not going to get any cheaper to continue to do nothing. To
support legacy infrastructure and applications, it's going to
require more expensive resources. It's going to require more
effort to maintain it.
The same applies for any non-virtualized or unconsolidated
environment. It costs more to manage more boxes, more software,
more network connections, more floor space, and also for more
people to manage all of that.
The risk of managing these more heterogeneous, more complex
environments is going to be greater—a greater risk of
outages—and the expense to integrate everything and try to
automate everything is going to be greater.
We help clients maintain their legacy environments and increase
asset utilization, while undertaking those modernization and
transformation efforts. From an outsourcing standpoint, the types
of things that a client can outsource could vary, and the scope
of that outsourcing agreement could vary—the delivery
mechanism or model or whether we manage the environment at a
client’s facility or within a leveraged
Working with a service provider can help provide a lot of that
insurance associated with the management of these
environments—and help you mitigate a lot of that risk, as
well as reduce your cost.
The risk to the client, to the client's business, should be
better mitigated, because they're not having to coordinate with
four or five different vendors, internal organizations, etc. They
have one partner who can help them and can handle everything.
Oathout: As you look at service providers or
outsourcers, there is a better menu of options out there for
customers to choose from. That better menu allows you to compare
and contrast yourself from a cost, service availability, and
delivery standpoint, versus the providers in the marketplace.
IT managers have choices on where to source, but they also have
choices on how to handle the capacity that fits within their four
walls of the data center.
We see a lot of customers really looking at: How do I balance my
needs with my cost and how do I balance what I can fit inside my
four walls, and then use outsourcing or service providers to
handle my peak workloads, some of my non-critical workloads, or
even handle my disaster recovery for me?
So IT managers have choices on where to source, but they also
have choices on how to handle the capacity that fits within their
four walls of the data center.
... We can get a 10:1 consolidation ratio on servers. We can get
a 5-6:1 consolidation ratio on storage platforms. Then, with
virtual connectivity or virtual I/O, we can actually have a lot
less networking gear associated with running those applications
on the servers and the storage platform.
So, if we look at just standard applications, we have a way to
migrate them very simply over to modern infrastructure, which
then gives you a lower cost point to run those applications.
When you look at modernizing your applications and look at
modernizing infrastructure, they have to match. If you have a
plan, you don't have to buy extra capacity when you start. You
can buy the right capacity then grow it, as you need it.
Acklin: Outsourcing can drive some initial
savings, maybe up to 40 percent, depending on the scope of what
you're looking at for a client. That's a significant improvement
on its own.
Not every client sees that high of a saving, but many do. The
next step, that migration step, where we’re also
migrating over to a consolidated infrastructure, allows you to
take immediate actions on some of your applications as well.
In that application space, you can move an application that may
be costing you significant amounts of the dollars, whether it be
license fees or due to a lack of skilled resources and so forth
on a legacy platform. Migrating those or keeping the application
intact, running on that new infrastructure, can save you
significant dollars, in addition to the initial work you did as
part of the outsourcing.
The nice thing, as you do these things in parallel, is that it's
a phase journey that you are going through, where they all
integrate. But, you don't have to. You can separate them. You can
do them one without the other, but you can work on this whole
holistic journey throughout.
The migration of those applications basically leaves those
applications intact, but allows them to have a longer lifespan
than you may typically would. ... We can still drive significant
40–50 percent saving, just through this migration phase of
moving that application onto this new infrastructure environment
and changing the way that those cost structures around software
and so forth are allocated toward that. It frees up short-term
gain that can turn around to be reinvested in the entire
modernization journey that we're talking about.
As you continue that journey, you're starting to get your cost
structures aligned and you're starting to get to a place where
your infrastructure is now flexible and agile.
You’ve got the capacity to expand. When you move
into that modernized phase, you're really trying to change the
structure of those applications, so that you can take advantage
of the latest technology to run cloud computing and
everything operating as a service.
... The idea of putting the outsourced, migrated, modernized
phases together is that they're not sequential. You don't have to
do one, then the other, and then the other. You can actually
start these activities in parallel. So, you can start giving
benefits back to the business immediately.
For example, while you're doing the outsourcing activities and
getting that transition set up, you're starting to put together
what your future architecture is going to look like for your
future state. You have to plan how the business processes should
be implemented within the application and the strategic value of
each application that you currently have in your portfolio.
You're starting to build that road map of how you are going to
get to the end state. And then Even as you continue through that
cycle, you're constantly providing benefits back to both the
business and IT at the same time.
Oathout: One example that we worked very closely
was in services with our customer France
Telecom. France Telecom transitioned 17 data centers to two
green data centers. Their total cost of ownership (TCO)
calculation said that they were going to save 22 million (US
$29.6 million) over a three-year period.
They embarked on this journey by looking at how they were going
to modernize their infrastructure and how they were going to set
up their new architecture so that it was more flexible to support
new mobile phone devices and customers as they came online. They
looked at how to modernize their applications so they could take
advantage of the new converged infrastructure, the new
architectures, that are available to give them a better cost
point, a better operational expense point.
France Telecom emphasized the migration. They migrated a number
of applications to newer architectures and they also modernized
their application base. They focused on the modernization and the
migration as the key components for them in getting their cost
Rudd: The things we're talking about don't have
to occur in this particular order. I know of other clients for
whom we've saved around 20 percent by outsourcing their mainframe
Then, after successfully completing the transition of those
management responsibilities, we've been able to further reduce
their cost by another 20 percent simply by identifying
opportunities for code optimization. This was duplicate code that
was able to be eliminated or dead code, or runtime inefficiency
that enabled us to reduce the number of apps that they required
to manage their business. They reduced the associated software
cost, support cost, etc.
Then there were other clients for whom it made more sense for us
to consider outsourcing after the completion of their
modernization or migration activities. Maybe they already had
modernization and migration efforts under way or they had some on
the road map that were going to be completed fairly quickly. It
made more sense to outsource as a final step of cost reduction,
as opposed to an upfront step that would help generate some
funding for those modernization efforts.
Acklin: We offer something that's called the
Transformation Experience Workshop. It's basically a one-day
activity workshop, a slide-free environment, where we bring you
and take you through the whole journey that you'll go on.
We'll cover everything from how to figure out what you have, what
you are planning, how to build the road map for getting into the
future state, as well as all the different ways that will impact
your business and enterprise along the way, whether you are
talking technology infrastructure, architecture, applications,
business processes, or even the change management of how it
impact your people.
You come out understanding what you're getting yourself into and
how it can really affect you as you go forward. But, that's not
the only starting point. You can also jump into this
modernization journey at any point in the space.
We can do a full assessment of your environment and figure out
how your apps and your infrastructure are working for your
business or, in most cases not working for your business. HP can
help you figure out the right place for beginning that journey.
... Many of our clients we talk to, don’t know
how they would pay for a journey like this. Actually, you have a
lot of options right in front of you. There are good methods on
how to cover this, how to put things together like these
three-phase activities (outsource, migrate, and modernize), or
how to go on these journeys that can still work for you even in
tough financial times.
Listen to the podcast. Find it on
iTunes/iPod. Read a
full transcript or
download a copy.