Despite years of Lip Service, most businesses have done a poor job of using technology to manage their technology. They've tried standardization, consolidation, automation, best practices, and outsourcing. Yet they're still spending about 80% of their IT budgets to maintain systems and keep the lights on, while only 20% goes toward new technology and innovation.
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Mott knows the numbers Photo by Sacha Lecca |
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Changing that ratio is difficult, despite falling hardware prices and the availability of inexpensive or free open source software. As companies consolidate data centers, it can take more costly electricity to power and cool closely packed racks of servers and storage systems. And those centers require more experienced--and more expensive--staffers to manage the systems, applications, and databases.
Tech companies, which are trying to help their customers deal with these issues, face the same challenges. Hewlett-Packard last week said it will consolidate 85 data centers worldwide into six centers in three U.S. cities. The effort is expected to reduce the company's IT spending by about $1 billion in the coming years and dramatically shift where the money goes. HP spends about half its IT budget on operations and half on new initiatives and innovation, says Randy Mott, HP's executive VP and CIO.
Once the consolidation is completed, HP expects spending on IT operations to drop to around 20% of the IT budget. "There are huge costs to be saved by making the right technology investments so that you are utilizing the power of technology," says Mott, a former CIO at Wal-Mart and Dell.
The latest challenge is the cost of energy, which has spiked with the jump in oil prices. In many cases, it now costs more to power and cool a data center than to buy the servers and storage systems to fill it. Tech vendors are trying to help. Advanced Micro Devices and Intel are producing dual-core server processors with built-in virtualization capabilities that require less power and throw off less heat, reducing cooling needs. And IBM last week introduced the IBM PowerExecutive, a system to automate the management of power consumption in data centers to cut energy costs.
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