Posted on 04 May 2011
The Hub Commentary_
I agree that costs need to be managed, however, there comes a point of no return. Justifying the business value and return on investment is the shift IT organizations need to make in order to be competitive with the cloud and SaaS providers.
There needs to be focus on cost cutting where possible, however, there needs to be more focus on the delivery of value and growing the business with technology. It is great to spend on technology when you can illustrate gains in revenue through the use of technology whether it be customer retention and quality of service or a differentiating service in the market.
Are you merely counting pennies or spending to gain?
Companies overspent by more than $207 billion on technology and telecom purchases last year, according to NPI, a consulting firm specializing in the management of IT spending. Many enterprises were dealing with budgets that had been slashed during the Great Recession, even as new projects were expected to drive the innovation necessary for growth. (Read Full Article…)
Posted on 14 April 2011
The Hub Commentary_
Cloud ROI of 80%, I must agree – NOT. This is exactly what creates hype and those short term cost savings in hardware and software manifest in long term management and monitoring. Measuring business services and growth to the bottom line of your organization is a better measure.
As the author describes, cloud based computing brings agility to the organization to be flexible and respond in market time to changing conditions and leverage economies of scale in a shared infrastructure. The second savings is not managing systems that are common to all organizations and provide no market differentiation for your organization.
However, in the rush to the cloud many are leaping, falling off, the cliff by not planning the management, monitoring and measurement in during development. Agility is a great thing, but adds complexity and requires a strategy in measuring business services and monitoring the performance of your service providers.
No doubt there are cost savings and when deployed strategically, cloud computing will be the innovation that could drive growth into an organization. Deployed tactically under the hype umbrella of short term hardware savings will only push some organizations off the cliff of doom.
What is your realistic expectation of ROI for your cloud deployments?
A recent Microsoft “study” claims an 80 percent savings by using the cloud. This news hit the blogosphere with a big splash — it’s another positive outlook for cloud computing, and it provides some pretty compelling reasons to move to the cloud. Not. (Read Full Article…)
Posted on 13 February 2011
I have been asked many, many times “what is the return of a business service management project / practice”. The answer is honestly, “it depends” on your environment, how much efficiency can be driven into it, how much consolidation, cost of outages, the list goes on. However, I know that is absolutely the answer everyone despises and I can say by NOT tackling a shift from technology to services, it costs you 2% of revenue (at a minimum) every year.
Thus, I put my old analyst hat back on and thought as an analyst what would I do? Create a model by which to calculate and start building out a business case. I have put this basic information into a short presentation and have added it to our resource page. The first link is a streaming slide presentation and the second is a self contained PDF file with sound. The PDF file takes a few minutes to download, but you can share the file as you like.
The objective with this slide show was to bring together the statistics from many analyst papers, provide a simple model and understanding of what it costs you to not manage services. We are at a tipping point this year with agile technology, new deployment options and competitive cost models.
This post goes hand in hand with the previous Featured Post on Finding Your Services. Know how to identify and classify your services for service value. The next in that series will be examples of services and the start of a service catalog.
Let me know your thoughts on this! How are you getting to service value and what does it cost you?
Click Here – This is the streaming slide show and is just over 6 minutes.
Click Here – This is the self contained PDF download – 8M download, it does take a few minutes to download and start, but you may share accordingly.
Posted on 27 January 2011
The Hub Commentary_
Calculating ROI and managing costs in the data center for Business Service Management (BSM) projects is difficult. In fact, I was asked this question so many times that I put my META Group analyst hat on and said, “Michele, what would Herb tell you to do?” Yes, the very same Herb VanHook who is featured in the BSMDigest this month. He would say create a model to calculate it and thus I did. Anything that improves processes and does not remove people, hardware or software from the environment is really cost management. This is still a good thing and needs to be recognized and justified and can be done quite simply.
What makes virtualization and cloud computing so appealing in the early stages is that it removes hardware and better utilizes hardware and software licenses and thus has a hard dollar impact early. So let’s turn the tables, I posted a news piece that spoke of the same costs of outages that I have used for years now – $100,000/hr is what it costs for a mission critical system to be down. 10 hours per year = to $1M, so Michele, cmon scale it, ok the usual metric is 1-2% of revenue to consider the size of your organization.
The insurance policy is your BSM strategy which is reliant upon the integration platform that brings together the bits of data into a meaningful view as services. I also venture to guess that most solutions start at <10% of that outage and the automation they bring to the table helps to shift the resource utilization pie in favor of using resources to new and growth projects versus monitoring the screen for events more than paying for itself in it’s early adoption.
I’ll post my ROI calculation method very soon to give you a real idea what you are losing by postponing you BSM practice.
Often, IT budget costs appear expensive as a result of being inflated by arbitrary allocation and loading of costs that should be shared or are otherwise improperly assigned. Unfortunately, old habits die-hard and the misallocation of costs continues to the detriment of both the organization and mainframe computing. (Read Full Article…)
Posted on 25 January 2011
The Hub Commentary_
IT by the numbers and with Business Service Management. In lean times, we need to get the most out of what we have, look at lower cost alternatives for the commodity and make the investment in the things that will drive value to the business. Delivering real ROI has been something IT has been notoriously poor at executing because they manage by technology and not by the business service and lack the understanding of the cost / value to the business.
We are entering a time of growth and expansion of technology and the time will come to reimagine IT as business services and manage them as such. Investing in new, agile technologies also require the right management baked in. Last week the press was all over the Gartner report dissing Amazon for not providing enough monitoring. Whose responsibility is it to manage your workloads in the cloud? Service enabling those workloads and instrumenting them to manage as end-to-end services will be key in taking full advantage of agile technologies and opex subscription services.
Time has come to think in terms of Business Service Management of the infrastructure.
You can’t run a company without technology, but you can’t invest in technology without the blessings of the finance department. And thanks to the stagnant economy, the pendulum of power between Finance and IT is swinging decidedly toward the chief financial officer’s door these days. (Read Full Article…)