How to save in IT investments through cloud

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Imagine that you are in charge of the data centers of any big or small corporation.  Imagine that today you receive a visit of an IT provider offering support in any of the areas you are controlling.

What would you first ask this provider for these days? Wouldn’t you like the provider to determine how to really save you more money in your data centers?

There are various ways to save money when assuming a cloud computing strategy.  Sometimes it is difficult to see these savings from the start, because people tend to think that there is a need to get into an up-front investment, which won’t provide a return on investment (ROI) in a clear way.

It is important to be aware, before you approach a cloud strategy, that the starting point for the savings will reside in the analysis of workloads from the various types of business applications that are handled. And, this argument of workload needs should be considered independent from the sum of other advantages, such as agile deployment, and standardization of infrastructure.

The IBM Cloud Exploration Workshop can help you decide which groups of business applications are ready for cloud, and how to perform an initial analysis of inhibitors and accelerators in the functional vision. During this customer assessment, IBM helps in evaluating the costs of every aspect that is related to running the selected applications in cloud mode.

This economic study can be conducted in several ways depending on the dedication and internal data collection that the IBM client is able to achieve. The development of this workshop assessment can include objectives, agenda and deliverables such as the following ones:

  • Validate the current IT environment: cost structure, growth plan data, and other important factors.
  • Develop the cloud high-level architecture.
  • Understand administrative and business impact requirements, and any related assumptions.
  • Advance the new the financial model.
  • Develop and deliver an executive presentation.

A usual way to start is by performing a questionnaire simply to determine the degree of potential saving in capital expenses and operational expenses. In this initial approach, the IBM team can help you consider those aspects within the IT of your company that might usually not be considered, but represent an expense. In the consideration, certain questions are asked such as:

  • How many test and development environment requests do you receive on monthly basis?
  • What is the average duration of provisioning a test or development resource?
  • How much time is dedicated to IT administration and maintenance of your test and development environment’s hardware and systems (which are part of the traditional IT expenses)?

Also, more strategic questions can be formulated, for example:

  • Do you apply or plan to deploy any chargeback mechanisms at your organization?
  • Can you monitor and track the utilization of your manually provisioned resources?

Other relevant questions can also be formulated.

With these kinds of questions, IBM sets up a test case to qualify the client situation to perform recommendations about which applications and infrastructure components can be placed in a specific cloud deployment model. An IBM study has shown that moving from a traditional infrastructure to a public cloud can yield a modest reduction in costs. However, for significant cost reductions, a private cloud infrastructure is required. The reason is because the underlying cost savings of the public cloud accrue to the public cloud provider and are only partially passed on to the public cloud user. Setting up a private cloud computing environment results in the largest cost savings based on today’s public cloud pricing models.

Analyzing typical areas in a data center to obtain payback for implementing cloud computing can be structured in five key areas:

  • Hardware: Will provide reduction in the number of servers and will drive reduction in server depreciation cost, energy usage, and facility costs.
  • Software: Will be impacted by the reduction in the number of OS licenses.
  • Automated provisioning: Will provide reduction in the number of hours per provisioning task.
  • Productivity improvements: Will come from the reduction in number of hours waiting for images per project.
  • System administration: Will come from improved productivity of administration and support staff, which means being able to support more systems per administrator.

All five of these areas can see significant reductions in cost or gains in productivity with the implementation of cloud computing.

As an example, consider the case of a banking customer with a large number of servers that are evolving to a cloud environment. In this example, the system administration costs are significantly reduced because of efficiency gains in administration, driven by the implementation of service management software. The service management software enables an administrator to manage more systems and as a result fewer administrators are required. The provisioning costs are significantly reduced through the use of automation, which greatly reduces the time required to provision resources. This customer experiences a huge improvement in productivity associated with testing activities; however in overall percentage terms these savings are much smaller than the large savings in provisioning and system administrator costs.

As you see, the economic benefits of a cloud strategy in companies are real, the payback period is typically very short, and the steps to obtain these savings are well defined.

Have you been able to go through some of the steps mentioned here in your company? Are you in the middle of cloud implementation and have a set of goals for saving? Tell us how it is going!

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