by David Merrill on Sep 23, 2011
Actually the title of this blog should be “Cost Savings Sharing,” but that is not a very catchy way to draw you in.
But, now that I have you…
As I work with customers around the world, it is increasingly common for medium-to-large IT shops to use third party contractors, system integrators, outsources or cloud providers to enable some of their IT operations. When it comes to storage, servers, VM, backup infrastructure, there are a variety of arrangements of asset ownership, labor allocation, task allocation, etc.. Therefore, when we embark on a cost reduction plan, it is important to determine whose costs are being impacted and targeted.
HDS has defined 34 different and unique costs associated with storage and IT ownership. We also are tracking some 29-30 different ‘levers’ (technology, best practices, business operations, people skills) that can reduce costs. So when we narrow down the costs to be reduced, and the options to reduce these costs, there is often another step to determine whose money will be saved at the end.
As an example, if a customer undertakes a plan to increase storage utilization through thin provisioning, de-duplication and dynamic tiering, they may be surprised to find out their investment in these changes will save costs – but not necessarily for them. They may have a SI or outsourcer that owns and manages some of the storage capacity; the changes that they pay for will benefit the architecture and utilization rates of someone else’s infrastructure. If they want to eventually see the savings, they might have to re-negotiate the contract. I am not saying this is a bad thing, but most organizations want to reap what they sow, or recognize the cost savings to their own budget first, before helping an external provider.
One of the steps in our Storage Econ methodology (that our consultants would do in a workshop) is to:
- Identify the costs
- Measure the costs
- Determine what levers would impact the cost
- And then determine the recipient organization of the cost savings
Step four is often overlooked until the transformation process has started. If you really stop and measure point four, it may impact your choices in step three.
Go ahead and be selfish in this area. Your budget and local economics may depend on it.