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Transformation and the Impact to your IT Staff—Part 4 “Utility-based Consumption”

by David Merrill on Oct 25, 2012

This is the fourth segment in a series of blogs related to the potential impact to your staff with various transformational elements. My previous topics covered how virtualization and chargeback can and will impact the dynamics and work flow of your IT team. This entry discusses alternate consumption and acquisition methods, and the effect on IT teams who undertake this transformation.

First – a prediction. I believe that the traditional method of RFI-Purchase-Depreciate-Asset Retirement will go away. Gartner predicts this to happen within 8 years; however, I think it will be closer to 5 years. The notion that we need to own and depreciate IT assets is based on accounting principles (for taxation and balance sheet reporting) and does not reflect the flexibility and agility that companies need from their IT department. Furthermore, having to hold on to assets for 4 or 5 years (in some cases 7 years) is an artificial impediment to cost reduction and IT improvements. Holding on to assets beyond their ideal useful life increases operational costs (like power and cooling per TB), outage risk, and limits overall performance. Imagine if someone told you that you could not purchase a new iPad 3 until you have had your iPad 1 for at least 4 years (forget about even getting an iPad 2). These practices of IT asset ownership are fading. Not all assets will encounter different provisioning models, but we are seeing this effect now with buy-as-you-grow consumption models, both in cloud environments and in the local data center.

There are many advantages to consumption-based IT, and this ingredient is usually an important one for a data center transformation project. So how can this impact your staff? Here are some general ideas to consider as you may have to transform how things are done, and how people work and interact with IT.

There are a couple of things that they will have to start doing (if they are not already):

  1. A services catalog will need to be created and updated at least annually
  2. Within the service catalog, the IT team will have to broker SLA and OLA requirements between the end user and the utility provider
  3. IT teams will become more involved with brokering services and solutions, without necessarily having their fingers in every aspect of the engineering and design of the solution
  4. A referential architecture will be required to map the service catalog to the delivery capability of the utility provider
  5. Chargeback and internal billing, and journal entry processes will be required if internal cost allocations are needed
  6. Utility models can accelerate self-provisioning, or auto-provisioning. These steps will require a new procurement and approval flow (initially) until the consumption reporting and behavior trends can be analyzed. You cannot have kids roaming around the candy store…

There are also a few things that they may stop doing, or at least reduce the time and effort in performing:

  1. RFI, RPP, ITT and other such instruments will be greatly diminished over time. Partnership decisions will be made based on price and service level capability
  2. Some level of architecture and engineering control will have to be shifted to the utility provider
  3. Testing, certifications and integration will largely be shifted to the utility provider. IDC estimates that these tasks take up 23% of the IT staff resource

Finally, there are fundamental changes to some work elements:

  1. Troubleshooting and second-third level support will be fundamentally different, depending on the type of utility service that you have. If managed services are part of the package, then these tasks will be largely removed from your team. Otherwise, it is business as usual
  2. CMDB and asset registries will have to be re-visited, and the impact of change control will need to be reviewed in light of having different owners for some of the assets
  3. Cross-team coordination will have to improve between server, storage, network and application groups, and the utility companies
  4. End-to-end transparency and accountability flows will need to be refined, or re-done altogether

Utility and Capacity-on-demand computing is here, and will continue to take over traditional purchase and ownership models. These decisions will impact your staff’s tasks, division of labor and required skills necessary to broker these new services. As it is true with technical transformations, there will also be organizational transformations required.


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