IT Cost Optimization — The (Im)possible Balancing Act

By Aaron Oshita

October 27, 2020 | min

Wouldn’t it be great if you could predict the future? It seems like IT is expected to do so when it comes to budget planning. How could you possibly account for all business needs and the resources to support them for the next 3-5 years in a few large, upfront capital expenditures? At the rate of change your business is facing, IT can no longer afford the risk of being locked in to one vendor or a myriad of one-off purchases. The cost of over-provisioned resources often goes unnoticed until it’s too late. New piecemeal resources create uncontrollable sprawl and take more staff time (and dollars) to manage. 

Planning for what we may need is one thing, but what about planning for what we may not need? Fluctuating demands and sudden calls to reduce spending can and may continue to happen at any time. Addressing costs reactively can push IT into a number of obstacles including:

  • Internal resistance to change due to deeply entrenched processes
  • Limited time and resources to identify root causes of wasted costs and address them comprehensively
  • Loss of control and visibility into the total IT spend

This requires you to remain agile and to continue to prepare for the unknown and be ready to pivot as needed while  getting ahead of the typical challenges of IT cost management.

Getting Ahead of the Unexpected

Managing IT expenses is a constant balancing act. On one hand, you have to maintain and protect your technology assets. While on the other hand, you have to help your business grow, which often means sporadic technology purchases to support fluctuating resource demands. Your stakeholders may push for more investment without accounting for the costs. Then, push comes to shove and all of the sudden, you’ve got a technology turf war to balance into the mix. We know this balance is only going to get tougher, so how can we keep IT prepared for an uncertain future?

Maintaining control and optionality in your IT spend requires an emphasis on consolidation and on-demand consumption. Datacenter modernization alone can help you get a handle on your on-prem maintenance costs, saving 10% to 20% of your datacenter budget. Additionally, consolidation sets up IT to simplify and scale operations in a cost-efficient way. Take advantage of platforms that offer “pay-as-you-grow” consumption models, allowing you to shift from capex to opex, and making it easier to adjust investments in times of need. The more flexibility you build into your foundation, the more options you’ll have to maneuver in an emergency. 

More Choice, More Predictable Cloud Spend

A flexible, intelligent, software-defined infrastructure as a foundation allows you to treat cost optimization not as a one-off fire drill, but as a predictable spend cycle. It allows you to better anticipate your spend and put safeguards in place to maintain control. Instead of waiting for an urgent call from your CFO to cut costs, a modernized infrastructure allows you to:

  • Pool capacity across the entire datacenter and reduce waste by enabling shared resources and services across multiple business units
  • Pay for only what you need by allowing you to add new resources on demand
  • Downscale capacity for lower-priority projects and idle resources with a just few clicks
  • Utilize existing licenses across multiple software platforms, preserving your investments
  • Implement automation and virtual assistants to reduce inefficient manual work
  • Minimize your datacenter footprint and associated power requirements

A recent report by IDC found that enterprises that modernized their datacenter and delivered IT services in a private cloud saved an average of $381,300 per organization from licensing, power and facilities-related expenses. Additionally, this gave these organizations the opportunity to efficiently scale and expand their hybrid cloud deployments, further enabling IT cost savings.

Building a Cost-optimized Hybrid Cloud

While the benefits of cloud are clear, managing its cost is a different story. You often have to contend with a laundry list of line items that can appear in your cloud bill that makes planning difficult. Especially as you start giving users more freedom to deploy cloud resources autonomously. So how can you deliver the benefits of cloud to your organization without breaking the budget? This becomes increasingly important as some organizations allocate up to one-third of their IT budget to cloud. Don’t wait until damage is done to address cloud costs by doing the following:

- Avoid Being Locked In: IT teams can quickly find themselves at the mercy of runaway costs once they're locked in to a single vendor. Use a hybrid cloud infrastructure that makes it easy to integrate with multiple cloud services without being held hostage by the high cost of switching vendors. This platform should allow you to build your hybrid cloud using hardware and software of your choice so you can use the most cost-effective technology to customize exactly what your business needs. 

- Implement Strict Governance Policies: The ease of cloud resource provisioning with a self-service model may cause users to become too liberal with their requests, consequently driving unforeseeable costs. Ensure that each business unit has agreed upon and commits to non-negotiable budget expectations by holding their users accountable for their own spend. Implement strict governance policies across your public and private clouds  to safeguard against cost leaks, track your cloud expenses on a granular level, and intelligently right-size cloud resource purchases.

- Ensure License Optionality: Matching the right workload to the right cloud shouldn’t come with extensive overhead costs. Ensure that pre-purchased credits and existing licenses can be carried over and utilized between your public and private clouds interchangeably. Your cloud platform should make it easy to preserve and utilize existing investments when and where you need them. 

Refocusing Investments for Accelerated Growth

Where to reinvest savings should not be a burden for IT to carry on their own. Facilitate a meaningful collaboration between your team and representatives of all lines of business. You will have to identify common needs and comprehensively orchestrate solutions that can address the highest priorities. Whether that’s building new digital channels to diversify customer interactions and collect deeper analytics, to enabling cloud native services to speed up development and slash time to market, the flexibility built into your cloud infrastructure opens many directions to support your growing teams.

  • With maintenance off their plate, consider upskilling your workforce by investing in new innovative projects, formal on-site training, or industry certifications
  • Take advantage of cloud native services to speed up your development cycles and bring new products to market faster
  • Support new big data and analytics projects to help deepen your customer relationships

IT cost optimization is an iterative process that requires on-going discipline and cooperation across the organization. To effectively facilitate this practice, you’ll need flexibility in your technology foundation that gives you insight to choose what’s best for your business and keeps your team focused on business value. In fact, some organizations have realized up to $7.8 million in productivity benefits, thanks to enhancing agility, scalability, performance and user productivity with Nutanix. 

See how Nutanix can help you realize higher business value from your IT operations.

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