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Experton Group believes IT executives need to become more proactive in monitoring the environment in the data center so that they can reduce the energy usage costs of data center operations by up to 40 percent. While it is clear to most people that power and cooling costs continue to skyrocket, it is not clear what the best near-, mid-, and long-term actions are to take to mitigate these costs. And for many clients it is less the cost than the availability of power and the appropriate DR/BC strategy. How many of the power and cooling problems that exist are due to inefficient design and use, and which problems are simply the result of a growth in business automation are questions facilities and IT executives need to know. IT executives should move to get a tighter handle on the reality of their data center environments with proactive monitoring of environmental information, integrated into an overall enterprise management framework.
Unfortunately, the need to provide power and cooling systems has been increasing at a faster rate than the ability of technology companies to produce cooler systems. This has placed many companies, even mid-sized companies, in a quandary. A data center that was designed to handle systems growth for the next ten years is often in a state that it cannot handle more systems after four or five years. This is not because there is no space, but rather, because either the power utility cannot provide the requisite power or the cooling systems do not have the capability to remove heat in the densities now being generated.
The latest environmental monitoring products will only help companies achieve better energy management if they are integrated into a holistic enterprise management lifecycle. This cycle needs to start with close cooperation between facilities managers and planners. This planning needs to include communication with enterprise architects, so that future networking, storage, and systems equipment can be included in environmental planning.
An assessment should be made of the existing data center infrastructure, with an audit to find out what environmental information is already available that might not be currently used. Advanced companies have already started doing a “Green IT Assessment” to incorporate all facets of energy and environmental concerns.
Experton Group believes most IT executives are not leveraging their budgeting and financial plans to fund the additional management processes, projects, and tools needed to improve IT operations. With the proper focus and action plan IT executives can use savings offsets to pay for the desired management improvements. In effect, IT executives can use the monies saved to self-fund other enhancements and thereby avoid going through the funding request process. IT executives should develop a financial strategy for self-funding projects that IT needs to improve its own operations. Executives should be able to execute the plan and still return some of the monies derived from savings back to the corporation or lines of business.
There are IT projects that, if phased appropriately, can pay for themselves within the same fiscal year. These are not always easy to find and are not obvious, but they do exist. IT executives should work with their staff to identify projects that can be undertaken that can fund themselves while yielding improvements to the IT management process.
Because most IT executives are not comfortable with financing and the myriad of options, few executives seek to use financing to fund other projects or to self-fund a project. Nonetheless, there are financial institutions and vendors with financial arms, such as Hewlett-Packard Co.'s (HP)'s HP Financial Services (HPFS) unit and IBM Corp.'s IBM Global Finance (IGF) unit, that will provide asset or project financing. IT executives should talk to these finance companies, understand the flexibility of the various offerings, and determine if and how the use of these financial tools will help them achieve their project self-funding requirements.
Client Challenges: Over the past year the nature of risk has significantly changed. Executives are now struggling with the impacts of global enterprise risks to and from corporate data. These risks can be business operational, credit, or investment risks or a combination of the three. Companies are working to define the data risks, understand where they come from, develop a classification methodology, and determine the extent of exposure to and from the data. They are learning how to monitor and report risks, and to mitigate them to an acceptable level.
Executives, employees, and the public in general have been surprised by the impacts of the once-acceptable risks that enterprises assumed. These losses cover the gamut of loss types – from natural disasters (Hurricane Katrina) and terrorism (9/11 in the U.S., 7/7 in UK, and 3/11 in Spain) to SARS in Asia to stolen laptops, credit card information, and highly sensitive client information from banks. Companies and nations have seen losses in the billions of dollars and their image and reputations damaged. In additions companies have been fined and/or sanctioned while individuals have been fired.
Experton Group believes executives have a fiduciary responsibility to perform a risk self-assessment that examines the global risks to and from data and create and execute plans, policies, and strategies that bring the risks into an acceptable range. While these exercises can consume a fair amount of resource, executives should find that the expense of prevention greatly outweighs the remedial outlays. Executives should ensure the self-assessments are also done at each of the business units and geographies, and the results are rolled up. To make certain all bases are covered, a top down assessment should be done as well and then the two sets reconciled. Executives should find that this data-oriented ERM self-assessment will provide them with the information needed for defensible, effective ERM decision making.
Experton Group Opinion: Over the next 3-5 years most global 2000 corporations will have to make a major change in their ERP systems. In the past five years there has been considerable consolidation in the industry and most systems in place today were purchased from a company that has since been acquired.
The emerging generation of business applications is being constructed around service-oriented-architecture (SOA) and standards-based middleware. Some of the ERP functionality will be transferred to software-as-a-service (SaaS). SaaS will likely be better suited for mostly standardized HR, finance and other back-office functions. Other functions that provide competitive advantage won’t initially be transferred to SaaS due to the need for more costly customization. Companies that understand the new business application environment will be better equipped for restructuring their processes to meet business requirements, not just to conform to limitations of their software.
Experton Group believes Oracle offers a compelling vision for a services-based ERP, but until they are further along with their implementation, companies who can delay ERP and/or CRM changes should do so.
SAP’s Netweaver vision is less far-reaching, but implementation is further along. SAP has not yet met with much success in their attempt to offer SaaS to SMBs.
Other emerging options should be watched, but relatively small market share means too much risk for larger companies today.
Experton Group believes no matter which alternative emerges as the correct one for your enterprise, the cost of converting to a services-based suite of applications will be significant. In the near-term, your enterprise can best prepare for the conversion by gaining SOA experience and skills, especially where it can be used to service-enable applications that will need to integrate with ERP and/or CRM.
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