With organisations focusing on reducing costs, EMC’s Brendan Crossey believes that the “disruptive” cloud-based technologies that are now being deployed promise even greater savings and increased innovation. He also argues that greening IT operations leads to lower costs.
With the economic downturn, there is a much greater focus on cost reduction. “Essentially everyone is looking to be much more effective in what they are running, much more lean and much more just-in-time; and overall much more cost- effective,” observes Brendan Crossey.
“They’re using a number of different technologies to achieve that goal. In the IT and storage world, we’re still seeing massive increases in utilisation. For example, in storage, we’re still seeing companies with 60-80 per cent increase in consumption per annum on a declining budget.”
Eighty per cent of the running costs for IT are in the “people and processes” category. “The impact of all these technologies is that traditional people and processes design is now starting to break through with that growth rate and cost attainment.”
The old business process for the IT function, including how you manage your people and your processes is “breaking that down.”
“It’s easy to manage a physical asset but if that’s a cloud-based service, someone else is running run it.” This move to IT as a pure service is very disruptive, and Crossey asks: “How do you design that? How do you procure that? How do you get the flexibility? It’s a continuous process, not something you procure every few years.”
“How do you change the technology? What will be your staffing profiles? What should they be trained in?” These are questions which arise from a cloud-based approach.
Crossey believes that could computing is “totally disruptive and for the first time we’re actually seeing IT as a way to reduce cost.”
In Northern Ireland, 80-85 per cent of the cost of people running an IT system is operational expenditure (people and processes) but only 15-20 per cent is on new technology and new development. Crossey believes that this ratio should be the other way around: “You should be using IT to drive more change, to drive more cost-effectiveness and get that model more towards a 50:50 ratio and then develop it with the majority on new technology.”
“Rather than trying to attack the 20 per cent, we’re now trying to attack the 80 per cent.
“You can drive much better cost savings by tackling the operational expenditure,” concludes Crossey.
When asked if he has observed any differences between the public and private sectors. He replies: “People are doing this for a reason, either to increase revenue or reduce costs.
“In the past, it’s been 90 per cent about driving revenue in the [private or public] sector rather than driving cost. Now everyone wants to reduce costs. However, the main difference now is how they procure that.”
In the private sector once the business case is made, “they will move fast”.
“Every day they are not implementing that technology, they are not saving on their cost base. They can move much quicker than government.”
Government has a much more difficult task, particularly in building the business case.
“If someone else has the technology, how do you build a procurement methodology around that and make it fair and equitable? You can’t tender for something that’s unique.”
With the fragmenting of IT services in the cloud it is becoming more and more of a problem. “We’re starting to see huge diversity in what people are offering. It’s all about that speed to market and innovative tools.”
Crossey says that “if you want to make real cost savings, you’ve got to buy technology at the peak of its curve, when it comes out. In three years’ time, that technology has moved on.
“You’re missing generations of technology these days.”
Traditionally we have seen technology being “refreshed” every three to five years. Now this happens every 18 months, which is a problem for many organisations.
“If it’s taking you three to five years to refresh your systems, you’re missing two generations of cost savings.
The outcomes of this acceleration in technology development is that the public sector is going to have to be much more flexible in how they procure IT services.
“What you’re buying and how you measure it is down to a lot of experience these days.
“It’s very difficult to put that in a set of procurement rules. How can the government tender and get the type of services that they require rather than just the cheapest?”
He believes that you now must get more value for money and technology providers must bring innovations to the market much quicker to get the savings the public sector requires.
“It’s becoming much more a services agenda. Supplying the technology just isn’t good enough anymore. How to utilise that technology? How does that affect the people and the processes?
“What you’re selling them is much more comprehensive. It’s no longer just a black box in the corner.”
It is no longer enough to be able to deliver a specific solution. Crossey says that clients, particularly in the private sector, choose “those organisations that can help you take that to market very quickly. To get it up and running very quickly and gain those benefits as quickly as possible.”
The nature of Crossey’s role has changed with the market. It is now “much more around a services and consultancy agenda”. Previously the procurement process focused solely on hardware.
“Our sales engagement has totally changed and is now much more about consulting. It is now about clients’ business agenda. What they’re trying to achieve, getting into staff and process issues: looking at the total impact of the technology.”
Crossey uses an analogy comparing IT services to utility services: “Electricity is something to help you do something. A utility and how you get most efficient use of but you don’t have conversations about how it is generated and transmitted.”
Another issue is sustainability. Greening technology and cost-cutting go hand in hand according to Crossey, with “significant cost savings being driven by the greening of technology”.
There is a lot of innovation around the green agenda in IT. With companies looking to use less storage while data grows up to 60 per cent per year. Crossey says EMC has taken a packaged approach to this: “Using the most appropriate levels of low cost, high capacity drives. Coupled with a small amount of very fast, high cost drives, to get an overall match, and make the process automated.”
Overall the IT utilisation rate is “very poor”, and often less than 20 per cent. Crossey believes that we need to bring this back “to the mainframe days: 90 per cent all the time”. This can be achieved by virtualisation and consolidation, with large efficient platforms. “Mixing capacity with performance to give level of service and performance required at lowest possible cost point.”
There are also technology solutions such as automatic storage tiering and disk spindown.
Technologies that reduce the amount of disc required. Slower, bigger discs consume a lot less power. It is now the norm for EMC to send customers a power calculation, giving the physical dimensions and how much power consumed.
“We’re now delivering a technology that is 20-30 per cent less power hungry with 20 per cent better performance and 20 per cent less cost,” observes Crossey.
Brendan Crossey is Head of EMC in Northern Ireland
EMC Computer Systems (UK) Limited Forsyth House
Cromac Square, Belfast, BT2 8LA
Tel: +44 (0)7768 526172