No matter where I go, and no matter what languages my clients speak, the “cost of business” is a universal message. And to IT, the “economics of hyperconvergence” really resonates because the problems it addresses are common to most businesses and IT organizations today.
One of these problems is what I call the “lights-on trap.” IDC sums it up with the sobering statistic that worldwide, 80% of IT spending is used for maintenance—keeping the lights on—and only 20% is for innovation to help move the business forward.
This is a very common topic: everywhere IT pros want to contribute a high level of business acumen and improve competitiveness and operational effectiveness. But, as the IDC statistic shows, IT is more often a cost center, rather than a source of innovation for the company.
Why is this situation so widespread? A core issue is that the 80% spent “keeping the lights on” is fragmented across many different things. Incremental progress on any one or two help, but they aren’t enough to substantially change the big picture for the company. Over time, people get used to this status quo and start to consider it something natural. It becomes hard to believe that a huge step is possible.
Let me explain by sharing one client’s experience. This is a well-established German company, a mid-size supplier to the automotive industry, and one of the leaders in its market. A few years ago cost pressures forced them to reduce the IT team headcount from 18 to fewer than 10 people. Recently, however, the economy has improved, and the business has come to IT with requirements to support important new initiatives. With limited people and time, the IT team couldn’t respond. They were stuck in the “lights-on trap.”
This is exactly the kind of situation where careful financial analysis can offer a breakthrough. Here’s what we found:
- A single hyperconverged infrastructure purchase frees up substantial capital budget – Hyperconverged infrastructure is, by definition, an integrated solution which incorporates many IT components which are ordinarily purchased separately. Compute, storage, switches, backup, disaster recovery, WAN optimization, etc.—they are all in the package. This customer had plans to refresh these components over the next several budget cycles. Hyperconverged infrastructure would free up these future capital expenses.
- The productivity of hyperconverged infrastructure significantly reduces operational expenses – We examined the time spent operating the existing environment: applying patches and upgrades to various components, administering backups and disaster recovery, managing vendor relationships, and training in their various products and technology. We found that, what once took three people to operate and maintain could be done with an IT team of two.
- Freed up headcount supports the new business initiatives – The IT team used the concept of “Lean IT” to communicate to senior management the idea of using technology to reduce wasteful use of staff time so that it could be directed at more productive work. This very much resonated with senior management of this manufacturer, which employs the concepts of Lean Six-Sigma throughout business operations.
This financial analysis and presentation unlocked the purchase of hyperconverged infrastructure. Not only could the IT team support the new project with flat budget and no new headcount, its working environment has greatly improved. Today, the team is working on innovative, forward-looking projects instead of spending long weekends and evenings simply making systems go. As you can imagine, it’s a huge success story. It would have been impossible with conventional IT.
This is just one example, many of my customers have exited the “lights-on trap” in this way. Here is what they do:
- They eagerly embrace new business requirements—despite resource constraints. These requirements present the opportunity for you to break free from the “lights-on” status quo.
- They set high expectations. Incremental improvements won’t give you the flexibility to assign people to new projects. A breakthrough is required, so you should demand substantial cost savings.
- They frame the investment proposal using concepts that are natural to business line management. This manufacturer used the “Lean IT” concept because management understood and embraces the lean philosophy for its main business.
What to learn more about avoiding the “Keeping the Lights on” trap? Coughlin Companies also found that they were also able to flip the 80/20 rule. Read their case study to find out how Coughlin went from spending 80% of their time “keeping the lights on” to spending 80% of their time on new, innovative projects.