The cuts that bind

There is no question that IT departments in all sectors are under far greater pressure to cut cost and deliver value than they were 12 months ago. But if that cloud has a silver lining, it may be the palpable sense of camaraderie – of a profession united by a common cause – that was in evidence at the latest Information Age roundtable debate, sponsored by IT and communications solutions company, Affiniti.

The assembled IT decision makers, from organisations as diverse as investment banks and charities, laid bare their own particular headaches, all triggered by the renewed imperative for cost control.

“Our challenge is to develop IT services without any [additional] capital expenditure,” said one delegate, the IT director of an automobile retailer. And his experience was typical. It has already impacted some key provisioning decisions, he explained.

“Until recently, we ran our ERP package on an ageing, co-located server, but it was on its knees,” he said. “We found out that it would cost £30,000 to replace, so we decided to go for a rental option instead. It costs more on a monthly basis, but it didn’t require the same amount of capital upfront, and we can scale it up as and when we need to.”

All of the various technological approaches to reducing cost that are currently on the radars of enterprise IT departments came under the scrutiny of the group. As ever, virtualisation was discussed reverentially. But not everyone’s experience of the technology was one of pure cost containment.

“We recently found that we owe £1.2 million pounds in licence fees, because we were virtualising applications and didn’t now how many processor cores we were really using,” explained one corporate IT manager in attendance.

Open debate

Open source software was also generally met with approving noises. However, one attendee, the IT director of a marketing agency, sounded a cautionary note. “I don’t see open source as a cost saver,” he said. “In my experience, you just shift the cost from licence fees to hiring specialist experience that is very difficult to find.”

That argument was countered by the IT manager of an educational facility, who argued that the real boon for open source software is autonomy over system design. “Open source might not be free, but it gives you freedom,” he said.

Many delegates saw in software-as-a-service an opportunity to share some of the burden of cutting IT cost. “SaaS is forcing providers to put some skin in the game,” said one.

But others still consider SaaS too immature for their requirements. “If I handed all my desktop applications over to Google, its infrastructure would collapse,” said the IT manager at a consumer packaged goods giant.

The focus of discussion inevitably turned to IT vendors. Attendees unanimously believed that vendors have a role in taking cost out of their IT expenditure, but few were confident that their suppliers are prepared to play the long game.

One positive vendor experience came from the IT director of a mid-tier bank. “I recently had to fit out a call centre,” he recalled. “We found a supplier who was prepared to take it on as a managed service, which involved taking care of all the capital expenditure, including sourcing the real estate.” Such innovative engagements offer a glimmer of hope for IT departments.

It may be a measure of the seriousness of the present challenge, but one business continuity manager in attendance reported how IT departments are helping each other out to cut the cost of IT service provision.

“Companies are buddying up and saying to each other ‘if you have a problem, you can use our infrastructure. We won’t charge you but if we get in trouble, we need access to yours’,” he explained.

As the roundtable debate itself demonstrated, a problem shared may not be a problem halved, but it may help to make the task seem less insurmountable.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media (now Bonhill Group plc) from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The...

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