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IBM Helps Clients Make Better Decisions Based on Actual IT Costs

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True IT costs are often difficult to determine, but they can quickly add up and impact the bottom line. Companies purchase inexpensive hardware to save money; however, over time the software licensing and labor required to manage an environment increases. And as sprawl happens, more networking, power, space and cooling are needed.

“We look at their numbers and an agreed-upon set of assumptions and run these through a transparent model. This can result in a very engaging conversation.”
— Christopher von Koschembahr, management consultant, Strategic IT Optimization Services (IBM Eagle Team)

Enterprise servers may come with one bill with a lot of zeros, but if clients add up all of their distributed IT cost items, they’ll realize enterprise systems are actually more efficient and cost-effective. Cloud solutions also offer savings and provisioning agility over x86 on-premises data center solutions.

Quantify and Reduce IT Costs

Total cost of ownership (TCO) analyses, such as those conducted by the IBM Eagle Team, are becoming increasingly important. The Eagle Team looks agnostically across all server platforms—IBM z Systems*, IBM Power Systems*, other UNIX* systems, cloud implementations and any x86 platform environments—to give clients a clearer picture of where IT dollars are being spent and to what effect.

Objective Measures

Since Eagle TCO studies were established in 2007, more than 525 have been completed. Many of the participants are larger companies straining under the weight of ever-growing IT costs—although increasingly, smaller companies are experiencing the same growing pains, whether because of sprawling server farms, swelling energy costs or the all-too-alluring total cost of acquisition (TCA). To get a complete view of total costs, it’s necessary to look at the following four factors to suggest changes in client IT environments that can remedy IT roadblocks:

  1. IT cost line items—hardware software, networking, storage, labor and power consumption
  2. All environments associated with one or more workloads—development and testing, quality assurance, production, high availability and disaster recovery
  3. Time and events—potential growth factors such as new market entries, mergers and acquisitions, product refresh rates and migration effort
  4. Nonfunctional requirements—less quantifiable, but significant factors, such as performance; reliability, security and availability (RAS); and service-level agreements (SLAs)

These add up to “IT economics, or the financial facts of doing nothing or acting on one or more choices the client is considering,” says Christopher von Koschembahr, management consultant, Strategic IT Optimization Services (IBM Eagle Team), Americas practice executive. “We want our clients to consider what will ultimately save them money by lowering their costs.”

This isn’t merely a sales pitch. IBM genuinely and objectively wants its clients to improve services and reduce or optimize their IT expenditures, whether on new acquisitions, software licensing, consolidation or rightsizing. All companies, regardless of industry, can benefit.

“We look at their numbers and an agreed-upon set of assumptions and run these through a transparent model. This can result in a very engaging conversation, because we’re laying out everything our clients would like to include in the study and expanding that out over a five-year period,” von Koschembahr notes. “If they don’t agree with the figures, we’ll adjust the study accordingly, depending on what they’d like to change. This type of iteration and active involvement is important because it makes the study their study—and not ours.”

Jim Utsler, IBM Systems Magazine senior writer, has been covering the technology field for more than a decade. Jim can be reached at jjutsler@provide.net.


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