Consolidation Business Strategy
Reduce TCO
IT must redefine it’s value
contribution.
IT must deliver value to the business. Value
is found in cost reductions, increases in
revenue, productivity improvement or
strategic enablement. Value contribution is
unique to each organization.
GE Access’ best-of-breed
solutions for Consolidation
reduce your total cost of
ownership because it increases
staff productivity, reduces
complexity, reduces costs of
software licensing, improves
computing resource utilization
and makes more efficient use of
real estate.
GE Access’ Financial Services
Group also provides many
alternative approaches to costeffectively managing the ongoing
acquisition cost required to
maintaining a state-of-the-art IT
infrastructure.
Because value is subjective and unique, it is
difficult to measure, especially in
relationship to a fundamental support
service, like IT infrastructure. Traditional
value indicators, such as ROI, tend to be too
project-focused to give us an accurate
picture of the value contribution of the
infrastructure. Despite decades of effort by
economists and analysts, evidence of causal
relationships between levels of IT
expenditure and indicators such as growth,
profitability and productivity, remain
tenuous. Furthermore, attempts to tie
specific technology approaches, such as PC
usage, client/server, web enablement, etc.
to business performance measurements,
have also been inconclusive. So the industry
continues to grapple with how to best
measure the value contribution of IT
services.
The value of an IT infrastructure
needs to be based on how well it
supports the business within the
context of a fast changing, dynamic
marketplace.
This evaluation includes how well it supports
business growth, enables organizational
responsiveness, builds competitive
advantage and supports organizational
innovation. When companies take this big
picture view they will start to quantify the
benefits of permeable boundaries, scalable
architecture, open systems and
standardization.
Companies use Consolidation to
reduce their total cost of ownership.
The easiest way to quantify the value
contribution of the technology infrastructure
is to demonstrate how it lowers the
company’s total cost of ownership. (TCO) A
good TCO study helps companies better
understand the financial impact of their IT
services by evaluating all aspects of asset
management, operating costs, minimizing
risk and investment protection. TCO takes a
holistic view of what it costs to run a
technology infrastructure that supports the
business, including the equipment costs,
installation, licensing, outside services,
maintenance, management, service, and
support. IT also quantifies the costs of
planned and unplanned downtime. A recent
IDC study reported that hardware only
accounts for about 25% of IT environment
costs. Over 50% of IT costs are indirect
costs including maintenance, administration
and management, and half of these costs
are attributed to downtime when the IT
systems are not working at all.
Consolidation helps to reduce the TCO of an
IT environment because it reduces the
complexity of the environment. A simpler
environment is easier to manage and
maintain, and therefore more efficient.
Greater efficiency reduces costs and
improves performance.
Consolidation helps lower
acquisition costs because fewer
systems and operating systems are
needed.
Building an IT infrastructure requires the
acquisition and management of large,
expensive assets, including hardware –
Servers, Clients, Storage, Network – and
software - Operating Systems, Application,
Utilities, Management. These costs are
either capital expenses that are depreciated
over the life of the system or expensed. How
these acquisitions are financed can make a
big difference on the financial impact of the
assets on the business.
Consolidation can help minimize acquisition
costs because it reduces the numbers of
machines a company needs to support its IT
services. Also, consolidating onto few
operating systems reduces the costs of
purchasing and maintaining multiple
operating system environments.
One problem that arises when considering
the financial implications of a Consolidation
effort is deceptive ROI’s. ROI calculations
are almost always project-specific. Most are
built around the deployment of a specific
application solution. The decision-making
process focuses on the financial payback of
solving a specific problem with a new
application or service. Choices of underlying
resources are often treated as “secondary”
issues. This decision making approach
tends to build major inefficiencies into the IT
environment. Because the ROI analysis
shows that the business returns are high,
and the Business Unit Executive is making
the business decision, capital infrastructure
decisions are made under false
assumptions. The cumulative impact of
project based, ROI decisions results in an
inefficient infrastructure. This means an
increasing proportion of IT resources are
Consolidation Business Strategy
Reduce TCO
devoted to infrastructures, leaving less
money to invest in new application
functionality.
Consolidation Results
The more complex the IT
environment is, the more expensive
it is to run.
 Realistic ROI analyses based on
Operational costs are where the lion’s share
of the IT budget is spent. Managing the
network, systems and storage; providing
end-user support with administration,
training, purchasing, help desks etc; and
maintaining the IT environment requires a
steady supply of cash. Naturally, the more
complex the IT environment is, the more
expensive it is to run. Disparate systems
require dedicated staffing and
administration. Software development is
more expensive and time-consuming.
Maintaining and supporting many machines
and operating environments are harder than
supporting a few systems and a single
architecture.
 Lower acquisition costs
 Minimize ongoing operational costs
 Lower opporutntity costs – lost
Companies tend to consider Consolidation
initiatives when the economy is tight. When
business slows, business executives cut
budgets, lay off staff and try to accomplish
more with fewer resources. Consolidation
offers the promise of improving efficiency
with fewer resources, a dream come true for
the business executives.
Consolidation reduces the
opportunity costs caused by
downtime and outages.
When a mission critical application goes
down, costs skyrocket. Operations stop,
customers get angry, opportunities are
missed. Most of these costs are never
quantified, but the financial impact of
downtime lasts for a long time. When
developing an ROI analysis of an
infrastructures total cost of ownership it is
important to track, aggregate and report on
the negative financial impact of when the
system is down. This analysis should
include estimated losses from missed ebusiness opportunities, degrading customer
satisfaction ratings and liabilities caused by
improperly tracked transactions.
organization impact, not projectbased costs
business, unproductive workers,
etc. – due to downtime and
outages
GE Access Consolidation Strategies
Servers: Sun Fire Servers
Storage: Sun StorEdge; Hitachi Thunder &
Lightning Series; , StorageTek D280 Disk
Subsystem; StorageTek D173 Disk
Subsystem
Storage Management Solutions: Veritas
Storage Management, Hitachi HiCommand
Storage Area Management Suite, StorEdge
Availability Suite
SAN Switches: Brocade Silkworm Family of
Switches, McData Sphereon Fabric
Switches, Qlogic Fabric and Fiber Channel
Switches, Cisco MDS 9000, Sun StorEdge
Open SAN Solutions
Security: Sun Platform Security; CheckPoint,
Nokia, and Internet Security Systems (ISS)
Network Infrastructure: Extreme Networks
HP Open View, Tarantella
Contact Information
www.geacess.com