Fixed price IT: From vision to reality

Clearly, IT infrastructure is a productive and intrinsically vital part of business operations. Without it, applications would not function, nor would the business processes that are supported by those applications. However, its apparent image problem means it seldom features as an investment priority. Rather, the emphasis is on cost.

IT asset productivity
Four key elements must be considered here:

• Applications: For the purpose of this analysis, applications can be divided into two major groups: ‘specialist’ and ‘industry standard’.
• Infrastructure: This includes all IT servers, storage devices and network components, as well as operating systems and environmental software (software that resides in and enables the infrastructure).
• Facilities: The buildings, power, air conditioning, fire prevention systems and security to house and protect IT environments.
• Staff: A mix of project-based and IT operations staff who drive ‘business enabling - application centric’ projects or run the day-to-day operations of the IT department. Small- to medium-sized companies often do not have sufficient scale to segment these groups. As a result, they are using valuable, expensive staff to perform a mix of highly skilled and mundane tasks.

So, how can you calculate the productivity, and therefore the tangible benefits – of these various IT assets? Applications – particularly specialist applications – can be viewed as business enhancing and, in many cases, business critical. In this respect, the capital expenditure on specialist applications can be justified as productive – that is, an investment, rather than just the cost of doing business.

But when you move away from the applications and towards the IT infrastructure, it becomes increasingly difficult to measure the business benefits, and the line between investment and cost starts to blur. In the main, IT infrastructure is an invisible layer of business enabling technology and process which only attracts the attention of business managers when things go wrong. But people have short-term memories and, as soon as the immediate problems are resolved, we see a return to the ‘out of sight, out of mind’ mentality.

Clearly, IT infrastructure is a productive and intrinsically vital part of business operations. Without it, applications would not function, nor would the business processes that are supported by those applications. However, its apparent image problem means it seldom features as an investment priority. Rather, the emphasis is on cost.

The cost base shift
The price of technology has continued to fall since the mid 1980s, when the PC emerged as the ubiquitous computing device. But although the unit costs have fallen over time, they have failed to keep pace with the pervasive nature of IT and the overall cost of technology has increased.

And it’s not just the number of physical devices – it’s also the incredible growth in the quantity of IT code and data, all of which needs to be housed, protected and managed. Add to this the increasing demand for specialist staff possessing both the expertise and breadth of knowledge to deal with today’s complex IT environments, and it’s hardly surprising that IT costs have continued to rise against a backdrop of reducing technology prices.

On top of this, the high density form factor of modern IT servers has proved to be a double-edged sword in terms of perceived versus actual benefits. The good news is you can accommodate more servers within a building footprint. The bad news is that most existing computer rooms and data centres cannot supply sufficient electrical power to drive the additional servers and air-conditioning units. Hence the increased demand for brand-new data centres with enhanced power provision. more...