Cost Optimization Part 1: Why IT Leaders are Losing Control of IT Budgets and What They Can Do About It

    July 12, 2016
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    By Luis Colon

    In part one of our series on IT cost optimization, we explain how the accelerating shift to DevOps is causing decision-makers to take more control of IT budgets, and how IT organizations can make a strong case for the software that they need.

    Technology may now be driving the business, but don’t expect IT professionals to be steering for long.

    IT operations are increasingly tied to business outcomes, a trend that has heightened emphasis on innovation and accelerated the shift towards DevOps and agile development. But with so much at stake, it was only a matter of time before business leaders and developers seized control of purchasing decisions, hamstringing IT organizations that were only just beginning to exercise some autonomy.

    IT professionals should start researching and making the case for the kinds of software that they’ll need now, ensuring that keeping-the-lights-on activities — as well as critical ops departments themselves — aren’t forgotten in the rush to modernize development processes.

    Passing the Reigns

    The last half-decade has been exciting for IT organizations, to say the least, commanding typically outsized power over the direction and thrust of business. But as TechTarget observes, the recent rise of continuous DevOps-style delivery and the availability of open-source software has meant that many companies now prefer to purchase IT capabilities elsewhere, rather than develop them in-house. For IT organizations, the result is a fading ability to leverage their relevance in order to control budget decisions.

    A Gartner study cited by TechTarget estimates that while just 17% of IT spending is controlled by those outside the department, that number will rise sharply to 50% in 2020 for organizations with a strong emphasis on digital. By 2021, 75% of companies with a traditional IT budget will fall behind.

    Although IT operations will lose budgetary power, it’s wrong to say that IT operations will truly sunset or fall victim to automation. Rather, they will begin to play a more consultative role within IT, “Maintaining the infrastructure, keeping it up and running, defining the services that you consume from it,” as Stephen Massalt, VP of cloud at Swiss telecom provider Swisscom, told TechTarget.

    IT orgs will have to both select ideal platforms for development and manage costs where automation is unworkable, which, given the newness of open-source software, is almost everywhere. As a result, effective IT management will become an even more important area of focus than business leaders may have assumed.

    Controlling Costs in a New Role

    In the rush to roll out new digital applications and services, IT organizations must ensure that capacity is sensibly managed and optimized for business goals. In complex, heterogeneous environments, it’s an exceptional case when that task is straightforward or easy. Precisely where costs are assumed to be shaved (the cloud) is where they tend to creep up in surprising and significant ways.

    It is therefore critical that IT organizations keep close tabs on the software that they’ll need to manage performance in the near future; not only to control costs in a fast-paced DevOps environment, but also to demonstrate the continued value that IT provides to the business. This helps to guarantee that new digital applications and the infrastructure supporting them are maximally cost-efficient, and that IT remains a critical asset for all stakeholders.

    IT professionals will be the first to admit that they understand the sources of unseen costs better than anyone, because they see operations holistically from a unique vantage point. No matter the sophistication of open-source platforms or DevOps strategies, companies will always need professionals that understand their infrastructure from the inside out.

    (Image credit: Drew Patrick Miller/Unsplash)

     

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