IT asset optimization requires constant adjustment to market and technological developments. Cloud computing may be a CIO's best method for asset optimization because it adds routing options to the journey of consolidating, virtualizing and ultimately operating a real-time infrastructure.
Table of Contents
- Executive Summary
Changing markets and new technology are raising the bar on IT asset performance. Approaching IT asset investment as a planned journey allows CIOs to optimize their investment decisions.
This report addresses the question, What are CIOs doing to optimize their IT assets?
“Optimizing IT Assets: Is Cloud Computing the Answer?” was written by members of the CIO & executive leadership research group, led by Andrew Rowsell-Jones (vice president), assisted by Barbara Gomolski (managing vice president).
We would like to thank the many organizations and individuals that generously contributed their insights and experiences to the research, including:
The contributors to our interviews and case studies: Kenny Marritt, Barclays (U.K.); Bentley Curran, Brady Corporation (U.S.); Michael Walsh, D-Link (U.S.); Denildo Albuquerque, Just Group (Australia); Mark Gulling, MeadWestvaco (U.S.); and Crispin O’Connell, Welsh Assembly Government (U.K.).
Other Gartner colleagues: Militza Basualdo, Judi Edwards, Brian Gammage, Jim Hocker, Steve Long, Al Passori, Linda Price, Nick Reddall, John Roberts, Irving Tyler and Steve Weber.
Other members of the CIO & executive leadership research group: Heather Colella and Richard Hunter
How to optimize IT assets is always on the mind of a CIO. For most IT organizations, the biggest group of assets is infrastructure, the applications that run on infrastructure and the people who look after both. In a typical enterprise, these run-the-business assets consume 60% to 70% of IT’s operating budget.
Gartner research shows three proven strategies relevant to asset optimization: strategic sourcing, offshoring, and the infrastructure “journey” of consolidating, virtualizing and ultimately operating a real-time infrastructure (see figure below). This report focuses on the infrastructure journey because it is evolving fastest—an effect of cloud computing, which can reduce cost and increase flexibility. In documenting the infrastructure journey, we provide milestones and indicators to help CIOs make the best possible decisions along the way.
“We are trying to move as much of our infrastructure as possible to other providers that can run it more efficiently … but ERP will go on-demand last because it is key to our business process.”
Asset optimization is a journey in which CIOs can reap seven kinds of business benefits:
IT cost reductions
Cost transparency/variable costing
Business and IT agility
Business and IT integration
Business and IT integrity
Cost benefits typically dominate early in the journey, while agility and transparency benefits dominate later. Cloud computing adds routing options by making scalable and elastic IT capabilities available as services; Web conferencing, e-mail, customer-facing websites and cloud-based CRM, for example, are already common in many enterprises. Gartner predicts that 80% of Fortune 1000 enterprises will be using some level of cloud-computing services by 2012. The CIO can exploit two forms of the cloud:
Private cloud—A subset of real-time infrastructure, this cloud consists of on-premise computing or data storage resources available automatically (subject to policies).
Public cloud—This is a service whereby a third party, such as Amazon or Microsoft, provides computing capacity, data storage, etc., on a variable-cost basis—with the customer paying the supplier on a per-unit basis (for more information, see “Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014” in Further Reading).
From an asset optimization perspective, the cloud substitutes for traditional on-premise IT assets (see figure below).
“The initial driver for change was cost. … We quickly got to a point where we were fairly comfortable with the cost savings. Then we got enthused by the capability.”
The asset optimization journey is continuous, never reaching a destination. For the foreseeable part of the journey—perhaps the next 10 years—a CIO will be able to take a predictable route that delivers variable business benefits. Most of the early benefits, for example, entail cost reductions, with agility, integrity and integration benefits coming later.
Asset optimization affects multiple stakeholders, often over an extended period. To validate and communicate a particular route, use short- and medium-term business needs tied to the kinds of business benefits asset optimization delivers. Validation includes assessing whether a course correction would improve the performance of IT assets, charting a path forward based on your findings.