Executive Summary: Optimizing IT Assets: Is Cloud Computing the Answer?


Published: 01 February 2011 ID: G00211420

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Summary

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.

Foreword

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

Executive Summary

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.”
Bentley Curran, CIO, Brady Corporation

Figure 1. Three strategies for optimizing IT assets
Research image courtesy of Gartner, Inc.

Source: Gartner.

IT asset optimization is a journey

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

  • Service quality

  • Sustainability improvements

Cloud computing adds new routes to the asset optimization journey

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.”
Mark Gulling, CIO, MeadWestvaco

Figure 2. The cloud is a potential accelerator of IT asset optimization
Research image courtesy of Gartner, Inc.

Source: Gartner.

Business benefits change as the asset optimization journey proceeds

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.

Plan your asset optimization journey

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.

© 2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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