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Business Alert: How to Gain Control of your Budget and Reduce TCO. John McArthur Group Vice President IDC. Why Use Financial Measurements?. Old Days Technology choice was limited and the value was often obvious Today Many choices, often replacing current technology and strategies
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Business Alert: How to Gain Control of your Budget and Reduce TCO John McArthur Group Vice President IDC
Why Use Financial Measurements? • Old Days • Technology choice was limited and the value was often obvious • Today • Many choices, often replacing current technology and strategies • Decision must be based on sound business criteria
ROI For determining whetherto acquire a solution The question is “IF” Estimates or measures the costs and financial returns before and after a solution is implemented To evaluate the financial benefits of a solution TCO For determining the most cost effective solution The question is “WHICH” Compares the expected costs of one solution to the expected costs of another over its useful life To evaluate the competitiveness of a solution Key Features Is it ROI or TCO?
Components of TCO: The Life Cycle Costs Acquire Retire Implement Manage
Components of TCO: The Life Cycle Costs Acquire Warning! Delayed acquisition can be one of the greatest costs
Financial Chief Financial Officer Business Unit Comptroller Best Practice IT Financial Management Software Suppliers Storage Suppliers Facilities Management Customers NETWORKED STORAGE Database Administrators LOB Human Resources Data Center Operations E-Business Executive Server Suppliers Application Developers Business Operational Know Your Stakeholders
Favors established suppliers Selects proven technology Focuses on cost containment and profit growth over revenue acceleration Invests to reduce risk Open to start-ups Considers innovative solutions Focuses on revenue generation over cost containment Considers slow time-to-market the greatest risk Checklist Know Your Company
Checklist Know Your Bidders • Visit the primary service location • Talk to current and former customers • Call the support desk at all hours • Use your credit department to complete a financial analysis and credit check • Privately-held suppliers should not be exempt
Components of TCO: The Life Cycle Costs Implement Warning! Slow implementation increases TCO.
Poor Planning is Your Worst Enemy Leverage Professional Services
Components of TCO: The Life Cycle Costs Manage Warning! The only constant is change
The view from early 2001 no longer applies… • Storage capacity was increasing 80% per year. • Storage managers had to improve efficiency more than 60% per year.
Disk Storage Systems Spending Growth Millions -18.2%
But the more things change…The more they stay the same • Shipments grew little more than 20% due to: • Dot-com shakeout • Economic slowdown • Telco meltdown • Decline in capital spending Personnel budgets are frozen or declining… So do more with less
The strategy with the best track record for lowering TCO is consolidation of: • Location • Devices • Management And virtualization is the key
Tip Components of TCO: The Life Cycle Costs Retire Always know where the exit is
Retirement Costs • Data ablation • Data migration • Equipment disposal and asset recovery
What suppliers doing to lower TCO… • Streamlined ordering • Private Web sites • Automated manufacturing • Standardization Acquire • Asset management • Equipment finance • Asset recovery Retire Implement • Remote monitoring • Remote management • Virtualization • Automated and predictive management • Interoperability testing • Design and implementation services • Customer certification Manage
Questions? Please e-mail me at jmcarthur@idc.com