Talking Up a Leaner IT

By Paula Musich  |  Posted 2002-11-04 Print this article Print

Services companies look to help users consolidate to wring the most from existing infrastructure.

Avanade Inc. last week became the latest consultancy to follow the IT consulting dollars to a formalized set of services intended to help clients get the most out of their servers, storage and infrastructure.

As new systems integration projects become increasingly scarce, the Seattle-based company is among a growing number of IT consulting and outsourcing companies that are beefing up services that concentrate on infrastructure consolidation.

Avanade—with its six new Infrastructure Assessment services designed to help IT optimize systems to lower costs—follows Greenwich Technology Partners Inc.s recent launch of its IT Infrastructure Consolidation Solutions, which cover a range of projects, including server, storage, data centers and network operations center consolidation.

Demand for such services has skyrocketed in recent months as IT accelerates its quest to wring costs out of computing while increasing performance.

"About 75 percent of the people we talk with are now in some kind of consolidation," said Stuart Tomlin, national practice director for systems and storage at GTP, in White Plains, N.Y. Tomlin is the architect of GTPs new services, which span multiple practice areas.

Avanade, like GTP, is offering assessments that cover a range of technologies, including operating systems, security, messaging, server consolidation, enterprise directories and operations management.

Its assessments, focused on Microsoft Corp.-based systems, take from three to five weeks. They include an inventory of what the client has and a road map to help the client control costs, as well as consolidate and streamline operations, according to Chris Burry, technology infrastructure practice director for Avanade, in Dallas.

The prime result of an Avanade assessment is a report that summarizes the state of the existing infrastructure and its ability to support the clients goals. The report also breaks down costs to show how they can be lowered and gives estimates of future costs.

Although it is not the primary motivation in all the infrastructure projects Avanade takes on, Burry estimated that "consolidation plays a role in easily 50 percent of our work."

IT infrastructure opportunities have long existed as companies merge and then must rationalize their data centers, servers, storage and so on to gain the requisite cost advantages. But the latest cycle of increased demand has its origins in the massive investments made in IT infrastructure during Y2K buildup and the e-business boom, said Joseph Beninati, GTPs CEO.

"Corporate America spent an enormous amount of money over the last three or four years. It was the largest boom in capital expenditures in the industrial age. Now times are tight," Beninati said.

A study done on technology spending in the first half of last year by Cap Gemini Ernst & Young U.S. LLC indicates that "the U.S. bought 40 percent more [computing] equipment and software than it needed to run the economy," according to John Parkinson, chief technologist for CGE&Ys Americas Region, in Chicago.

CGE&Y spotted the general cost reduction trend early—about 18 months ago—and now about 18 percent of its project work in North America is focused on consolidation efforts, and about 20 percent of its consultants are engaged in that work.

Not every enterprise will hire a consultant for consolidation work, but those that go it alone face potential pitfalls.

"We try to get clients to look at a singular outcome. Looking at just servers could leave money and problems on the table," said Paul Brown, director of IT architecture for IBM Global Services Business Consulting Services unit, in Philadelphia. "While we can look specifically at storage, the trend is to explore beyond that to look at disaster recovery, planning, high availability and storage."

By taking a more holistic approach to consolidation, IT consultants and outsourcers, such as IGS, GTP, Avanade and its parent, Accenture Ltd., take into account the impact that changes will have on user productivity.

"When you close data centers, you move applications away from the end users—so theres a bandwidth impact," said GTPs Tomlin.

"The reality is, the right solution isnt a template. It depends on the nature of your business—who is using your system, where are they, what are they doing. All those can make a very different strategy for consolidation," said Jerald Murphy, an analyst with Meta Group Inc., in Princeton, N.J.

The amount of savings and the ROI (return-on-investment) period for such projects vary greatly with the scope of the initiatives.

Accenture typically sees an 8-to-1 ROI, said John Kaltenmark, a managing partner and chief architect at Accenture, in Chicago. "We were able in one case to deliver over $13 million to the bottom line," Kaltenmark said.

With so many opportunities to reduce costs and improve performance at the same time, its impossible to say when the trend will slack off. Some industry analysts say that when the economy picks up in a year or two, and the ability to wring more costs out becomes too difficult, IT spending will turn back to new revenue generation opportunities.

But CGE&Ys Parkinson doesnt see anything on the horizon to derail the consolidation cycle. "We still really dont know whether people [realize] all the opportunities available [as a result of] consolidation," he said.


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