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The shock delivered last year to the economy in general and to IT budgets in particular has made everyone loath to predict trends for this year. But anticipating uncertainty is one kind of prediction, and we think that expecting and planning for an uncertain year is probably what most people are doing. So what is the best approach to IT in this climate?
When iffy corporate revenues mean that big-ticket IT initiatives are likely to face tough scrutiny, a savvy CIO will focus more on efficient use of IT in carrying out existing initiatives. In doing this, consolidating resources, particularly servers, makes sense.
Significant economies can be gained by reducing the number of servers and the associated expenses of software licenses, management, power and storage. Further, with security at the top of most priority lists, it should be noted that its much easier to secure, mirror and otherwise protect critical business assets if those assets are centralized. Top-notch security is so expensive that few systems can be thoroughly protected, but for many, it makes sense to put all your eggs in a few baskets—and watch those baskets closely.
Overall, several factors will be involved in the calculus. Server consolidation will go hand in hand with manpower consolidation and expertise consolidation. Whichever solution calls on the fewest people (the excess bodies have been laid off) and the most widespread knowledge base (niche expertise is expensive) will fare the best. We expect that well be hearing from a near-forgotten acronym, TCO, quite a bit this year.
Some vendors, IBM among them, are pitching a message along these lines. The IBM vision of fewer servers, mainframes even, running an inexpensive operating system such as Linux will likely be tested in many shops. This model will often go head-to-head with more traditional Unix environments, such as those offered by Sun, and the ubiquitous Intel-based Windows servers.
Indeed, 2002 could well be a year of reckoning for the Microsoft computing and business model—commodity hardware running mass-market software on ever-greater numbers of servers, where the vendors interest lies in the proliferation of software licenses. This interest runs counter to the mandate to consolidate.
Some observers predict a breakout year for IT spending next year. While we can hope for that, merely higher expenditures—throwing money at the IT problem—will never achieve by itself higher productivity or competitive advantage. IT shops that learn how to get the biggest bang for the buck this year will likely continue to get that bang for the buck, with much greater business advantage, next year, should spending on strategic initiatives resume.