WHITE PAPER

Seven Tips for Recession Proofing Your Data Center

Operations
Vikram Watave
Vice-President (Solutions), Infrastructure Management Services
The unprecedented economic meltdown has made value-for-money a strategic imperative for
organizations small and large. Businesses across the globe are engaged in a process of risk
evaluation, cost reduction and business plan development to counter recessionary pressures and
retain market share. IT budgets, and more specifically data center operations, have been among the
first to bear the brunt of the cost-cutting axe.

Traditionally, investments into DCO infrastructure account for a percentage of the organizations total
revenue. The drop in demand for products and services has, however, made it imperative to relook at
these investments. Most companies have already built in additional datacenter capacity in terms of
servers, storage systems, network devices, and cooling equipment. The resultant increase in
operational expenditure and the already high capex has placed immense pressure on the CIO to
rationalize cost and increase return on investments.

This article proffers a peek into some of the best practices organizations can leverage to recession-
proof data center operations. The article will look at the various cost levers that CIOs can leverage to
transform the data center cost structure. It will provide an insight into initiatives that can reduce opex
and free capital, which organizations can then invest into innovative measures that will enable
business continuity and help improve IT agility to respond quickly to market dynamics.

I. Know your Cost-Cutting Sweet Spots

According to various market research reports, maintenance and support continue to account for
more than 50 percent of an organization's IT budget. In order to reduce total cost of ownership and
improve return on investment, the organization should first gain a holistic view of these cost drivers.
To begin with, the organization should set up a dedicated team comprising in-house IT experts,
departmental stakeholders and top management representatives to investigate DCO cost-control
measures: optimizing the use of hardware, software, power and human resources; matching
capacity to business requirements; and avoiding capacity shortages or underutilization. This exercise
can also be conducted in conjunction with an external IT service provider with the requisite DCO
consulting expertise.

In the initial phase, the audit team should identify all the DCO assets deployed across the
organization to enable easier analysis of overall assets utilization and gain greater clarity into annual
spending on servers and storage devices, network components, software licenses, applications,
databases, and operating systems on each server. A plan can then be prepared to rationalize
overspending on underutilized assets without impacting business continuity or asset performance.

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Power consumption accounts for a significant portion of data center costs. Inefficient operation of the
data center too is a leading cause of increased energy usage. In addition to this, there is the cost of
supporting infrastructure like UPS systems, mechanical generators, power distribution units, transfer
switches, and electrical cabling and conduits. The real estate occupied by datacenters too can
account for a large portion of the capital expenditure. Housing multiple servers in disparate locations
can result in high rent and maintenance costs.

Physical infrastructure including data center hardware like servers, storage devices, etc, forms
another large cost component. Many organizations underutilize existing assets leading to
consumption of a large portion of the organization's IT resources. In fact, research by analysts firms
indicates that the typical data center is only utilized to 30% of its capacity. Organizations should
analyze utilization rates and identify opportunities for data center consolidation.

II. Consolidate and Achieve Economies of Scale

Consolidating multiple data center to fewer locations can have a significant impact on the budget. In
addition to regular overheads like real estate cost, and maintenance and upkeep, it can save on
operational costs such as energy and personnel.

Application portfolio rationalization is another area that needs to be considered, as it brings in

economies of scale, reduces complexity and introduces better manageability. By deploying multiple
applications on fewer servers, organizations can reduce instances of the operating system it runs
and thereby reduce total cost of ownership. Adoption of open source applications too promises
significant savings in terms of operating system and application license fees. The focus should,
however, be on encouraging data sharing among applications, which could involve redesigning and
redeveloping applications.

Hosting applications sourced from different vendors on multiple servers can lead to data replication.
This, in turn, results in the need for more storage and thereby higher storage costs. Studies indicate
that storage utilization rate in most companies is less than 50 percent. Consolidation can, reduce
storage complexity, increase availability and utilization, improve scalability, and reduce ownership costs.

Data center consolidation can, however, have a severe impact on the enterprise network. This
impact needs to be evaluated and appropriate measures taken to ensure that there is sufficient
network bandwidth to handle network traffic.

Seven Tips for Recession Proofing Your Data Center Operations 03

III. Implement Virtualization to Maximize Asset Utilization
Virtualization technology partitions single servers into multiple virtual servers running different
applications or even different operating systems thus replacing many underutilized physical servers
leading to greater energy-efficiency. Virtualization enables reuse of resources for varied purposes
and maximizes utilization of each resource. Enterprise can thus defer purchase of new servers and
shrink costs by reducing the amount of hardware that must be replaced.

Virtualization can also be leveraged to resolve the issue of storage underutilization, reduce over-
provisioning of storage devices, data duplication and rationalize the number of disks and other
storage media required by the enterprise. Enterprises can make smarter use of power and cooling by
leveraging virtualization to retire underutilized servers. Even the time spent setting up and
configuring virtual machines is much lower than that taken for deploying standard hardware. Other
benefits include improved efficiency, a reduction in power and space consumption, reduction in
spend on new hardware, and equally importantly, simplification of data management.

IV. Automate Services for Quicker Payback

Data center automation can involve additional investments into new tools and technologies. During
these recessionary times, it is possible to question the wisdom of funneling more money into the data
center when the focus is on cost reduction. However, automation promises significant cost savings
and a relatively fast payback period. Services like patch management, server provisioning,
configuration management, security alerts, password resets, etc can be automated to reduce the
number of man-hours spent dealing with these tasks and thereby lower human resource costs. Tools
focusing on digitization or run book automation, which can automate scripts, are available in the
market today.

Organizations can achieve significant benefits in terms of increasing agility, service quality and
reducing costs by re-engineering operational processes and investing in automation. Process
automation replaces manual execution of repetitive functions, reduces errors and allows
administrators to focus on value-added functions that ensure continuous high-quality service
delivery. By implementing data center automation software organizations can significantly reduce
data center operating costs, improve service quality, increase efficiencies, enhance compliance and
security, and realize huge time savings while performing routine data center processes. Automation
can also go a long way toward removing human error from critical data center processes.

Seven Tips for Recession Proofing Your Data Center Operations 04

V. Standardize Tools and Processes for Substantial Benefits
Data centers leverage a variety of tools to manage activities like clustering, replication, backup and
recovery, and other critical aspects of the infrastructure. Each of these tools generally provides its own
user interface or management framework. Standardization ensures that devices have consistent
interfaces and protocols. Implementing standards and best practices across the data center can help
enterprises realize substantial benefits in terms of productivity gains. Simplified management and
configuration interface will markedly enhance IT operations, and ensure lesser downtime. It will also
reduce systems management, maintenance, and labor costs. Standardization will equip the in-house
IT team with the capabilities necessary to manage the data center environment much more efficiently
and effectively leading to lower total cost of ownership. According to research reports, implementing
standards and best practices can lead to as much as 15-20 percent reduction in TCO. Data centers
must increase their ability to respond to changes in the business environment by employing
repeatable planning, provisioning, and monitoring processes.

Aligning operations to IT management frameworks like the IT Infrastructure Library (ITIL) ensure that
all IT services, including those associated with the data center, are delivered as efficiently as
possible. Most vendors today would have adopted ITILV3.0 best practices to avail built-in process
maturity and assured productivity gains i.e. evolve from a technology centric to a more business-
centric IT organization. At this level of maturity, IT is measured in terms of its contribution to the
business and all services are measured by its ability to add value.

VI. Opt for an Adaptive Data Center

New generation data centers need to be adaptive to business dynamics. They should be flexible
enough to address near-term infrastructure requirements and also account for future business
growth while continuously reducing overall infrastructure costs and complexity. Organizations can
address these objectives by buying services like servers, software, storage or network equipment
as a fully outsourced service. One key option to look at in such outsourcing is moving applications
on to a public or private cloud. While there are lot of solutions available from different vendors,
enterprise need to have a "Cloud Strategy Document" especially around how to do phased
migration of applications.

This approach can effectively dispel the twin dangers of overcapacity and inflexibility. While the
former can prove cost-prohibitive the latter can prove instrumental in hampering future growth. Such
services are generally billed on the basis of the amount of resources consumed. Hence, aside from
the higher flexibility, the usage-based pricing model allows customers to pay as they grow.

Seven Tips for Recession Proofing Your Data Center Operations 05

To avail these advantages, organizations should partner with an offshore service provider with end-
to-end capabilities in providing converged software, server, storage and networking platform that
automates service delivery for the data center. Ensure that the partner leverages industry standard
frameworks like ITIL v.3 and service level agreements (SLA) based on performance metrics. Such a
partner should also be able to provide top-notch service at cost-effective rates.

This strategy can help organizations significantly reduce operational costs and realize quick payback
while dramatically simplifying complex infrastructure tasks like disaster recovery, capacity planning,
consolidation and provisioning. Additionally, third-party data center service providers will ensure that
they use the latest technology. This will provide organizations the advantage of leveraging the latest
technology to achieve faster service delivery and time-to-market without incurring the associated
incremental investments.

VII. Target Cost Containment through Global Delivery

At the macro level, revisit the service level agreements the enterprise has set for the data center. Easing
service levels in certain areas can impact costs without affecting the profitability of the business. Identify
applications that fall into this category and restructure operations to benefit from the leeway. Also
consider outsourcing these services to a specialized application service provider, as you may be able to
avail similar levels of reliability at a lower cost. The organization can leverage service level agreements
to impose penalties in case of a drop in service quality. Carefully review service level agreements for
business continuity requirements and to avail compensation for downtime should it happen.

Studies have proved that a CIO administrating the entire datacenter from a particular geography can
potentially save anywhere between 35-40% in a year by embracing the global delivery model. Thereafter,
the company can expect year-on-year productivity gains of 8-10 percent. Thus, in a period of three years,
the organization can save 45-50% assuming that all kinds of services are being delivered out of a single
geography at the moment.

Organizations need to analyze the possibility of consolidating and outsourcing certain services. For
instance, would it be possible to consolidate monitoring as a function across all applications, servers,
databases, etc owned by the enterprise. The organization can then look at outsourcing that function.
Thereby, organizations can profit from the option of functional outsourcing or exercise the choice of
retaining assets while outsourcing the entire administration and management of the datacenter. This
can bring in considerable cost savings for the organization.

Co-location and remote hosting is another service that can save considerable amounts especially if
the organization is considering setting up a new data center. If the service offerings of a third-party
vendor is technologically advanced and makes economic sense as compared to running a facility
using in-house resources then the organization should contemplate opting for this solution.

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Conclusion
The objective of any IT initiative is to drive continuous profitable growth while lowering capex and

opex. To effectively maintain their businesses, enterprises should streamline, automate, and

standardize processes to reduce data center-related costs, improve business efficiency, increase

innovation, and drive profitable business growth. As we have seen, enterprises can leverage

virtualization and consolidation opportunities in various areas including servers, applications, storage,

networks, people, resources and processes, and the actual physical locations of the data centers.

However, internal stakeholders need to be involved in this process to understand which resources

applications use and its usage patterns. Comprehensive planning is required to leverage the full

benefits of consolidation or virtualization.

The stakeholder team should formulate a clear strategy to evolve to a next-generation data center

that operates more efficiently and delivers ever-increasing value to the business. The focus should be

on doing more with existing resources and becoming more effective or rationalizing existing

resources and improving efficiency to continue meeting current service levels.

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 About the Author
Vikram Watave is the Vice-President for solutions in Infrastructure Management Services (IMS), he is
responsible for defining new technology solutions in Remote Infrastructure Management and
Infrastructure Outsourcing, strengthen sales/rollout solutions to global customers and manage customer
interactions post implementation.

Vikram has over 22 years of experience in the IT and Industrial Automation industry in consulting,
pre-sales, solution development and customer management.

Contact: marketing@patni.com 25+ years in IT Services | 15000+ employees | SEI-CMMI Level 5 (V1.2) | P-CMM Level 3 | ISO 9001:2000