Automated Enterprise: Many High-ROI Opportunities

  • Written By: Tom Pisello
  • Published On: October 30 2004



Automated Enterprise: Many High-ROI Opportunities
Featured Author -

Introduction

Major systems management vendors are presenting a new vision of the future data center, and success-minded CIOs should begin constructing a roadmap to the automated data center, with moderate steps that ensure return on investment (ROI).

Automated data centers self-configure, self-heal, self-optimize, and self-protect. The underlying solutions combine intelligent management software and resilient hardware to deliver better asset utilization, make data center operations less expensive, increase flexibility to meet changing business demands, and proactively provide more resilience.

Companies that haven't yet adopted the automated data center face a number of potential challenges. For example, changes to a large financial services organization's Microsoft's Active Directory accidentally brought down Internet access for the company's trading desk. (Active Directory, an essential component of the Windows 2000 architecture, allows organizations to centrally manage and share information on network resources and users while acting as the central authority for network security.) As users logged in, they weren't able to get on-line, and could not access vital information and mission-critical applications.

After eight hours, the problem was traced to an accidental change made by the Active Directory administrator, and the proper settings were restored. The trading desk was adversely affected and this minor issue caused an impact that was estimated in the millions of dollars, in both productivity and lost business.

Whether for availability, security, or general IT operations, the automated enterprise delivers significant productivity and business benefits. Depending on the business, even slight improvements may generate exponential returns—and provide tangible business value that extends far beyond IT. Organizations looking to become more automated should follow established strategies and best practice features, including

  • User and Resource Provisioning—add, move, and modify resources or configurations to enable or enhance performance of mission-critical applications, customers, partners, or employees on a priority and demand basis.

  • Infrastructure Availability—ensure consistent and readily available access to key business resources by managing availability, loss prevention, and recovery.

  • Security Management—establish identities and manage security of key business resources.

Following these best practices has significant financial benefits, as they'll expedite the automation processes in four critical areas: IT operations and administration; virtualization and provisioning; security; and availability.

IT Operations and Administration

Operations and administration typically consumes 30 to 40 percent of IT spending—an average of $4,400 (USD) per employee in an average US enterprise. Of this, 65 percent is dedicated to ongoing maintenance and asset management, 25 percent for migrations and upgrades, and only 10 percent for innovation. To improve the value of IT, it's important to decrease the ongoing maintenance and asset management through task avoidance and productivity enhancements, while increasing the resources toward innovation.

Organizations should target the three biggest areas of gain:

  1. Reduce the number of administrator tasks
  2. Reduce each task's steps and cycle-time
  3. Reduce the skills required

Data centers deploying consolidation and self-optimization handle their workload with 30 to 40 percent fewer assets; this saves 20 percent on overall administration. Self-healing and other best practices yield another 5 to 10 percent in labor savings. This can amount to an annual savings of $1,320 (USD) per employee for a typical enterprise.

Security

More than 85 percent of companies experienced security breaches within the last 12 months, and more than 60 percent of companies acknowledged financial losses as a result.

When a security incident occurs, IT organizations scramble to meet the challenge. Even if harm is prevented, many tangible and intangible costs are incurred

  • Repair and Mitigation—the time and cost of finding the problem, repairing damage, recovering data, and ensuring that the vulnerability is addressed to prevent future harm.

  • Downtime—lost productivity, revenue, and profit while the systems or applications are unavailable.

  • Competitive Impact—loss of customers and market share due to system unavailability or customer dissatisfaction.

These costs can be broken down by type of cyber security incident, including internal and external attacks. It's important to understand the typical total cost of each type of successful attack to fully understand the financial benefits of mitigating them.

Security Threats and Estimated Impacts
Typical Impact per Incident (USD)
Virus $24,000
Denial of service $122,000
Physical theft or destruction $15,000
Data destruction $350,000
Theft of proprietary information $4.5 million
Illegal system access—outsider $225,000
Unauthorized insider access $60,000
Installation or use of unauthorized software or hardware $250,000
Insider abuse of net access or e-mail $360,000
Financial fraud $4.4 million

Estimated security impacts per incident for various internal and external security issues—Source: Alinean

The automated data center's self-protecting features proactively reduce vulnerabilities, automatically distribute patches, and reconfigure systems as needed, reducing security risks, and saving companies 20 percent per year on security management and business impact costs.

Virtualization and Provisioning

Automated data centers' virtualization and provisioning features are estimated to save companies 30 to 40 percent on hardware and software, by avoiding establishing the systems for peek load. The automated data center automatically allocates assets where needed, supporting changing business priorities and meeting routine and peak performance requirements.

Net savings can easily top $1,000 (USD) per year, per employee, based on a typical enterprise, which spends $1,633 (USD) per year, per employee for data center hardware and software, and an additional $1,496 (USD) per year, per employee on purchased software.

High Availability

How long downtime lasts is crucial. A workgroup losing just a few minutes can easily make up the time, but hours of downtime can mean invalid transactions or a permanent loss of clients.

Estimated Outage Cost per Minute
Business Impact (USD)
Supply chain management $11,000
Electronic commerce $10,000
Customer service center $3,700
ATM/POS/EFT $3,500
Financial management $1,500
Human capital management $1,000
Messaging $1,000
Infrastructure $700

Estimated downtime impact per minute for various business applications—Source: Alinean

Downtime for a typical computing infrastructure is estimated at $42,000 (USD) per hour. At this rate, a 1 percent improvement in availability can lead to millions in reduced risk and productivity losses.

Unplanned Downtime (Mission Critical)
Typical Uptime
Hours Down per Year
Cost per Unplanned Downtime Hour (USD)
Downtime Risk (USD)
Worse than average 98.000% 174.72 $42,000 $7,338,240
Average 99.000% 87.36 $42,000 $3,669,120
Better than average 99.500% 43.68 $42,000 $1,834,560
Good 99.900% 8.736 $ 42,000 $366,912
Best in class 99.999% .09 $42,000 $3,780

The automated data center promises to be more resilient to downtime issues, helping companies achieve best-in-class or "good" availability—typically a 50 percent reduction in downtime. For most organizations, this can mean saving millions of dollars annually.

Conclusion

The technology will continue to advance throughout the next three years and IT management will have to augment its own skills and processes to profit from the promised benefits.

All companies are different, but for those needing a resilient high performance infrastructure for business process improvement and e-business mission critical applications, the automated enterprise will deliver a solid ROI.

About the Author

Tom Pisello is the CEO of Orlando-based Alinean, the ROI consultancy helping CIOs, consultants, and vendors assess and articulate the business value of IT investments.

He can be reached at tpisello@alinean.com.

 
comments powered by Disqus