80/20 Rule: Find Savings to Fund your IT Innovation Projects | Curvature
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80/20 Rule: Find Instant Savings to Fund your IT Innovation Projects

Organizations are constantly seeking to obtain an edge over their competitors in today’s highly dynamic and fluid business climate. Increasingly, businesses recognize that digital transformation is the crucial linchpin needed to differentiate their organizations and pull ahead in today’s digital-centric business environments.

Funding innovation

The challenge often boils down to obtaining the requisite resources to fuel new, innovative initiatives. With budget slashes and constant pressure to maintain a growing IT infrastructure with the same number of employees, most attempts to improve the status quo are often doomed to failure as they are starved of money and time from the get-go.

To avoid this pitfall, it is imperative that businesses garner adequate resources before they begin. One strategy that organizations can use to support innovation in the face of flat or declining IT budgets is the “80/20 rule.” This revolves around identifying hardware upgrades and maintenance contracts that can be pruned with minimal or no impact to operations, and then funnelling those savings to fund new projects and systems to move the needle on key metrics such as productivity and the bottom line.

With judicious planning, 20 percent (or more) of the existing budget can be freed up for such projects. IT departments can then pivot toward a bi-modal IT approach to take care of existing systems with the remaining 80 percent of the budget while simultaneously launching new initiatives geared toward innovation.

The path to success

Though the 80/20 rule doesn’t require an increase in budget, it is vital to first convince the budget owner tasked with handling the organization’s P&L to gain project buy-in. The next step is to appoint a champion to helm the technical discussions with IT stakeholders to ensure that the engineers and IT team tasked with keeping existing systems running are properly assuaged of their concerns.

When identifying resources that can be cut free, it is important for organisations to stop seeing their IT infrastructure through a single set of lenses. Instead, they should segregate components such as the network, server and storage environments to better determine which infrastructure can be maintained  and which must be upgraded.

To increase the chances for success, firms can start by targeting low-hanging fruits for cost savings. Typical areas include the access layer of the network, equipment on the network edge, and the data centre. The load levels for the first two components are generally flat and can be switched to third-party maintenance, while modern servers may support a higher virtualisation density and may well fit into fewer racks.

Crafting the plan

It goes without saying that an intimate understanding of the full infrastructure is crucial to success and must be obtained through methodical analysis. At Curvature, we rely on ClearView℠, which takes a holistic view of all assets within the organization and uses a well-defined series of questions to quickly and effectively identify all hardware components and dependencies.

With a full picture of their infrastructure, organisations can quickly identify existing equipment that can be used beyond its manufacturer-defined end-of-life (EOL) date. Of course, not every component can be retained and sometimes there are situations where the lack of software support can be an issue. However, it is important to note that most equipment manufacturers stop releasing software updates long before an equipment’s EOL, so the lack of software updates is less of a barrier than many understand it to be.

Even traditional servers may not warrant an upgrade, depending on what they are deployed for. The new generation of equipment may not offer a relative level of performance improvement with regards to their CapEx implication, while others such as the WiFi infrastructure may also continue to meet their requirements for some time yet.

Reaping real benefits

It was through this approach that a global FSI with over US$100 million worth of Cisco networking hardware averted a US$42 million hardware refresh last year after ascertaining that their existing hardware was fit for purpose. By going with an IT roadmap determined by their business needs and not one driven by a vendor, they are now on track to save a projected $48 million over three years – while still enjoying enterprise-grade service level agreements in 25 countries.

Of course, organisations going against the grain can expect to face vigorous resistance from equipment manufacturers with a vested interest to sell more hardware. Although manufacturers will offer up scenarios designed to evoke uncertainty and fear, there is no reason that IT cost savings achieved through a rigorous process of equipment analysis and third-party maintenance will not succeed.

Crucially, businesses using the 80/20 rule gain the financial leeway to experiment with and implement much-needed IT innovation projects that they would not otherwise have had.

For now, CIOs and IT managers interested in a deeper dive on how to implement the 80/20 rule for their network equipment may want to check out Curvature’s column in Network World.

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