There were several elements to the program, but virtualization was one of the most effective. "We moved from an environment where we were 100% physical to over 90% virtual," he says. That saved several million keep-the-lights-on dollars that the company poured back into innovation. At the same time, Analog Devices switched to a service catalog approach, automating such tasks as resetting passwords for employees — something that help desk staffers previously did over the phone about 1,800 times per quarter. "Those technologies swooped in and saved us," Forte says.
For many companies, moving services to a public, private or hybrid cloud also has a huge impact on costs. Johnson estimates that Informatica spends about 60% of its IT budget on innovation and only 40% on keeping the lights on, and heavy use of the cloud is one reason why. "We have more than 30 enterprise software-as-a-service operations," he says. "We have a mantra: 'Cloud first.' Can we do it with a hosted cloud solution? If not, and we have to buy it, that's fine. [But] building it custom is always the last resort."
And security concerns shouldn't keep you out of the cloud, Fenwick says. Business executives "need to look at how much it matters if something is running in a data center 100 miles away and owned by the company versus one that's 100 miles but owned by another company," he says. "People don't really understand the relative risk of someone hacking into our data center compared with Amazon's data center."
Eliminating customization for any function that isn't a key differentiator can substantially reduce keep-the-lights-on costs. "People have done a lot of the easy stuff," Fenwick says, referring to the fact that virtualization and cloud computing have already had big impacts on many IT budgets. Standardizing software is the next thing you can do to meaningfully cut costs.
But while standardization can create great efficiencies, it can be a hard sell. That's because, unlike the cloud or virtualization, standardizing — whether on SaaS or off-the-shelf applications — requires users to change how they do their work. "If you're buying something off the shelf, it's by definition not going to be designed for your processes," McGrath says. "And once you start tinkering with it, you lose the benefit."
The key is to have the discipline to say, "We are not going to customize this.... We're not going to make changes that will make it more difficult for us to be agile." Fenwick says.
Johnson says standardizing both technology and business practices helped Informatica get to the point where it spends 60% of IT's budget on new initiatives. "You make sure you don't have 10 ways of doing something," he says. "You have one way of doing it."
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