Pulling Out More Value

Over the past five years, many major corporations added servers, enterprise software and just about anything that promised to make them an e-business. But Scott's outsourced IT services team was busy reassessing GM's technology investments and simplifying its massive IT infrastructure. GM now runs on 80 Lotus Notes servers instead of 300 and has halved the array of software products used to run operations. The company also has initiated a storage consolidation effort. And there's more tune-up work to come. "We're looking at tools right now that will help audit our infrastructure and help us count licenses, count seats," said Scott, who reports to GM Group Vice President and CIO Ralph Szygenda.

GM's IT overhaul reflects a trend that solution providers are now grasping: Many companies,large and small,are refocusing their technology spending on solutions that consolidate and optimize existing infrastructure and squeeze out a better return on investment. Because the shaky economy has nearly stalled new IT investment by businesses, integrators are realizing that their chances of convincing a customer to make even a minimal expenditure are slim unless they pinpoint ways to wring out costs.

"They're willing to spend, but they're only willing to spend if they see a hard and fast payback," said Bruce Mowery, vice president of marketing at software tools vendor SupportSoft, Redwood City, Calif. "We're not talking a three-year payout; we're talking as little as three months."

The good news is that the optimization argument can get integrators in a customer's front door fast and provide an opportunity to pitch additional services. For example, server and storage consolidations and projects that improve software license management are gaining traction, as are management services that help companies gauge their current IT assets and sharpen their cost-efficiency. Software developers like SupportSoft and Mercury Interactive (see story, page 18) are already banking on this trend by developing new applications.

"For the channel, especially for those with a good services component, this is the future. Frankly, what choice do they have?" said Christopher Lochhead, CEO of Lochhead Corp., an enterprise management consulting firm. Lochhead has coined the phrase "business technology optimization," or BTO, to describe this IT philosophy shift and has formed an advisory practice to address it.

The slow economy is just one instigator of the BTO movement,and the wave of technology infrastructure measurement, tuning and management tools expected to accompany it, according to Lochhead and other industry observers. A profound realignment of corporate expectations for technology also has reshaped business IT investment.

"IT optimization is definitely one of the biggest opportunities that our customers are seeing right now," said Rohit Gupta, director of product management at GE Capital IT Solutions, Newport, Ky., which is piloting an infrastructure measurement offering dubbed GE S.I.T.E. (Statistical Infrastructure Technology Evaluation). The service, which hasn't been priced yet, is scheduled to be rolled out in mid-November, Gupta said.

Rye Brook, N.Y.-based Siemens Business Services (formerly Entex Information Systems) also is identifying ways that customers can trim costs through a service dubbed SieQuence, which was launched earlier this year, said Paul Maier, senior vice president for the eastern U.S. region at the company.

"The role of the IT organization has shifted from a cost center to much more of a business center and how it helps the company execute business strategy," Maier said. That could involve something as simple as automating a password reset function or streamlining outsourced break-fix and help-desk support, he said. "There is the possibility for people to spend more if they choose the wrong business partner," Maier said.

Some integrators are starting new practices geared toward optimization. Last week, Dimension Data launched a service called "Infrastructure Refresh," designed to help companies reorganize and upgrade their systems to lower the total cost of ownership, said Gary Zasman, practice director for enterprise systems at Didata North America. The integrator developed the service in the wake of more than 100 projects focused on IT optimization, and the work has caught the attention of vendors such as EMC and Cisco Systems, which are teaming with Didata to identify new opportunities, Zasman said.

"We can generate very good services revenue. Customers wind up with a cheaper, more reliable infrastructure to manage and operate, and the savings in total cost and administration can actually pay for the refresh," he said.

Part of the infrastructural snarl in many companies today stems from a phenomenon that Didata dubs the "Y2K hangover," Zasman said. In the rush to avert potential technology disasters, businesses invested heavily in upgrades and added a multitude of servers and software, and now they're left with too many systems and not enough staff to maintain them, he said.

Market research shows that many companies are encountering systems overload. Gartner estimated that five years ago, the typical enterprise supported 20 to 25 applications and now that number is at about 200. Lochhead cited research from Mainstay Partners, a Redwood City-based firm that has launched a consulting process for technology optimization. Mainstay found most companies spend 25 percent more on IT than their budgets specify, and only 21 percent have a process for prioritizing or managing technology investments. What's more, 75 percent think IT functions aren't well-aligned with business strategies.

High-tech companies have been among the first to say enough is enough.

"We probably spend two times what we need in IT," Avaya Chairman and CEO Don Peterson said in a recent interview. Over the next two years, the Basking Ridge, N.J.-based telecom vendor plans to slash its technology budget to roughly 5 percent of revenue, down from the current 9 percent, he said.

Peterson's agenda includes a server consolidation project, a re-evaluation of Avaya's networking relationships, a revamp of its SAP software investment and a deeper commitment to its own IP telephony products to extend its telephony infrastructure investments. "Even when the accounting books say there's no value %85 telephony infrastructure goes on for a long time," he said. "Some of the savings are not always obvious."

To measure the performance and usage of its internal applications, CRM vendor Siebel Systems has invested in SupportSoft asset discovery and metering software, SupportSoft's Mowery said, adding that Siebel has redeployed licenses that weren't being used efficiently. Didata also has used SupportSoft internally to handle the integration of technology acquired through acquisitions. "You can save tremendous amounts of money on license management," Mowery said.

One key difference between the customer of today and the one of yesterday is sophistication, according to Todd Barrett, networking sales manager at CPU Sales and Service, a Needham, Mass.-based solution provider. "Customers are more aware of vulnerabilities in their systems and misconfigurations and misaligned patches," Barrett said. "We are contracting with our consultants to validate that a server is secure/hardened, that a tape backup system is set up and functioning properly, that an e-mail server is optimized and secure, and that an antivirus system is configured to limit viruses."

At enterprise software vendor J.D. Edwards, rising customer sophistication has led the company to overhaul its product line to stress modularity, said CTO Mike Madden. That's welcome news to integrators, many of which cite the inflexibility of enterprise software as a hurdle to aligning IT closely with business processes that can change at any time.

J.D. Edwards also has launched Project Proof, a restructuring of its engineering arm that has enabled the company's quality-assurance organization to act more as an extension of the customer rather than the development teams creating the software, Madden said. For the effort, the Denver-based vendor has invested $4 million in measurement tools, including some from Mercury Interactive, he said.

Ultimately, customers of virtually any size can benefit from the measurement and tuning tools now hitting the market, solution providers say. Torrance, Calif.-based Impex recently completed a municipal government job in which it consolidated storage from 13 servers onto a single SAN. The project saved the client hundreds of thousands of dollars in administrative costs plus added up-to-date tape library technology, said Impex President Rajiv Shah.

Also in the government realm, Capita Technologies helped Los Angeles County improve an Oracle database application that tracked criminals' crimes and whereabouts, said Charlie Granville, executive vice president at the King of Prussia, Pa., solution provider. "We kept the database and built a front end to it. We kept all the business logic, alerts, views and security. We came in ahead of schedule and under budget," Granville said. "Here we had a dead-end application, and in six months we had a whole new life for it."

Making simple adjustments to clients' technology architectures, such as tweaking the settings on a database or hardware configuration, can ensure that their systems are running at optimal capacity, said Dan Linstedt, CTO of Core Integration Partners, a Denver-based solution provider. Core Integration offers an architecture assessment service designed to smoke out areas in a client's network or application framework where greater efficiency can be attained.

"With databases in particular, it is mostly a question of configuration and the number of database instances on a machine," Linstedt said. "We help clients reconfigure their disk arrays, putting them on a VPN if they have one available." Other things Core Integration does to help customers get more from their IT assets include increasing parallelism,points in a network where multiple jobs can be run simultaneously yet independently,and examining system data flow.

And IT optimization isn't just a concern of large and midsize companies. Industry executives say small businesses also want leaner infrastructures. "This trend is just as relevant for smaller businesses," said Ken Klein, COO of Mercury Interactive, Sunnyvale, Calif., which is recruiting small integrator partners.

Luis Rodrigues, president of American CompuSystems, a small-business solution provider in Clearwater, Fla., said his clients relish IT savings. "For the small-business owner, saving even a few hundred dollars a week, that money goes right into their pocket," he said. "If I can save you four hours on a process, that is saving you money. It's a harder calculation, but something you can discuss. You almost have to be a business consultant, not just a technology consultant."

AMY ROGERS, MARIE LINGBLOM, PAULA ROONEY and STEVEN BURKE contributed to this story.

Photography by Bill Clyde/Brenner Lennon Photo Productions for CRN.