Businesses are facing many hard-hitting challenges caused by the current economic environment, where technology budgets have become negatively impacted by the credit crunch. According to an article published by the Wall Street Journal in October 2008, 61% of CIOs are currently re-evaluating their budgets, 49% are trying to save money by renegotiating contracts with their vendors, and almost 25% have instituted a hiring freeze - which is a bad sign indicating that many businesses may not have enough staff on hand to complete already started projects on time. Opportunities for IT cost reduction can be found within key categories where Total Cost of Ownership (TCO) can be reduced, and core areas where remote backup companies enable savings during these hard economic times that many businesses are facing.
The sudden onset of the financial crisis and consequential recession has induced strong growth in IT spending for 2009, causing IT organizations to reevaluate their operating costs and prepare for the worst. Money is tight and reducing overhead is the key to keeping the doors to the business open. Globally throughout all industry sectors, IT organizations are searching for ways to operate leaner. The growth of corporate storage needs and the resulting increased importance of data protection and storage are forcing IT departments to grapple with increased costs and complexities. By managing an efficient storage environment through outsourcing, centralizing and automating IT functions, organizations will realize a reduction in TCO of storage infrastructure, increased performance and lower overhead. Hiring a remote backup service providers to handle the operation and maintenance of hardware and software will prove more efficient and cost effective.
TCO analysis is a prerequisite for any ROI study since customers cannot determine their savings without understanding their costs. Industry-recognized approaches to analyzing TCO can be separated into the following four categories:
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Cost Categories |
Definition |
|
Hardware and Software |
Costs of necessary hardware, software and associated services. Includes hardware and software purchases, maintenance and support contracts, training and professional services, upgrades and other software such as virus protection and backup software. |
|
IT Operations
|
Ongoing costs associated with operating data center servers. Components include the costs associated with server deployment, server configuration, network and storage infrastructure, data center power and cooling and other system administration tasks. |
|
Downtime |
Costs associated with both planned and unplanned server downtime. Includes costs of restoring services, lost employee productivity and lost revenue. |
|
Business Administration |
Costs associated with business processes. These include the labor cost associated with creating orders, obtaining purchase approvals, negotiating vendor contracts and tracking the procurement process. |
A remote backup company assists organizations in achieving a reduction in their TCO through several ways. Their most immediate means to accomplish this are through:
· Eliminating tape backup
· Agentless, centralized server for remote locations
· Tiered storage solutions
· Server consolidation through virtualized infrastructure
Tough economic times force downward pressure on IT budgets that require organizations to operate leaner. When calculating TCO, procurement of assets, IT support, administration, downtime and operation cost are all factors to consider. Outsourcing a remote data service provider to uncover the hidden costs and manage IT operations associated with the business can be critical to achieving significant savings as the organization's needs continue to grow. Eliminating business practices that are significant cost centers for the business, as well as implementing advanced standards of data storage and protection will have a positive impact on reducing TCO, while inevitably increasing the ROI for the company.
For more information on Calculating TCO for Storage Management, please download our TCO white paper.