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Planning, communication keys to controlling budget and reducing TCO

Planning, communication keys to controlling budget and reducing TCO

CHICAGO -- Understanding your suppliers, customers and your company is essential in achieving optimum control of spending and overall cost of ownership. But, gaining and documenting that knowledge can be a storage administrator's greatest obstacle, specifically when implementing new technology.

"Poor planning is your worst enemy," said John McArthur, group vice president, storage research, International Data Corp. (IDC), a Framingham, Mass.-based analyst firm.

McArthur, who spoke Wednesday during the Storage Management 2002 conference, said in order for businesses to achieve the highest levels of total cost of ownership (TCO) and return on investment (ROI), storage managers need to plan -- and that means knowing everything about your suppliers, examining the needs of your end users and having a firm grasp of your company's style, goals and direction.

Without it, you're sunk, he said.

McArthur stressed the importance of knowing the people in your organization who are vital to helping you implement new technology. McArthur refers to them as "stakeholders," and they include everyone from the chief financial officer (CFO) to application developers, to the facilities managers.

It's also essential to know what kind of company you work for -- a turtle or a rabbit -- the turtle being a slow to change company and the rabbit being a quick-start, risk-taking company. You'll be better prepared, he said, when it's time to bring your solutions to the CFO.

But, it's in understanding (and underestimating) suppliers that McArthur said is where companies tend to flounder.

In the past, most managers wouldn't think of getting storage management products, let alone advice, from a supplier that wasn't well established in the market, McArthur said. But, that's changing.

"We see a trend now that even if the company is a start-up, managers say?'if they can fix it, we'll hire them." But, he warns that if you plan on working with a start-up, visit its primary location, talk to existing customers, leverage its credit department and know their current partners. In fact, follow that advice for your suppliers.

"These are things we don't spend enough time on," he said.

Of the nearly 800 high-level storage managers attending the conference, many agreed vendors love to try to leverage initial cost with the long-term cost of ownership. Don't buy into it. Only you can determine your TCO and ROI.

Julie Robards, an IT manager with the City of Bloomington, Ill., agreed with McArthur's recommendation. "Talk to their [a supplier's] customers before you talk to them," she said. "Customers are not going to lie."

Robards also knows the importance of planning ahead before you contact a supplier. "You'll have no idea what it's going to cost until you plan and budget," she said. "You can't reduce cost and calculate ROI until you know what it is you're spending."

The problem with some IT shops is that they have no understanding of what they have, said Hugh Hale, director, technical services, BlueCross BlueShield of Tennessee. "He doesn't know what he knows," he said. "How do you budget for what you don't know?"

Hale is part of the team that won the Chattanooga-based BlueCross BlueShield the Innovators Award in the TCO category for its extensive overhaul of its IT infrastructure -- including implementation of a storage area network (SAN) -- that allowed the company to save $120,000 per month right away.

"People are so busy putting out fires, that they don't have time to really look at what's going on," he said. "So, they just keep throwing money at it."

Hale's colleague Bob Venable, manager, enterprise systems, said one of the biggest problems preventing realizing TCO and ROI is their inability to define it. "People just look at the cost of something," he said. "You can't do that."

Both agree with McArthur and said that knowing who you're doing business with is vital to TCO. And, they have two pieces of advice of their own: Pull your team together and communicate, and use management software tools so you can qualify what you already know in your gut. Software management tools help you to visualize it and put it on paper.


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