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Optimizing IT Assets: Is Cloud Computing the Answer?

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Executive summary IT asset optimization is a journey Cloud computing adds new routes to the asset optimization journey Business benefits change as the asset optimization journey proceeds Plan your asset optimization journey Appendix: Case studies Further reading

February 2011

ABOUT GARTNER
Gartner, Inc. (NYSE: IT) is the worlds leading information technology research and advisory company. We deliver the technology-related insight necessary for our clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, we are the valuable partner to 60,000 clients in 11,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, we work with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,400 associates, including 1,200 research analysts and consultants, and clients in 85 countries. For more information, e-mail info@gartner.com or visit gartner.com.

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ABOUT GARTNER EXECUTIVE PROGRAMS

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Optimizing IT Assets: Is Cloud Computing the Answer?

FOREWORD

Changing markets and new technology are raising the bar on IT asset performance. Approaching IT asset investment as a planned journey allows CIOs to optimize their investment decisions.

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This report addresses the question, What are CIOs doing to optimize their IT assets? Optimizing IT Assets: Is Cloud Computing the Answer? was written by members of the CIO & executive leadership research group, led by Andrew Rowsell-Jones (vice president), assisted by Barbara Gomolski (managing vice president).

Andrew Rowsell-Jones

Barbara Gomolski

We would like to thank the many organizations and individuals that generously contributed their insights and experiences to the research, including: The contributors to our interviews and case studies: Kenny Marritt, Barclays (U.K.); Bentley Curran, Brady Corporation (U.S.); Michael Walsh, D-Link (U.S.); Denildo Albuquerque, Just Group (Australia); Mark Gulling, MeadWestvaco (U.S.); and Crispin OConnell, Welsh Assembly Government (U.K.). Other Gartner colleagues: Militza Basualdo, Judi Edwards, Brian Gammage, Jim Hocker, Steve Long, Al Passori, Linda Price, Nick Reddall, John Roberts, Irving Tyler and Steve Weber. Other members of the CIO & executive leadership research group: Heather Colella and Richard Hunter.

Optimizing IT Assets: Is Cloud Computing the Answer?

EXECUTIVE SUMMARY

How to optimize IT assets is always on the mind of a CIO. For most IT organizations, the biggest group of assets is infrastructure, the applications that run on infrastructure and the people who look after both. In a typical enterprise, these run-the-business assets consume 60% to 70% of ITs operating budget.
Gartner research shows three proven strategies relevant to asset optimization: strategic sourcing, offshoring, and the infrastructure journey of consolidating, virtualizing and ultimately operating a real-time infrastructure (see figure opposite). This report focuses on the infrastructure journey because it is evolving fastestan effect of cloud computing, which can reduce cost and increase flexibility. In documenting the infrastructure journey, we provide milestones and indicators to help CIOs make the best possible decisions along the way.

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We are trying to move as much of our infrastructure as possible to other providers that can run it more efficiently but ERP will go on-demand last because it is key to our business process.
BENTLEY CURRAN CIO Brady Corporation

Three strategies for optimizing IT assets

Strategic sourcing

Infrastructure journey Basic infrastructure (sprawled)

Three IT asset optimization strategies

Virtualized (consolidated)

Private cloud (real-time infrastructure)

Public cloud

Offshoring

IT asset optimization is a journey

Asset optimization is a journey in which CIOs can reap seven kinds of business benefits: IT cost reductions Cost transparency/variable costing Business and IT agility Business and IT integration Business and IT integrity Service quality Sustainability improvements

Optimizing IT Assets: Is Cloud Computing the Answer?

EXECUTIVE SUMMARY

Cloud computing adds new routes to the asset optimization journey

Cost benefits typically dominate early in the journey, while agility and transparency benefits dominate later. Cloud computing adds routing options by making scalable and elastic IT capabilities available as services; Web conferencing, e-mail, customer-facing websites and cloud-based CRM, for example, are already common in many enterprises. Gartner predicts that 80% of Fortune 1000 enterprises will be using some level of cloud-computing services by 2012. The CIO can exploit two forms of the cloud: Private cloudA subset of real-time infrastructure, this cloud consists of on-premise computing or data storage resources available automatically (subject to policies). Public cloudThis is a service whereby a third party, such as Amazon or Microsoft, provides computing capacity, data storage, etc., on a variable-cost basiswith the customer paying the supplier on a per-unit basis (for more information, see Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014 in Further Reading).

From an asset optimization perspective, the cloud substitutes for traditional on-premise IT assets (see figure opposite).

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The initial driver for change was cost. We quickly got to a point where we were fairly comfortable with the cost savings. Then we got enthused by the capability.
MARK GULLING CIO MeadWestvaco

The cloud is a potential accelerator of IT asset optimization

Infrastructure journey Basic infrastructure (sprawled) Resources in multiple silos Virtualized (consolidated) Physical colocation, centralized management, pooled resources Service-based Private cloud (real-time infrastructure) Resources optimized based on business priorities

Centralized Standardized Rationalized

Public cloud 1 2 3 4 5 Service-based Scalable and elastic Shared Metered by use Internet technologies

Note: Not all real-time infrastructure (RTI) is private cloud (although all private cloud is RTI). To be private cloud, RTI must meet the same criteria listed for public cloud. This simplification has been made for clarity.

Business benefits change as the asset optimization journey proceeds

The asset optimization journey is continuous, never reaching a destination. For the foreseeable part of the journeyperhaps the next 10 yearsa CIO will be able to take a predictable route that delivers variable business benefits. Most of the early benefits, for example, entail cost reductions, with agility, integrity and integration benefits coming later.

Plan your asset optimization journey

Asset optimization affects multiple stakeholders, often over an extended period. To validate and communicate a particular route, use short- and medium-term business needs tied to the kinds of business benefits asset optimization delivers. Validation includes assessing whether a course correction would improve the performance of IT assets, charting a path forward based on your findings.

Optimizing IT Assets: Is Cloud Computing the Answer?