How to Manage IT Budget and Reduce Data Center Costs

By CIOReview | Friday, September 30, 2016
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A well-built IT budget and properly managed data center assists in streamlining a company’s operations. IT manager works to manage the current data center effectively and efficiently without any extra investments. Their tasks involve cutting down the operational costs without harming company’s routine operations. They add different techniques like energy efficient data centers, opting for cloud computing, and others, to minimize the cost outlay.  

An energy efficient data center helps in saving a considerable amount of cost and time. Data center managers are concerned about building energy efficient data centers to cut expenditure because the increase in data center cost can bring IT pros down.

IT budgeting is a critical and important exercise for enterprises. The data center managers’ needs to timely figure out how to implement continual technological advancements into data center without opting for extra investment. To cope up with highly competitive markets, the company needs to boost its performance, quality, and productivity, which lead to an increase in expenses. The task of data center manager is to manage the IT budget along with fulfilling ever increasing infrastructure needs without harming the operations.

Effective management of data centers and IT budget is now an important task for CIOs. The task of IT budget management involves keeping company expenditure within predefined targets and cutting cost wherever possible. Organizations continuously look for improvement in the IT price performance along with getting more business value from current IT investments. To manage IT costs, IT executives need to first analyze the current IT spending because it will help in finding the possibilities of value optimization and cost savings.

IT manager needs to set parameters for the cost utilized by each operation because it will help in identifying possible areas for cost reduction. For example, an executive needs to track the cost involved per terabyte of storage and later compare the outcome with the price performance. If the result is over the average metric, then by implementing current technological innovations the storage costs can be trimmed down.

To wisely supervise IT budget, analysis of fixed and variable costs of the company is also important. The fixed costs involve the investment for IT infrastructure, data centers, IT staffs, etc., while variable cost includes contract labor, annual servicing costs, and others. It is necessary for CIOs to implement disciplined cost management strategies to ensure that they will enable efficient business capabilities.

Gartner’s report on IT budget management mentioned that about 23 percent of IT budget spending is required for data centers. Therefore, it is necessary to manage operational costs of the data center, but it is a vital task because any wrong decision can disturb the relentless drive of the businesses. The operating costs of the data center are dominated by the carrying costs of the IT gears along with cooling and power needs. The carrying costs of the IT equipment include servicing, warranty, depreciation, and acquisition. These costs are an inevitable factor of data center along with the IT budget. Therefore, to cut down data center costs and make them more cost effective, data center managers’ needs to follow performance-driven strategies.

Merging multiple data centers into a single unit will help in decreasing hardware costs. Data center consolidation will help in getting rid of unnecessary IT equipment, software, maintenance and support, and disaster recovery agreements. Renegotiation with the hardware, software, maintenance and support provider creates a possibility of cost cutting. Cloud computing has appeared as a market disruptor for IT companies as it decreases the load of installing various data centers. It uses virtualized resources provided by the cloud service providers. By utilizing cloud computing, CIOs can reduce their IT expenses at a very high extent because the costs like buying new equipment, disaster recovery service costs, power usage, cooling equipment will be decreased.

Data centers waste lots of energy through its power and cooling infrastructure, which increases the financial burden on the company. Therefore, CIOs need to opt for modular cooling systems, strategies to lower down energy costs, etc. The modular cooling system (MCS) works as a refrigerated chiller for the data centers. MCS controls and keeps the temperature of data centers according to the surroundings. Integration of modular cooling systems will help in decreasing energy emission and power consumption, which will enable equipment to work with high efficiency at low power usage. The demand of power can be reduced by using high-efficiency UPS. They help data centers in increasing the battery runtime along with keeping components at low temperature to increase their lifeline.