Is the IT budget really shrinking?
Certainly since the heyday of 2008, yes indeed it is. ‘The IT market will not recover to 2008 revenue before 2012,” said Gartner’s Peter Sodergard in Sydney recently. “For more than 50% of CIOs the IT budget will be 0 percent or less in growth terms.” The good news is that Australian enterprise IT spending will show a compound growth rate of 1.3% over the next five years with total IT business to reach $A56.4 billion by 2013. Gartner also said that the biggest growth will occur in the communications, healthcare and utilities market locally.
However, dig a bit deeper and some disturbing facts emerge, firstly IDC recently reported that since 1998 services costs have gone up eight fold compared to the cost of the server. Likewise, power and cooling costs now sit at a ratio of $0.50 for every dollar spent on a server, with worse to come in NSW. Gartner also recently reported that IT has to take into account the prospect of high failure rates with delayed equipment replacement. “If replacement cycles do not change almost 10% of the server installed base will be beyond scheduled replacement by 2011.” This means that less IT budget will be available for new projects; it will be used up in replacement, service and running costs.
The other pressure on IT is the increased demand from the CEO/Board for a quick return on any expenditure actually envisaged. New research from TheInfoPro shows that key spending trends focus on “ purchases on optimisation of existing server, networking and storage assets that show a six to 12 month return.” CIOs have to present a clear and demonstrable business case for all investments, quite a task for most CIO’s without good trusted advisor help.
IT solutions for 2010 and beyond
Here we review advice from experts and discuss with some of our leading vendors and offer our own summaries. Firstly, please consider the need to look closely at a range of solutions.
Local analyst John Brand from Hydrasight wrote recently with some advice that is very close to our thinking. “the old buy versus build approach of the 80’s and 90’s is now replaced with a source, configure, manage approach where IT organisations source the required capabilities from wherever they are best delivered , configure for their environment and manage performance, with constant review to make sure business flexibility and performance are always improved.” We concur; no one vendor can do everything, it’s all about the right product for the right price with the best ROI and scalability. In addition, note what IDC Australia just reported from annual management study: “The top IT challenge here is to reduce costs.”
Gartner locally had a similar attitude to sourcing, Matt Boon advised delegate attendees to consider all suppliers of Virtualisation products for instance saying; “I feel it is dangerous to align with a single virtualisation vendor.” As explained above this is exactly our philosophy here at Regal IT, we offer virtualisation from Citrix, Microsoft and VMware, Storage from Compellent, Dell and HDS and servers from Dell, HP and IBM. Each has its own unique attributes for specific applications; it’s up to us to work with you to find you the best.
Lets now look at specific areas of growth for 2010 and beyond.
While IT had only a small growth as mentioned above, servers are a hot item, Asia Pacific has grown faster than any other region in the world over the last two quarters reported Gartner. Moreover, Australia and NZ led the way with 36.4%growth year on year, an astonishing figure, probably caused by a move to blades and of course replacements as mentioned previously. The biggest issue we are seeing with servers is power consumption, and heat. The data centres are also filling up faster than they can be built. You need to start looking at SSD drives, getting disks into the SAN and out of the server (see next issue), and new network technologies like Processing Area Network (PAN) software that manages the CPUs and memory as resource pools which are allocated to virtual servers on demand. Design of the data centre is a critical need.
According to IDC 2009 was the year the number of virtual servers exceeded the number of physical ones, and it sure is not going to stop. Gartner see a broad opportunity for virtualisation of servers in 2010 particularly in the SMB space as they become comfortable with the technology. Strange then that actual server shipments are booming here if virtualisation is so pervasive, I hope users are not rushing to more servers without looking at alternatives. Again, another reason we should be looking at your individual needs and plans. Dr Kevin McIsaac from IBRS recently wrote, “in order to drive up the utilization of the infrastructure, and drive down the management costs, IT organisations need to embrace virtualization across servers, storage and networks.’
3.The Virtual Desktop.
IDC recently reported; “We are also seeing virtualisation on the desktop and not just on the server side. Thin clients are finally reaching their long-promised potential, replacing desktops.” Regal IT has long been a supporter of thin client technology with a long association with Citrix, and many sites are using the technology here. IDC continued with this statement, “In 2004 the concept was ready but the technology was not, now thin client is moving from the task worker to the productivity worker.”
4.We asked Nabeel Youakim, VP of Citrix APAC to comment,
“IDC is right, we are seeing customers virtualising the desktop more and more. Key of course is the enabling technology growth and the demand from many customers wanting to move to Microsoft Windows 7. Not many business users embraced Vista and are in the main still using XP, now unsupported by Microsoft. They now want to move to Windows 7 but question the deployment method to do so.”
“Citrix has developed a unique delivery mechanism to enable a more dynamic deployment model that we call FlexCast; a set of different ways of delivering the desktop to users. It's about thinking of all your virtual desktop and application delivery methods as a toolbox that enable you to directly address the different performance, security, personalization and mobility requirements of all your users – all in one product. This approach is dramatically different from the way most other vendors are looking at desktop virtualisation. They try to force fit a single desktop virtualisation approach to all use cases, even when it does not make sense. FlexCast is revolutionary in comparison, but the idea is quite commonplace if you think of some analogies.”
See the link for more information http://community.citrix.com/display/ocb/2009/10/07/FlexCast+delivery+technology+in+plain+English
5.Again Regal IT can assist our clients with selecting the best delivery tool from the FlexCast menu
In the next issue we will look at storage and storage management, system management appliances and green IT issues, please look out for it. In the meantime, please contact me at Regal IT if you would like further information on any of the above.