Making sure cost cuts don't cost you
Written By Gerrit-Jan Albers, Service Delivery Manager at one of South Africa’s leading outsourcing and consulting companies, RDB Consulting
In the current economic climate, many organisations are driven to cut costs, save money and improve cost efficiency across the board.
One area that is typically under scrutiny is IT. As a result, organisations are scaling back on areas such as software, applications, operating systems and even databases.
The cost cutting route, however, can turn out to be an expensive exercise as short cut solutions can negatively impact performance and profitability in the long run.
Added to this, cutting costs in one area may even lead to increased costs in another. When it comes to saving money, organisations need to balance cost efficiency and operational efficiency.
Finding the right balance of both can be a challenging task, but is critical in maintaining long-term agility, competitiveness and profitability.
Unfortunately, IT is typically one of the first areas of budget cuts as its role is often not seen as critical to the business. However, IT underpins the operations of the majority of organisations across industry sectors and without it, many businesses could not function.
In an effort to reduce IT spend, organisations often ‘sweat’ their assets for as long as possible, stretching their hardware investments.
However, hardware is one area that is constantly evolving and being upgraded, and over time legacy equipment can become inefficient.
As a result tasks such as data analysis, business intelligence and even day-to-day information processing can take longer, negatively impacting the productivity of the organisation and its people.
This in turn has a knock on effect, impacting the profitability of the business, as time is money. In addition, legacy hardware often requires additional maintenance tasks to be performed, increasing the cost of support.
Furthermore, replacement components become difficult and expensive to source, increasing the cost of maintenance. By cutting back on hardware upgrades, organisations often end up spending more money rather than saving money as newer hardware would not require any of these additional costs.
Software licensing is another area where organisations attempt to save costs. By downgrading licenses and reducing the number of licenses, costs can be trimmed.
However, downgraded software often comes with reduced functionality, which again can negatively impact productivity. Another way of reducing fees is to buy the software, but not the support.
However, if for example application downtime occurs due to a database issue, the support needed to resolve the issue is usually more costly than if contracted into the original support agreement.
Another popular means to cut costs is to reduce resources, such as the number of people employed within an IT department.
However, when people leave an organisation, they take their knowledge and intellectual property with them. This means that the existing resource tasked with performing another job in addition to their own may take months to get to grips with the new role and responsibility.
The resource now performing a dual role may also not have the same focus, as their time is split between multiple tasks. This impacts IT service delivery, with all the resulting ‘knock on’ effects.
Cutting costs can have many negative effects on the business, which will end up costing a lot of money in the long-term, particularly in mission critical areas such as the database.
The risk of downtime is a very real problem, and the inability to restore services increases downtime along with the financial impact thereof.
Obtaining services and support on an ad-hoc basis is also more expensive than a comprehensive service contract or service level agreement (SLA).
Furthermore, maintenance on legacy infrastructure and hardware is a laborious and expensive task. Out of date hardware will eventually reach a point where it will no longer function, having serious business and financial implications.
Rather than simply embarking on cost cutting exercises, organisations should look towards delivering greater cost efficiency with high levels of service delivery.
An effective outsourcing partner who specialises in specific areas of IT such as database outsourcing, maintenance and administration, will help organisations to understand where they can afford to trim on spend and where they cannot.
This will help ensure that organisations achieve optimal balance of cost and operational efficiency, effectively cutting costs without negatively impacting the business and its profitability.
GfK and VMware: Innovating together on hybrid cloud
GfK has been the global leader in data and analytics for more than 85 years, supplying its clients with optimised decision inputs.
In its capacity as a strategic and technical partner, VMware has been walking GfK along its digital transformation path for over a decade.
“We are a demanding and singularly dynamic customer, which is why a close partnership with VMware is integral to the success of everyone involved,” said Joerg Hesselink, Global Head of Infrastructure, GfK IT Services.
Four years ago, the Nuremberg-based researcher expanded its on-premises infrastructure by introducing VMware vRealize Automation. In doing so, it laid a solid foundation, resulting in a self-service hybrid-cloud environment.
By expanding on the basis of VMware Cloud on AWS and VMware Cloud Foundation with vRealize Cloud Management, GfK has given itself a secure infrastructure and reliable operations by efficiently operating processes, policies, people and tools in both private and public cloud environments.
One important step for GfK involved migrating from multiple cloud providers to just a single one. The team chose VMware.
“VMware is the market leader for on-premises virtualisation and hybrid-cloud solutions, so it was only logical to tackle the next project for the future together,” says Hesselink.
Migration to the VMware-based environment was integrated into existing hardware simply and smoothly in April 2020. Going forward, GfK’s new hybrid cloud model will establish a harmonised core system complete with VMware Cloud on AWS, VMware Cloud Foundation with vRealize Cloud Management and a volume rising from an initial 500 VMs to a total of 4,000 VMs.
“We are modernising, protecting and scaling our applications with the world’s leading hybrid cloud solution: VMware Cloud on AWS, following VMware on Google Cloud Platform,” adds Hesselink.
The hybrid cloud-based infrastructure also empowers GfK to respond to new and future projects with astonishing agility: Resources can now be shifted quickly and easily from the private to the public cloud – without modifying the nature of interaction with the environment.
The gfknewron project is a good example – the company’s latest AI-powered product is based exclusively on public cloud technology. The consistency guaranteed by VMware Cloud on AWS eases the burden on both regular staff and the IT team. Better still, since the teams are already familiar with the VMware environment, the learning curve for upskilling is short.
One very important factor for the GfK was that VMware Cloud on AWS constituted an investment in future-proof technology that will stay relevant.
“The new cloud-based infrastructure comprising VMware Cloud on AWS and VMware Cloud Foundation forges a successful link between on-premises and cloud-based solutions,” says Hesselink. “That in turn enables GfK to efficiently develop its own modern applications and solutions.
“In market research, everything is data-driven. So, we need the best technological basis to efficiently process large volumes of data and consistently distill them into logical insights that genuinely benefit the client.
“We transform data and information into actionable knowledge that serves as a sustainable driver of business growth. VMware Cloud on AWS is an investment in a platform that helps us be well prepared for whatever the future may hold.”