Cost Control Hits Home

November 14, 2008

by Lee Congdon, Chief Information Officer

I just reviewed an IDC report that indicates IT spending will grow at 2.6% in 2009, a lower rate of growth than previously forecast. That mirrors my view that on average, IT organizations will continue to invest next year, albeit at a modest rate. However, I don’t believe the general trend fully reflects what is happening in individual organizations and for specific spending within a given firm. Those investments are fluctuating much more broadly.

I’ve spoken with IT leaders describing budget cuts of 15%, 25%, even 40%. But I also observe something different about this economic environment. Firms appear to realize that the global economy may be troubled for an extended period and are taking steps to address that potential, rather than simply keeping the lights on and the doors open.

Another difference is that business users are demanding innovation and new solutions even as they are asking for lower spending. In many cases this reflects the reality that the firm must continue to offer innovative solutions to their customers or lose ground to the competition.

IT leaders traditionally reduce project spending in response to short term economic pressure. Firms also reduce their contingent resources, another common short term response. What appears different this time is a willingness and desire to invest in longer term projects to reduce cost, even while taking these short term actions.

Invest to Save

Those longer term projects may involve an application consolidation. Many firms have three or more legacy solutions intended to address the same business requirement, with none of them completely solving the problem. Or, for example with a recent acquisition, the firm may have even more overlapping platforms.

Each platform requires hardware support, software licenses and support, and staff to keep it operational. It must be integrated with the other applications in the environment. In aggregate, the costs are often substantial, and as noted the business problem is not fully solved.

This presents an excellent opportunity to consolidate onto open source platforms, such as Red Hat Enterprise Linux. With software commoditization a clear trend, any IT organization should have a strategy to migrate some or all of their solutions portfolio to open source.

A platform consolidation, even in difficult economic times, is an excellent opportunity to start that process. One of the great features of open source, in addition to the high quality and low cost, is that it can be very cost effective to get started.

In fact, many of your technical staff probably already have some experience with common open source platforms. You can start development with the community versions of the software and migrate to the supported versions as you need assistance or as the applications are deployed.

One recent example where platform consolidation has worked in Red Hat is our migration from multiple email servers around the globe to a common, fault tolerant email service running on Red Hat Enterprise Linux. We’ve been able to provide a substantially improved service, with more features and much better manageability, in a very cost effective manner through our use of open source platforms.

Middleware Costs

Many firms are heavily invested in proprietary middleware solutions that have traditionally solved multiple technical problems and delivered business value, but in today’s environment are under scrutiny given both the license fees and ongoing maintenance costs.

Organizations that are examining their middleware costs should take a careful look at open source solutions such as JBoss. If you haven’t completed a cost comparison in the past, you are likely to be pleased and surprised by the cost difference between proprietary solutions and the open source alternative. Again, this is a reflection of commodity economics changing the price balance in favor of the customer.

At Red Hat, we’ve recently migrated some legacy middleware, BPEL and portions of our Mule environment, to JBoss with great success. (We plan to retire the remainder of our Mule infrastructure within the next two months.) We’ve fully integrated JBoss solutions in our development environment using the Genome project that I’ve discussed here in the past. In addition to reducing our costs and making our development environment more agile, the migration has given us both improved resiliency and greater flexibility in production.

Consolidate and Standardize on Open Source

The key messages here are first to simplify and consolidate your environment to drive out complexity and reduce costs. You will be better positioned for the future, regardless of the economic climate, if you select open standards-based solutions for this consolidation. And, if you select open source solutions to implement those standards, you will be able to take advantage of commodity software economics and further reduce your costs, while using products that are both highly functional and of high quality.

I encourage you to evaluate both Red Hat Enterprise Linux and JBoss. I think you will find, as we have, that they are excellent solutions and great tools for lowering IT costs.

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