Today more than ever businesses are being challenged to make sound, financially prudent investments in their IT infrastructure. CIOs are under pressure to contain spending while at the same time deliver the IT services needed to support the business’ increasing desire for applications that are more agile, perform better and are available 24x7.
It is in this context that IT decision makers must decide what infrastructure (servers, storage, networks, software) will be used to support the business’ applications. And this is not a one-shot deal. IT infrastructure technology is constantly evolving (e.g. the advent of cloud computing, virtualization, hyperconverged), as are the business’ applications. As a result, infrastructure decisions have to be made with one eye on what is needed to support the business today while at the same time trying to anticipate the application and infrastructure trends over the next several years.
“Infrastructure decisions have to made with one eye on what is needed to support the business today while at the same time trying to anticipate the application and infrastructure trends over the next several years.”
Most IT organizations are filled with bright personnel who have the ability to evaluate various technologies and influence purchasing decisions based on the technical qualifications and suitability of the solution for a particular business requirement. But today, not only does the technology have to meet the needs of the business, but it must also be a cost-effective solution—possibly the most cost-effective solution. This means that in most cases, the decision to deploy a solution must be based on the technical merits but also on the financial merits. In almost all cases there will be multiple technical solutions that can fit the bill and therefore a financial analysis of each technical option must be carefully weighed in order to make the “right business decision.” The financial analysis of IT infrastructure investments is becoming an increasingly important part of the IT organization.
“A financial analysis of each technical option must be carefully weighed in order to make the right business decision.”
Today’s IT leaders and CIOs have many more options to consider when setting the direction for business application deployment (in-/out-sourcing, purchase/lease, public/ private/hybrid cloud, IaaS, etc.). It’s imperative that IT leaders leverage sound financial analysis in making these infrastructure decisions. This financial analysis usually takes the form of a Total Cost of Ownership (TCO) analysis or a Return on Investment (ROI) analysis or sometimes both of these.
In this blog series, we’ll talk about the best way to go about evaluating options, effectively measuring TCO and ROI and examples of how to get it right.