Companies Can Save Big by Simplifying Their IT

One of the universal complaints at a company of any size is that working with the IT systems always seems unnecessarily complex. The message has gotten through to the big IT equipment and service vendors, who have responded in the last year or two by adding the word “simplification” to their sales pitches.

And while that feels like a great idea that most people can get behind, doing something about it is another matter. Now there’s some data from the research firm IDC suggesting that companies can cut costs significantly by streamlining their IT systems.

In a study released earlier this week, IDC looked at IT simplification efforts at nine large organizations and found they saved an average of more than $3,600 per user. And while that may not sound like much, the average size of each organization’s user base — they included the defense contractor General Dynamics, the airline Aeromexico, the U.S. Army and one unnamed “major U.S. retailer” — was 23,000. That works out to about $83 million each.

You can likely imagine the reasons that IT gets complex. Companies grow and buy other companies, but never combine their IT resources. Some companies decentralize their IT, allowing one division to do things differently from another. Old applications linger because they’re judged “too important to touch” and never get upgraded. You can also probably add a few more things to this list.

So what did these nine companies do? For one thing, they cut back on the number of servers running in their data centers. Virtualization — the practice of subdividing one computer to act like many while using the same hardware — helped. So did eliminating software applications that overlapped with others. Oracle, which sponsored the study, gets mentioned for its engineered systems, which combine a server with a machine tuned to run its database software.

One big change was shifting some applications to cloud software companies. Before the simplification efforts, the companies in the study group ran 88 percent of their applications on-premise, but reduced that to 43 percent afterward. That move alone improved productivity by 43 percent because of less downtime and trimmed staffing costs by nearly a third, IDC said.

One thing the study leaves out is that achieving this savings requires the up-front investment to buy and install new systems and software.

There’s a lot more to it in IDC’s 12 pages, but I took a screen grab of the most important chart, outlining the breakdown of all the savings IDC identified.

Keep in mind the figures are averaged across all nine companies, though the report coyly notes that one of them saw “significantly higher” benefits per user. Apparently whoever coined the phrase “keep it simple, stupid” was on to something.

source: Arik Hesseldahl/Recode