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Business Issues: Page (1) of 1 - 10/19/09

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Weighing Options: How to Best Invest Your IT Budget for an "Always On" Network

By Robert Johnson

Unfortunately, most companies experience more unplanned downtime than they want.  Achieving an uptime of 99% is impressive but 1% of downtime is the equivalent of 87 hours per year!  Studies have shown that unplanned downtime costs at least $45 per hour for each of your employees.  Most companies need their key business applications running around the clock since customers, employees, and other constituents need access at any time.  In order to minimize downtime and frustration, the infrastructure must be constantly monitored and the team must have ready problem solving strategies in place.  Managing a solid infrastructure requires skilled IT people, effective processing, and advanced technology.  This article examines the economics of an "always on" IT infrastructure using in-house vs. external resources and the pros and cons of each alternative.

The "Always On" Business Imperative
Having an IT infrastructure that's "always on" is a necessity for most companies, regardless of industry sector or size.  Customers want to buy products and services, manage their accounts, and check order statuses at any time.  Employees must communicate with customers to service them as well as collaborate with colleagues to meet business and market demands.  
  
For example, university students, faculty and staff want access any time to course registration, on-line courseware, student records, and other systems.  Bank customers want round the clock account access to check balances, pay bills and complete other transactions.  For obvious reasons, hospitals need immediate access to clinical and pharmacy systems, patient records and other key systems.

   Atrion believes an "always on" infrastructure must be:

•  stable (e.g. high network throughput for both voice and data traffic)
• secure (e.g. prevents intrusions and data losses)
• efficient (e.g. lowers the cost and effort to manage network and systems) and
• compliant (e.g. alerts when changes impact regulatory requirements). 
    
  The Cost of Unplanned Downtime

According to a 2008 Standish Group study, downtime costs for a company's ERP system is $350 per hour.  A 1000 person company that experiences unplanned downtime of 1% would be impacted with at least $3.9 million in lost revenues, unhappy customers, lower productivity and grief! 
  
Reducing Unplanned Downtime with In-house Resources 
As noted above, a high performing network infrastructure requires monitoring, managing, and ready problem solving.  The "always on" infrastructure must also be proactive in optimizing the network.  In order to carry out these actions, in-house resources must be effectively organized and channeled.  
  
Monitoring the infrastructure involves detecting, validating, and isolating faults.  In many cases, a company will need vendor technical support to get back up and running.  Working with a vendor that's responsive and highly competent will greatly shorten the problem resolution phase.  Tracking problems with a trouble ticket system will eliminate extra time and effort.  
  
Proactively managing and optimizing the infrastructure includes activities such as tracking assets and archiving configurations as well as changes -- particularly for regulatory requirements and bandwidth optimization.  
  
As noted above, to accomplish these tasks on a 7x24x365 basis requires having skilled IT people, effective processes and advanced technology.  Let's look at each of these in more detail.
  
For the people element, a company will need moderate to high levels of network & systems expertise along with strong problem solving skills.  We estimate that to hire, motivate and retain such people will cost approximately $75k per year (which includes benefit and overhead costs). The network engineers must be willing to cover 2nd & 3rd shifts and weekends, especially for critical unplanned outages.  There's also the need for additional people cost for maintenance contract administration which can be significant.
   
 For the process element, a company will need to establish and manage the schedules for 24x7x365 coverage as well as document procedures for monitoring, resolving problems, managing proactively and optimizing infrastructure performance. 
  
For the technology element, a company will need to invest in tools to monitor and manage proactively the network and systems (e.g. automated network compliance, change and configuration management), plus the associated training and maintenance contracts for these tools.  There are also costs for the annual maintenance contracts for the network and systems hardware and software.  
  
Some companies have adopted shareware for monitoring and managing their networks to lower costs. These tools, however, restrict functionality and limit their effectiveness. 

The cost for in-house infrastructure management is a major consideration for most companies, followed closely by the time it takes to put it in place.  The costs for the in-house approach for people, process and technology vary by the size of your company.

For example, if you have 100 employees, our studies indicate you'll need 1 network/systems manager primarily dedicated to managing your IT infrastructure, which with process and technology costs will be about $120k annually.  If you have 500 employees, you'll need 2 dedicated network/systems managers, which with process and technology costs will be about $320k annually.  If you employ 3000 people, you'll need about 7 network/systems managers plus process and technology to manage your infrastructure around-the-clock which will be about $815k annually. 
   The benefit of in-house infrastructure management is that it's completely customized to meet your unique needs and controlled by your company.  Unfortunately, it's usually the more costly approach and takes longer to put it in place than most companies can afford.  While it's being built, unplanned downtime is higher and more costly than desired.
   If your company hasn't invested significantly in in-house infrastructure management, you have an attractive alternative.  You can secure a technology services provider to provide round the clock infrastructure management for you.   You'll need to select a reputable vendor you can rely on, however.

Selecting a Reliable Infrastructure Management Services Provider
Obviously, you want a service provider that's reliable, responsive and effective so that your infrastructure is always on and performs well.  The service provider must be able to competently monitor, solve problems, and optimize the infrastructure. 

To accomplish this, the service provider needs to have a technical operations center, staffed around the clock by employees with strong technical expertise.  Their employees and engineers must deliver superior levels of service to you and be committed to "customer first."  They'll need to be responsive to your needs, flexible & easy to do business with.  You'll want the services provider to be committed to resolving problems quickly & not "finger pointing."   They'll need to be financially viable (e.g. reasonable growth and profitability measures) since you'll probably want to be able to rely on them long term. 

In addition, your infrastructure management services provider must possess a solid understanding of your business and how IT supports it.  Consequently, they must be willing and able to communicate effectively not only to your company's decision-makers but also to your staff to transfer knowledge.  Your infrastructure management services provider also must be impartial and honest; anyone can sell you products you don't need. 

The benefit of bringing in an infrastructure management services provider is that it's significantly less costly than building in-house capabilities.  You'll save at least 25% of what it would cost to build it yourself.  Another benefit is timing: the right services provider should be able to provide their service for you almost immediately.    The downside of this approach is loss of "control" vs. in-house capability and ensuring the services provider consistently delivers a high level of service to your company.  
  
The decision comes down to how best to invest your IT budget to generate the greatest return for the business and your shareholders.  For many companies, the obvious choice is to engage a reliable infrastructure services provider and invest the savings in IT projects with strong business value.

Summary
Most companies need their systems and network running around the clock since customers, employees, and other constituents need access at any time.  Even a small amount of unplanned downtime is costly.  An "always on" infrastructure demands effective people, process and technology to monitor and resolve unexpected problems, manage proactively and optimize the infrastructure. 

You can invest in in-house capability but it takes considerable expense and takes time to put in place.  Or you can contract with a services provider that specializes in infrastructure management.  This alternative is less costly and can be implemented quickly.  The service provider you select, however, must not only demonstrate that it can maintain an always on network, but also that it is responsive and ready to solve problems.