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What does that cheap server really cost?

Kenneth G. Brill, executive director of the Uptime Institute, has an eye opening piece in Forbes on the full cost to purchase, house and run cheap ($2,500) servers.  In his work, Brill aggregates facility related server costs that are typically dispersed across several budgets:

"Data-center building depreciation is often carried separately from data-center mechanical and electrical equipment. Utility bills often go to a centralized energy function. Site operation costs for technicians, security staff, power and cooling equipment maintenance, property taxes and other costs are often split between facilities and IT budgets. Nowhere is the total picture consolidated."

What Brill found is that "Annual facility costs will exceed the cost of a "cheap" server in two years in the best case scenario, or 14 months in the worst."  In other words, "Spending $2,500 on a server really means spending between $8,300 and $15,400 in facility capital to provide the necessary space for housing the server and powering it."

Other interesting data points:

"--Just the electricity required to provide power and cooling will exceed the cost of the server in six years. Utility bills virtually never go to IT, and often don't go to facilities either, which inhibits conservation."

"--For an organization with 5,000 servers, the industry rule of thumb is that up to 30% are technologically obsolete. This means that up to 1,500 servers can just be unplugged with no negative impact on data-center production. The savings: $12 million to $23 million recovered in data-center facility capacity, $700,000 in annual electric savings and 6,000 annual tons of reduced greenhouse gas emissions. These savings result merely by telling the "kids" to turn off the "lights" when they leave the room."

Brill then continues by asking what this turns the lights of habit could mean for companies and the economy -- not to mention the environment:

"If we did this on a broad national scale, do we really need to be building all the new data centers, or could we defer a large portion of this investment into the future? Our companies and economy would be far better off if that money went into new application development instead of bricks and mortar!"

While $15k might seem like small money, Brill concludes with an example of a $22 million blade investment that didn't account for facilities in the purchase decision:

"One company's IT department decided to invest $22 million in blade servers but forgot to inform facilities. The facility investment required to merely plug-in the blades was an unplanned $54 million. An additional unplanned $30 million was required to run the blades over three years. So what appeared to be a $22 million decision was really an enterprise decision of over $106 million."

I've only provided some excerpts here.  I think this article is a "must-read" not just for managers and senior IT executives, but for all IT professionals making server line-item requests.  How can you help shift investment dollars from facilities to the delivery of business capability?

Will your CIO survive the business and technology change tsunami?

Abbie Lundberg, editor in chief of CIO Magazine, has a great post on Are More CIOs getting Fired, in which she recounts a conversation with Bruce Rogow, IT Consultant, New Paradigm /nGenera contributor, on why previously successful, incumbent CIOs are suddenly finding themselves out of work.  While some of this attrition is 'business as usual' -- retirement, over 5 years in a position -- much is attributed to 'business change'.

The most interesting reason some of the CIOs gave for why they were leaving their positions was that the CEO and/or the business direction had changed, and there was a new sets of expectations for IT. Seventeen or 18 that he talked to said they had been doing a great job (one even faxed over his performance review to prove it), and they didn't see it coming. They were told, simply, that the business needed a different kind of leadership.

So what's going on? According to Rogow, a lot. He said for the first time in five years, the CIOs he's been meeting with have more questions for him than answers. They know that the imperative is for growth, and they have CEOs who understand that IT is the best platform for growth. But they don't know exactly what that means for how they run IT. They want to know: How is this different from what we did in the past? How can we increase IT velocity and dramatically decrease cost at the same time? How can we resegment IT when much of it is based on immediate user demand -- and how do you get requirements out of people who don't necessarily know what they need? How do you ensure security, agility, reliability? If the new approach is chunking, how much do you bite off?

As the post continues, Abbie shares that it's not that incumbent CIOs are missing the boat, but rather how CIOs are responding to the impending business and technology change tsunami:

It's not so much about missing something that might leave without you; it's more like being on the shore knowing there's a tsunami coming. CIOs are aware it's coming, but according to Rogow, they're responding to that awareness in different ways. He presented three scenarios.

1. Some CIOs are trying to do business as usual. All these issues are coming at them, and they're swatting at them like flies. They're tweaking. They think they can tweak their way into the future, but they're wrong. These guys are vulnerable.

2. Others are taking a real objective look at what's coming in the next three to five years -- and they're coming back saying "holy s***." This is not "different circus, same clowns," he said; it's a different circus with different clowns -- different skill sets and different user communities with radically different points of reference and expectations. This group of CIOs is working hard to figure it out.

3. The third response is reactive. New CIOs come in thinking that whatever the last person was doing wasn't right. They know they were brought in to do things differently. Some are good, Rogow says, but some are doing the most ridiculous things -- they come out of the business with no real grounding in IT, get rid of the enterprise architecture group and decide that users should be able to use whatever they want without understanding cause and effect or the consequences of their decisions. This group is the one most likely to really screw things up.

Another wave-crushing scenario I see is CIOs who observe, or are informed, of the imminent wave and respond by undertaking a strategic review to produce a 3 - 5 year plan.  While it's always good to have a long term view, the wave won't freeze-in-place to match a glacier like response.  Organizations need to respond to velocity with velocity, which of course, is not an excuse for recklessness, or obsessive tweaking, but crafting an informed response that includes matching business and IT capability, ridding portfolios of excessive technical debt, and delivering value, early and often.

How is your CIO and organization responding to this tsunami?  Are you experiencing different scenarios?  Will your CIO be a survivor or casualty?  Which should they be? 

Believe it or not, this is an actual customer service response to 'where is my order' inquiry

My first reaction to a snippet of this customer service response that was forwarded to me was "that's a joke, right?".  Sadly, it's not.  I then received the entire email chain between the customer and this customer service representative.  My favorite part is the caveat on using the proffered store credit.

Though an apology cannot compensate for your disappointment in our company, we do wish to say how very sorry we are that your experiences were so negative; from ordering, to your interaction with our customer service staff. Although our staff is well trained (though this particular agent was quite new) to represent our company, there are circumstances beyond even their expertise. Namely, our web commerce system which takes orders, but does not accurately determine inventory, nor does it correctly and efficiently notify our customers of out of stock or sold out items. Unfortunately, the customer service representatives are not aware of this unless a customer inquires about the delayed shipment of their orders; in turn, leaving them unable to give a satisfactory reason as to why this occurred.

However, I have forwarded your email to [redacted] to be used as a prime example of the effect that this particular defect in our web commerce system is having upon [redacted] valued customers and the staff who serve them, and we should see major improvements over the next few days. I also spoke with [redacted] regarding this matter, and she would like to offer you a $20 in-store credit to be used towards future merchandise if you so choose. It will be credited to your account immediately; however, it can only be accessed by phone order due to the web system being unable to determine available credit.

We sincerely hope that you find our response to your message satisfactory, for you are considered a highly valued customer of [redacted].

It was sent to me as 'a potential lead', but I'm taking a big time pass on this one.

links for 2008-08-05 [delicious.com]

• Seth's Blog: I need to build a house, what kind of hammer should I buy?                
  Is your focus on picking the right tools, or your purpose & outcomes?  "If you want to do something worth doing, you'll need two things: passion and architecture. The tools will take care of themselves. (Knowledge of tools matters, of course, but it pales in comparison to the other two.)  Sure, picking the wrong tools will really cripple your launch. Picking the wrong software (or the wrong hammer) is a hassle. But nothing great gets built just because you have the right tools."
                 
  (tags: tools success)
              
• Enter the Cloud with Caution                
  Good list of considerations before entering the cloud, beyond standard stuff (backup, ownership), questions on data content, data storage location & applicable regulations, privacy & competition by cloud provider
                 
  (tags: cloud_computing considerations data)
              
• Unboxed - Even the Giants Can Learn to Think Small - NYTimes.com                
  Do you work an environment that spurs or impedes creativity?  "After spending decades growing and merging themselves into their behemoth proportions, big businesses are rediscovering the charms --€” and the innovative side effects -- of thinking small...break apart the bureaucratic hierarchies now smothering it. Optimizing a company for creativity involves helping individual employees of every rank develop an entrepreneurial spirit. In Mr. Rosedale’s view, the most creative work environment is one where every employee, regardless of job title, has enough freedom to develop that sense of personal initiative." ... "Most companies erroneously focus on competition and on differentiation from their competitors," he contends. "The business opportunity lies in turning creativity into productivity."€..."The idea,"€ he says, "€œis to enable a creative environment where there's a good degree of experimentation."€"
                 
  (tags: creativity business_architecture small)
              
• What Drucker Would Say About Mervyns
                 
  "Drucker noted: "There is surely nothing quite so useless as doing with great efficiency what should not be done at all..."Drucker asserted that when a valid theory of the business is "clear, consistent, and focused," it's bound to be "extraordinarily powerful."... Drucker pointed out that it's not uncommon for a company to slip in this way, to take its theory of the business for granted as time passes. Management grows "less and less conscious of it," Drucker wrote. "Then the organization becomes sloppy. It begins to cut corners. It begins to pursue what is expedient rather than what is right. It stops thinking. It stops questioning. It remembers the answers but has forgotten the questions.""
                 
  (tags: drucker business_architecture failure)
              
• Elastra Gets $12M -- Is It Amazon's Enterprise Play?
                 
  interesting piece on why Amazon is investing in Elastra, to make Amazon's cloud more enterprise friendly - supporting enterprise application architectures and portfolios...
                 
  (tags: amazon cloud_computing elastra)