We’ve made it to fall. Football season is back, baseball is in its final stages, the kids are back to school, and the leaves are starting to change. It’s also budget time for 2012 for the vast majority of companies.
This year is one that I don’t expect to be any different than the past several years past. The mantra for the past decade seems to be the following:

•Do more with less
•Cut the budget
•Increase production

I don’t believe that it will change much this year from past years. The US Economy has not shown the job growth and housing recovery needed to sustain a true positive market correction. Last month, Moody’s said that they believe the US Economy will continue to flounder next year (http://www.businessweek.com/ap/financialnews/D9P4OVNO0.htm). More recently, the International Monetary Fund lowered the outlook for both the US and Europe: (http://www.freep.com/article/20110921/BUSINESS07/109210351/IMF-sharply-downgrades-outlook-U-S-Europe).

We can debate the reasons why the economy is the way that it is (lack of jobs, growth occurring overseas as we ship jobs there and then wonder why we’re having issues, for one thing; the fact that the economy is fully dependent upon human interpretation and emotion and is based on consumer confidence for another) but that does not solve the issue that corporations face today: How to produce more with less resources and keep within budget? It’s not an easy task.

Let’s explore some ways within IT that a company can slash costs to fund a necessary project. After all, there’s nothing like having a new compliance-driven initiative and finding “we don’t have budget for it’. The goal of this article is to arm you with some ways to prevent that from happening to you in 2012.

1.Lowering Local Access Costs within the corporate network
With corporations shifting applications and (sometimes) infrastructure to third party datacenters or hosted “cloud providers” in those same commercial datacenter, the opportunity to lower local access costs (or “local loop pricing”) is simple. In addition to moving your primary or secondary operations to a commercial, third-party data-center, you will find that many established telecommunications and Internet Service Providers (ISP’s) have established service within.

• Large Company Solution-Move to a Commercial Data Center
The vast majority of commercial data-centers are what we term “carrier-neutral”. This means that any telecommunications provider or ISP can provide service to clients in their facilities. When a carrier establishes service in the datacenter, “cross-connects” to the carrier are often very inexpensive. It is not uncommon to get a fiber gigabit connection in one of these centers at less than $1000/month. In that same scenario, a large company with a corporate headquarters and located in the suburbs (say, 30 miles outside the center of a city where the “Telco Hotels” typically stand) might pay $20,000/month for that same loop.

This scenario requires a strategic look at how operations are done today and what can be re-engineered for cost savings and better functionality. Removing fiber rings and local-access loop costs from large corporate networks is one way to get the budget you need for other projects.

*Small Company Solution-Look at Different Access Methods
Small companies that don’t have a huge data pipe or corporate network, but have the same need to find budget for next year, can also reap benefit from this strategy. One of the ways is to look at the cost associated with a small company’s current network.

Redeployment of older, traditional telecom access products like T-1 and PRI can often make a significant difference in monthly cost. T1 and PRI are often used with TDM phone products (think, old-time phones) and have higher access costs. The newer phone systems and networks are digital, and the favorite handoff (access method) is that of Ethernet. Getting Ethernet to a small-business can be tricky (it’s distance-sensitive) but can yield rewards of up to 70% savings! Ethernet Over Copper (EoC) is a method of delivering Ethernet over the existing copper line.

Note-the one drawback of having the EoC handoff versus the traditional Ethernet delivery (Fiber) is that growth and expansion take a back seat. If you order EoC, make sure it is enough for your immediate and intermediate-term needs. Unlike Fiber, it is not as easy to upgrade.

But the cost-savings are definitely worth it if it’s well-planned!

2.Look at Your Power Bills
This is not supposed to be a propaganda article on datacenters, but if your company is hosting either primary or secondary operations internally, take a look at your power bill. Mike Anderson, a Network Engineer at Primary Capital Mortgage in Atlanta, was spending $1600/month to cool a single rack of servers in their “server room”. This server room was located in their leased Headquarters and had only single-source, commercial-grade facilities. They had no redundancy of any sort from the infrastructure perspective such as those of the top-tier datacenter providers.

Mike made the decision to move to a leading datacenter provider, who provided them with a rack and fully-redundant power for a large savings over what they were managing themselves. The savings that the company realized funded their previously non-budgeted hosted e-mail security and archiving solution that they had wanted.

“We saved $700/month, plus an additional $2000 annually in maintenance costs”, said Mike. “It simply made sense for us to do this, and we improved infrastructure for our core operations”.

3.The Cloud is fine, but at what cost?
One of the greatest trends today is hosted applications (Software as a Service or “SAAS” or “Cloud”) but one really needs to look at why an application or infrastructure should be outsourced.
Some of the common reasons given by companies are:
a.Lack of Personnel to run applications or operations
b.Lack of Capital Budget
c.Cost-Savings over doing it themselves

Having a lack of personnel is likely the most compelling reason. If your company cannot provide the means necessary to host applications or infrastructure, external providers can easily do this for you.

Lacking a budget is another very good reason to go with a cloud or hosted solution. What would be a very expensive capital investment now becomes a much more affordable operating expense. While you may lose the capital depreciation for tax purposes, it is still the means to an end.

The idea of a cost-savings is a bit more complex. ROI is factored based upon variables such as internal costs (salary, benefits, training of personnel), software and hardware costs (options), systems and utilities, and risk-management. If your ROI clearly shows that a hosted solution is superior, it may be time to evaluate technology options.

EHarmony.com recently announced a move to a new technology rather than the cloud solution (Amazon Cloud) that they were using. This article discusses how they have increased their compute per-day by 20 hours.

While hosted solutions will continue to be a hyper-growth market, it’s imperative to explore what options are available and what the total cost of ownership is before going that route.

4.Using Today’s Technology
One way to get some budget actually involves spending money. The latest Unified Threat Management (UTM) or Next-Generation (NG) Firewalls have features such as web filtering, which can reduce bandwidth utilization drastically when set up with protocols. For very large bandwidth users, the cost reduction is not insignificant.

Another feature of the latest generation of these devices is that they allow users to add features (load-balancing, web-filtering, anti-virus, malware protection, etc…..) to suit the corporate network needs without having to spend money on additional equipment. This is often far less expensive than buying devices separately. It also is easier to manage.

I hope that you found this article helpful and hope to hear from you in the event that you would like to discuss your 2012 goals for your organization.

About the Author:
Eric Blaier is the founder of Integrated Business Services, Inc., an Atlanta-based Web Security, Business Continuity & Telecommunications consulting firm. His client roster includes numerous Fortune 500 clients in the healthcare, finance, technology, and broadcasting sectors. He can be reached at sales@integratedbusinessservices.net or www.integratedbusinessservices.net