In their interview with Brian Jeffery, Managing Director of ITG, Jeff Frick and Dave Vellante gained valuable insight into IT economics, discussing the costs and challenges that IT must overcome if they wish to maximize profitability.

Where does the money go in IT?

In his first question, Vellante asked Jeffery to share “a little about ITG” with theCUBE viewers. ITG employees, Jeffery explained, are “the numbers guys.” Their main focus is understanding “where all the money goes in IT” and how that money can be spent most effectively. Jeffery studied to be an economist and his expertise is in helping governments and large corporations understand where and how their money is really being spent. “It’s amazing,” he commented, “how little detail most organizations know about their budgets.”

• Storage Resource Management: Money Well-Spent

Jeffery singled out “storage budgets in particular” as an area where businesses have little knowledge about where their money is going: “I’ve seen… billion-dollar companies that have one line-item: storage.”

He gave an example from a project IBM had asked ITG to work on: a comparison in costs in organizations using the IBM Virtual Storage Center. ITG conducted interviews with 50 users: the numbers indicated that businesses were saving between 60 to 90 percent of their budget due to the effectiveness of IBM’s Virtual Storage Center and Tivoli Storage Productivity Center.

• Revamping Tier One

In terms of what generates storage savings, Jeffery considers the IBM products a “big hit” because they allow users to migrate data “off tier one and on to other tiers.” Three years ago, these interviewees said, they had “70 percent on tier one” and now have 30 percent.

Jeffery pulled back to look at the bigger picture to give some reasons for these changes: “hardware costs are coming down,” and tier-one based software products — “code that’s old enough to smoke and drink –” is getting more efficient. But, Jeffery doesn’t go so far as to recommend that companies get rid of tier one, especially when it comes to large organizations.

Prioritizing initiatives saves upfront and long term

Vallente jumped in and asked Jeffery to break down where most money is spent in IT.

“The basic problem,” Jeffery said, “is everything.” Part of the culprit is “people working on very short term ROIs,” which has lead to some businesses believing that “[they] don’t have to bother to plan because it’s all going to change anyways.” And now, when businesses attempt to implement a cloud initiative, it has to handle a host of “little killer interfaces.”

Jeffery posits that businesses have “been spending their money across too many things” and are unable to focus a “top priority” that would provide the most value to their business. But, Jeffery says, more businesses are beginning to consider that they need plan that will help them navigate through changing tech trends.

• Using Storage to Cope with the Pace of Change 

Frick wondered whether Jeffery had noted any businesses that were able to handle the rapid and increasing pace of change in the IT marketplace. “It happens,” Jeffery says, “when you decide to fix this. And that’s when the subject of storage comes up.” For Jeffery allows businesses to “show big savings if they can virtualize it.” The issue vita storage virtualization, Jeffery says, is that “few people are doing it and even fewer are doing well.” The bottom like is that storage is “very good from a CFO perspective” because “you can do it without jeopardizing service levels, without upsetting users.” But he stresses, “you can’t be a little bit virtualized. You do it or you don’t do it.”

• Change Management Is Essential 

Vellante finished the interview by asking Jeffery about the tech trends that he finds most exciting. “Storage,” Jeffery said plainly, adding “flash memory will have a big impact” and that “virtualization, as soon as people realize how to do it, […] is a big piece of the picture too.” The biggest challenge, Jeffery believes, is that “it’s all changing too fast.” Current business models, Jeffery bemoaned, can’t handle real time information. To conclude, he stressed that change management is the most important survival skill in IT.