Tuesday, February 05, 2008

When Selling Managed IT

SAVVIS just inked a 3-year managed IT services deal with Perfect Commerce. NetworkWorld has the headline: "Why Perfect Commerce is mothballing its data center", then the sub-title: "Web site’s shift to utility computing means less IT equipment, staff". This is the reason it is a challenge to sell managed IT services to medium and large businesses -- the current IT staff fears losing jobs.

"Perfect Commerce says the utility computing model allows it to grow its Web site as needed while reaping significant savings. Perfect Commerce is replacing its own IT infrastructure with one operated by Savvis." (Straight outsource deal).

The decision maker can see the ROI (return on investment), if it is demonstrated.

"We’ll probably save around 25% for the people who run the data center," says Del Putnam, vice president of technology at Perfect Commerce.

Cut out expensive consultants:

"We had our own data center. We had our own IT people. But a lot of the software and hardware that we use is very specialized, and so you can’t always find the depth of expertise across all of those systems on staff,"

Virtulaization will save on hardware (CAPEX). Money can be used elsewhere. So can human resources. Most IT staff time is spent in maintenance mode. Now some can move to more interesting (and challenging) projects.

Putnam "recommends IT professionals focus their energy on mission-critical applications rather than hardware or operating systems, which are likely to be replaced by utility computing... Application knowledge "is something we’re not going to outsource."

In a tight economic situation, companies will be looking for ways to cut expenses. In many cases, IT like HR is looked at as overhead, instead of as Resources that keep the company going. When pitching Virtualization or Managed IT remember to demonstrate the ROI -- where is the savings? What's in it for the CXO?

Keep in mind that the IT department will be against this move.

ROI comes from labor savings, CAPEX (hardware), consulting expenses, power, rent, hiring, and admin overhead.

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