Trimming network redundancy at the University of Connecticut's School of Business was certainly not COO Michael Vertefeuille's first choice to save money. However, as the college faces a 10% budget shortfall this year, falling on the heels of last year's 5% cutback, he's had to dig deep.
“We already have data center consolidation and virtualization projects underway, but this budget deficit is more severe than that and we needed to do more,” says Vertefeuille, who is based in Storrs, Conn.
This has meant going over his network architecture with a fine-tooth comb and making the difficult decision to cut the redundancy — and the ability to immediately come back quickly after a disaster or outage — from his multi-link infrastructure. “The service contracts on our routers are astronomical — especially when we already paid a premium for carrier-grade Nortel 8600s,” he says.
The school is now relying solely on its primary routers, which feature built-in redundancy and have a four-hour parts replacements contract. “We know we're moving back to a single point of failure, but the cost savings are worth it. The assessment shows that since it would take a catastrophic failure to keep those routers down, we don't feel we're putting ourselves in jeopardy. It's a risk tolerance we have to take,” he says.
Vertefeuille and his public-sector peers, who even in a good year have to make tough budget calls, are not alone in having to weigh these drastic trade-offs, according to Jim Frey, research manager at IT consultancy Enterprise Management Associates. As the economy tightens its grip on IT budgets, public and private sector IT teams alike are being forced to consider cost-cutting strategies that would otherwise have been verboten.
IDC predicted in February that year-over-year growth in IT spending this year will only reach 0.1%, down from the November 2008 forecast of 0.9%. Translated into IT budgets, this means IT teams have to come up with the money for new projects with a bent toward the creative.
“There is definitely a trend toward non-traditional thinking right now. People are scrambling to figure out how to fund projects for the next six months to a year, rather than farther out,” Frey says.
Buying IT gear on eBay
While Vertefeuille tussles with his architecture to eke out those funds, Charleston Southern University CIO Rusty Bruns turns to eBay to drum up equipment savings.
“I don't have an enormous budget on a regular day — only US$2 million — and most of that is spent on maintenance costs. So in this economy, I have to do even more to save money where I can,” he says.
Bruns has bought everything from Packeteer packet shapers, which enable him to apply policies to optimize network traffic flows, to digital phones from the online auction house — and the payback has been tremendous. He bought his first packet shaper brand-new from Packeteer for $13,500. “A few months later I needed another one, so I went online and got it from eBay for $2,500,” he says.
While he's had great luck with the quality of the technology he's purchased online, he admits that he uses gear bought on that venue to equip his secondary, tertiary and test networks. “We don't use eBay buys for parts of the network where if it goes down, the whole network goes down. We need the maintenance contracts for those and we're not willing to gamble on that,” he says. For instance, he picks up secondary routers and servers on eBay, but not the primary ones. He also doesn't use eBay for security devices such as firewalls.
To avoid the horror stories of purchases gone bad, Bruns has developed standards for his team to follow when shopping on eBay — such as making sure that vendors have a 97% or higher positive customer satisfaction rating and that they've carried out several hundred transactions. “Knowing how to work with eBay is very important so that you don't get stiffed,” he says.
Bruns also buys second-hand technology from corporate peers who are on faster refresh cycles. “IT executives come to me when the lease on their technology, which is still relatively new, is up. It costs me pennies on the dollar and it saves them the time of having to get rid of it themselves,” he says.
For instance, he recently bought (from a law firm) 50 desktops that would have retailed at $550 each — for $89 each. “I put them in the university's computer labs and will get at least another two to three years out of them,” he says.
He advises IT executives to tap into their peer networks at local trade associations and conferences to find out about similar deals. “Some people might shy away from saying they buy second-hand equipment, but I have no problem with it. Any time I don't have to go to the university cabinet and ask for money that is otherwise earmarked for students, that's a good thing,” he says.
Saving money with software
David O'Berry, director of Information Technology Systems and Services for the South Carolina Department of Probation, Parole and Pardon Services, is targeting software and collaboration to reduce operating costs going forward.
O'Berry is partnering with South Carolina's State Information Technology Planning team to create a software and reusable code repository for more than 70 state agencies. “Though government IT is not always known for its ability to collaborate, it's where we're going to realize the most cost savings.” he says.
To that end, O'Berry is tapping into the state's SAP enterprise resource management system community Web site.” He plans to use the database and the site's social network features to catalog each agency's stockpile of software licenses, developer code and project knowledge.
The goal is for agencies to search the database whenever they start a new project to see if there are appropriate tools, expertise and, in some cases, even hardware readily available. The idea is to find out from the Web site if, for example, there's hardware or a piece of a larger server up for grabs. In addition, O'Berry's team will enter detailed information and code that came out of a recent switchover from PowerBuilder/Sybase to .Net/SQL architecture so that if another team wants to do such a project, they will have code and knowledge at the ready. “That way, others won't have to reinvent the wheel if they start a similar technology effort. We're all trying to solve the same problems,” he says.
For groups looking to roll out a similar repository project, he recommends setting ground rules for community participation. Among other issues: make sure information is flowing bidirectionally. “Explain to participants that the effort will fail if they don't share the knowledge they have,” he says.
Timing is key
Allen Gwinn, senior director of technology at Southern Methodist University's Cox School of Business, agrees that now is definitely the time to think counter-culture and to challenge vendors, especially on pricing.
“In normal times, the philosophy is that we can use collective buying power to leverage good prices. But unfortunately, that has led us to an economy where we're in restrictive, binding agreements that are bad for us,” he says.
For instance, a few years ago, Gwinn researched the cost of a mobile phone upgrade through the university's chosen vendor, only to find that the bottom line was quadruple what he could get with a competing vendor. He had to convince the university's stakeholders to let him out of the sole-source contract so he could pursue the better deal. Today, the university has “discount pricing off of list” from two mobile service providers, but Gwinn is free to buy from any vendor if he has a good business case.
“Wireless is at the commodity level, so this is definitely an area where vendors should compete against each other based on price,” he says.
The same applies to service contracts, according to Ben Hansen, assistant director for information technology at BendLa Pine Schools in Oregon. “What we're doing is examining every single service contract we have and making sure they are appropriately priced,” he says.
Buyers should be savvy about vendors' business model, he says. “We turn up the heat on our providers toward the end of each quarter because that's when they need to show their investors good numbers and are much more willing to negotiate,” he says.
Just as important is giving them insight into your business so they know your budget goals. “We tell them straight out that we have x amount of money to spend because of economic realities and this is what we need to get done. We also let them know that there is no exclusivity and they are competing against other vendors,” he says.
So far, it has worked to his advantage, helping him significantly drive down telecom, hardware service and equipment costs alike. In the last six months he has been able to drive already low acquisition costs down by an additional 20% or more. “A year or two ago we didn't have that advantage so we're running with it now,” he says.
And what happens to these trade-offs when the economy bounces back? “We may go back to a redundant router architecture someday, but for right now we're finding we can successfully go without,” University of Connecticut's Vertefeuille says.