Given the constant focus on virtualisation as a ‘green’ technology, you could be forgiven for thinking it’s manna from heaven for IT execs desperate to reduce power consumption and carbon emissions.
While the technology undoubtedly boasts strong green credentials, this increasingly is detracting from the real bottom line business benefits: making financial organisations more nimble, more productive, and gaining competitive advantage whilst bringing down costs.
The concept of virtualisation is, of course, nothing new: before the words “sever virtualisation and “storage virtualisation” were grouped together, it had been driving efficiency within the IT departments of financial organisations for many years.
The first mainframe and Mini computing environments of the 70s and early 80s were a totally virtualised structure, with lots of programmes operating on different areas of one system.
To run additional programmes, additional memory and storage were added, and the test environment would run on that same system, therefore replicating the production environment 100%. In essence, not a million miles from the current virtualised environment.
Back in these early days of enterprise computing, environmental concern had barely entered the public consciousness, and was certainly more likely to be associated with Greenpeace than IT departments.
While today we’re quite rightly seeing a massive increase in effort to ensure that we help address the pressing environmental concerns and safeguard our planet, we should be more open about the driving reason behind the increase in buying virtualisation technologies - because it can save money.
Think about the IT manager’s perennial struggle - to maintain the current systems that keep the business running while delivering changes that can have a direct impact on improving the business. It’s getting harder.
In most cases, 85 per cent of an IT department’s annual budget is allocated to general upkeep (including upgrading systems and applications, helpdesk, hardware maintenance etc) with only 15 per cent remaining to implement the new systems that a financial organisation requires in order to move with the market and gain competitive advantage.
Churchill Insurance’s decision to develop a far more user-friendly website serves as a good example of the latter: the drivers for the upgrade were strategic rather than IT-related, and the new website was intended to enhance the customer experience and speed up transactions, leading to increased profitability and market share.
The IT department played a crucial role as implementer and facilitator in ensuring successful completion of the project and meeting the business objectives.
Yet getting a project like this off the ground can, of course, be costly, labour intensive and cumbersome.
The additional costs of new hardware, project management, infrastructure design and internal IT resource need to be collated, a proposal written and authorised by senior management - all with heavy man-hours costs.
In a virtualised environment, however, it’s possible to dramatically smooth the process and costs of delivering on such a project.
Less hardware is required, project management time shortened and the infrastructure is already virtualised so will only require minor adjustments.
The business justification is stronger and it will be easier for senior management to approve - in short, it’s easier to spend £1,000 than it is to spend £10,000.
The decision time and cost of making that decision to start a business-changing project is greatly, and incrementally reduced.
Once the project is approved, the next major hurdle is its implementation. In a non-virtualised environment the infrastructure will need to be procured (often a major tender process), installed and tested.
This whole process invariably requires the input of other parts of the business - an unnecessary distraction from their day to day work.
Yet with a strong virtualised environment, the total infrastructure should be very fast to adapt to full utilisation, ensuring the strategic development is up, running and boosting revenues as soon as possible.
With a well-managed virtualised environment, where business improvement investments are easier and cheaper to make, the whole dynamic of the IT department changes.
The budget balance swings so that less is required for general upkeep and more is available to spend on beneficial projects.
As a result, IT becomes a more strategic part of the financial organisation, not just a cost centre used almost exclusively to keep systems running.
This change in the IT department, in turn, has a direct and positive impact on the staff working within that department who are notoriously difficult to recruit.
All good IT professionals will find working on exciting projects that have a real effect on the business, much more fulfilling and fulfilled staff means less sickness or lateness, increased productivity and reduced staff turnover.
Of course, the well-documented benefits of virtualisation are also vital.
By sharing the resources of a single computer across multiple environments, today’s financial services companies are freed from physical and geographical limitations.
Alongside energy savings, they are experiencing higher availability of resources, improved disaster recovery processes, tighter security and more efficient desktop management as well as better use of hardware, leading to reduced capital expenditure.
So while the green benefits of power, space and heat reduction are a beneficial by-product of a virtualised environment, they shouldn’t be the business drivers for investing.
While the market remains focussed on these issues, financial organisations are missing a trick in taking advantage of virtualisation as a technology to make companies more agile, efficient and competitive, while dramatically reducing spend.
Peter Stroud is the MD at Panacea Services, a company that enhances clients' businesses by providing tailored IT solutions that offer business benefits, which are cost effective and deliverable