All too often, corporate executives regard the corporate IT budget as an expense: The less you spend, the better the bottom line. To users, IT appears to be the support technician—the wizard who ﬁxes problems, sets up new hardware, loads software, manages backups, and essentially “keeps the lights on,” so the rest of the workforce can do the real work of running the business. IT is regarded as a tactical resource—and little more.
The most successful organizations today take a different approach. They view IT as a strategic asset that is essential for achieving the company’s business goals. These innovators treat the IT budget as an investment: minimizing cost gives way to maximizing innovation andROI. They continue to increase the percentage of revenues allocated for IT initiatives year over year—and they are reaping substantial beneﬁts.
When the IT mindset shifts from tactical to strategic, the way IT functions in the enterprise changes. IT managers work closely with line-of-business managers to deliver IT services and new applications faster, creating opportunity for business growth. Business users continue to have reliable, secure access to legacy services while boosting productivity with innovative new services.
What has caused this shift? Although there are several factors, a key enabler is virtualization. In little over a decade, virtualization has progressed from an opportunistic tool used for a few specialized applications to a pervasive technology that supports the full range of IT services and business-critical applications such as ERP, CRM and collaboration. Even more, virtualization has opened a new model for IT that makes the delivery of services more automated, flexible and aligned with specific business needs.
The Evolving Role of Virtualization
Some companies are benefiting more from virtualization than others. Why? The answer goes beyond the technology—although it’s a vital catalyst—to the way that their IT departments leverage virtualization and other innovative technologies to transform their organization.
These innovative IT managers have combined virtualization technology, along with a new way of operating, to become more service oriented and more focused on delivering business value.
The journey of transforming IT through virtualization begins with the IT production phase, then moves to business production, and finally reaches the goal of offering IT as a Service (ITaas). Each phase of the Journey offers substantial benefits in efficiency, agility, and control. Companies that reach the final phase of the Journey—ones that offer ITaaS—realize the greatest benefits. These organizations are the ones that pursue a strategy of extending virtualization beyond the computing platform to the rest of the infrastructure including storage, networking, and security. This level of pervasive virtualization is a prerequisite for realizing the full benefits of delivering IT as a Service.
Companies that offer ITaaS run their operations in ways that differ fundamentally from their peers. This includes offering self-service and on-demand models for providing IT that signiﬁcantly increase IT flexibility and create business value. As a result, their IT organizations generate greater incremental revenues, respond faster to the needs of the business, reduce operations costs, and garner more enterprise budget than their peers.
Companies that offer ITaaS reinvest more of their virtualization savings in innovation. Gartner research shows that 70 percent of traditional IT budgets are typically consumed by “run the business” costs, with just 30 percent available for new applications and services. As a whole, VMware customers are ahead of this industry average, committing only 58 percent of their budgets to existing operations with 42 percent reserved for new investments. But the most striking results are reported by companies who offer ITaaS; one-third of which have achieved their goal of a 50-50 budget allocation.
It’s helpful to look at the evolution of IT as a journey. This journey consists of three stages where the focus of IT operations moves from IT productivity to business productivity and then to the delivery of ITaaS.
The Software Defined Data Center
Underpinning the entire IT Journey is the software-deﬁned data center. In the software-deﬁned data center, computing, storage, networking and security resources are implemented in software that can be pooled for efficient allocation and managed centrally in an integrated way. Once an aspiration, the prospect of a fully virtualized data center has become a reality, as the industry explores ways to abstract essential functionality into software running on industry-standard x86 hardware. In fact, 77 percent of customers surveyed by Gartner have a strategy in place to expand virtualization across the data center to networking and storage.
The software-deﬁned data center architecture guides the IT Journey every step of the way. It helps ensure that progressive investments in virtualization build toward a highly efficient and automated IT environment, while extending the value of existing infrastructure investments.
In the ultimate realization of the software-deﬁned data center, all resources are virtualized, so they can be automatically deployed based on clear IT policies. Applications can be operational in minutes dramatically reducing the time IT staff spends on application provisioning and deployment. On-demand services, automated provisioning, proactive incident remediation, and policy-based security and compliance are all becoming a reality for the growing number of companies that have moved into the world of ITaaS.
As a result, analysts like Gartner are making aggressive projections—for example, that the global software-deﬁned data center market is estimated at $396.1 million in 2013 and expected to grow to $5.41 billion in 2018. This represents an estimated CAGR of 68.7 percent from 2013 to 2018.
Benefits of Delivering ITaaS
As organizations move along the path towards offering ITaaS, the tangible business benefits of virtualization pay off to a greater degree as investment grows. These benefits include reduced cost per compute instance, better compliance with SLAs, improved IT performance and increased business innovation. Although many companies have achieved remarkable success with virtualization, most are being far from complacent. According to Gartner, more than three-quarters of organizations with virtualized server environments have a strategic plan for extending virtualization to storage and then networking and security. This data is a strong indication of the extent to which IT managers and executive management understand and accept the value of the software-defined data center and the migration of IT as a Service as the future of IT.
To learn more about beginning the journey toward a software defined data center and ITaaS, or to talk about how to start a virtualization project in your data center, contact our VMware Solutions Team.
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