Interesting article in a recent Forbes magazine. In "IT After the Recession," Ed Sperling interviews Gartner's Mark McDonald about research conducted with a sample of corporate CIOs about the economic impact of the global downturn on their budgets. Not surprisingly, 90% of the answers did say they had reduced budgets this year.
The report points out a couple interesting trends that call for virtualization on a greater scale in my opinion. The first is in the management of server environments, an area that is only becoming more constrained. The survey notes that budgetary cuts are focused on reducing third-party and contractor support, or renegotiating support contracts.
That is a good sign compared to knee-jerk layoffs to meet budget goals, but it still will call for a lot more automation and reduction of costs wherever they are available. Hardware virtualization will remain a top priority for CIOs, given the need to "do more with less" with every technology asset, as well as the ballooning amount of storage and processor power required to handle complex workflows.
Second, in the article McDonald points out a discontinuous trend that calls for more innovation: "There traditionally was a relationship between transaction volume and revenues. As revenues grew, so did transaction volume. Starting about four-and-a-half months ago, CIOs began reporting that relationship is broken. Transactions continue to grow even though revenues are flat to down. In banking, for example, balance inquiries are one of the fastest-growing transaction types. It doesn't generate any revenue, but it does generate a lot of work."
That is a stunning report, and one that we have seen corroborated in banking/insurance, travel, defense and other industries - more transactions no longer means more revenue. Today, both customers and business partners expect 24/7 any where, real time data from the enterprise -- in fact a companies' ability to provide good real-time data such as order status, tracking, pricing, balance, etc. are key differentiators in customers' minds.
The same also applies to development and testing transaction volumes -- non-revenue generating transaction fees, bandwidth, and data setup while working to build functionality, can increase much faster than the revenue the business functionality supports. In these cases, Service Virtualization is a valid approach, since you have systems that are either unavailable or not under the teams' control for Hardware Virtualization.
We hope as the CIOs start to employ these leaner practices during the downturn, they will come out stronger in the years to come.
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