TLDR: IT finds itself in the driver’s seat for guiding businesses through these uncertain times. With the increased urgency to cut costs while remaining competitive, infrastructure optimization plays a central role in the path forward.
With the recent pandemic, economic projections by McKinsey for the coming months and year paint a difficult picture. Yet, history suggests that solutions to our current challenges do exist. And, by looking at the organizations that came out stronger after previous downturns, we in IT can find basic and proven strategies to not only survive but possibly thrive.
Thankfully, Harvard Business review did that heavy lifting already, in an article they published in 2010. Their research suggests that by cutting costs in the right areas and investing for innovation in others, organizations dramatically increase their odds of surviving during, and thriving after, a downturn.
This blog discusses those details in greater detail as well as outlines a possible way for IT to implement these lessons learned – focus on optimizing core IT components like the operating system.
Using History as our Guide
Harvard’s study covered 3 recessions: 1980, 1990, and 2000. They looked at a reasonable sample size of 4700 public companies, covering the 3 years leading up to a recession and the 3 after it.
First, the bad news. Only a small number of companies (9% of their sample size), did better after the recession than when they entered into it. The 9% statistic suggests 2 things:
1) Thriving in a recession is challenging.
2) Most companies did not have a proven blueprint entering into the recession.
Organizations cannot do anything about the first, but the second point can be addressed and should be a top priority given our current economic situation.
After looking at the behaviours of their sample, HBR bucketed each member of the group into 1 of 4 cohorts: prevention-focused, promotion-focused, pragmatic, and progressive. If you are interested in reading more about the categories you can view the article, here.
However, in the interest of time, this article will focus on the clear winner: the pragmatic companies. It will then cover IT’s central role in winning during this period.
It isn’t about just cutting costs (see the article to view statistics on organizations solely focused on cost cutting) nor is it just about spending to capture more marketshare. And, frankly, it isn’t even just a combination of the two, it is the surgical application of cost cutting and spending that yield the most impressive results – those organizations that were able to thread the needle between the two saw a 37% chance of exiting stronger than entering.
As the article states, “These companies reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets.”
It’s important to note that operational efficiency isn’t about trimming staff, in fact the majority of organizations that were the most successful did not cut staff. Operational efficiency, in this context, is about employing the right resources in the right way.
IT’s Central Role in the Path to Survival and Perhaps Prosperity
Operational efficiency can be segmented several ways, but this article breaks it down into the classic 3 familiar to most in IT: People, Process, and Technology. As already mentioned, the overly simplistic approach to cutting costs by slashing staff does not lead to the best outcomes.
Rather, the secret is in the correct application across all 3 of these areas. And, while it’s obvious IT has a play in the technology area, it is also central to the two other segments: people and process. The systems that help to design and deliver efficiency across processes are software solutions. And, those that help to manage human resources are, of course, software solutions.
Because of the recent shift to virtual work, IT’s role in day-to-day activities is now more central to survival than ever before. IT is the organization responsible for the implementation and ongoing operation of the tools supporting virtual work. Without these tools, any hoped for progress comes to a halt.
The Start of a Specific Blueprint – The short and long term approach
So what can IT organizations do in their current environments that both cut costs and improve the performance of the digital services they are delivering?
In short, optimize existing fundamental aspects of the IT infrastructure. This article discusses the operating system as one area of the infrastructure ripe for optimization in the sections that follow.
Other tools that might help in cutting costs or improving performance such as those for general infrastructure, application, and cloud management, are already in use by most organizations. For example, most IT departments (and certainly those within digitally native companies) have already deployed cloud management and APM solutions.
So, any optimization gains they might get from those solutions have already been realized. And, those that haven’t deployed those types of tools, can expect their implementation to be months. This, in a time when we need to cut costs and improve performance as quickly as possible.
Cloud cost management tools exist as well, and certainly they can help in finding much needed budgetary room, but again they take time to implement and won’t necessarily improve the digital experience for your customers. (See our recent ‘Cloud Cost Optimization Guide’ for more details.)
If you look at it from an application delivery perspective, refactoring code to function better in today’s environment takes time and ‘costs’ an organization expensive development talent. Talent that should be focused, now more than ever, on innovation and bringing value to the user.
Operating Systems – And the New Frontier of Opportunity
A new approach for optimizing the use of compute resources has recently emerged that might be the perfect fit for the critical operational efficiency challenges that organizations are facing.
Operating systems, one of the main building blocks of any infrastructure, were designed to be generic general-purpose systems supporting acceptable performance for different applications and use cases.
In their core, operating systems are trying to achieve interactivity and fairness in resource management, therefore resulting in suboptimal performance of all tasks for overall general performance. However, applications and workloads running in production are mainly designed for performing specific, repetitive tasks at high performance and scale.
In these environments optimizing decision making for an application specific goal such as response time or throughput, rather than interactivity or fairness, leads to significant performance improvement.
This new frontier of real-time continuous optimization enables organizations to leverage AI-driven infrastructure optimizations that are suited specifically to the running workload.
By learning the application’s specific resource usage patterns and data flow and analyzing CPU scheduling order, oversubscribed locks, memory, network and disk access patterns it is possible to identify contended resources, bottlenecks and prioritization opportunities and solve them using scheduling and prioritization algorithms.
This approach ensures the most efficient use of compute resources, resulting in the need for fewer VMs, less compute resources, reducing costs significantly while delivering better performance. You can find case studies outlining sample results here and here.
Easy to implement and resulting in quick ROI, this technique and similar ones will help IT accelerate innovation while cutting costs. The reader is encouraged to view this white paper which discusses both the tools and best practices that will help optimize costs in cloud environments.
So, there is a proven path forward in these difficult times and the technology to help organizations move along that path is available. Now more than ever, IT has the chance to lead the rest of the enterprise to a better future.