What Will They TAX Next? (by Scott Turkow)

Author Profile - Scott Turkow has 8 years of experience in the Enterprise Software space, primarily in Operations and Sales Ops roles. Scott is the Senior Operations Manager at Integrien Corporation, the leading intelligent systems management company that enables the predictable operation of mission critical applications. Prior to Integrien, Scott was with the Resource Management Software Group of EMC, which focused on the development and sale of automated network management products. A tri-athlete in training, Scott tries to be outdoors when he’s unshackled from his computer.

What Will They TAX Next?

Is “The Man” sticking it to you again this year? More often then not, when it comes to taxes, we stick it to ourselves. Which reminds me, do I still have time to itemize the building of a fallout shelter as a preventive medicine deduction?

For years, many organizations have been over-investing in IT assets and then wondering where the biggest chunk of the budget goes? I’m an IT tax professional (Suze Orman has nothing on me), so here’s a free tax tip that falls into the “overlooked deduction” department – it’s the “labor tax”, silly. And not necessarily in terms of headcount, but the manual effort tied to tasks that can, and should, be automated.

IDC says Management and Administrative costs will grow by 10% a year through 2010[1]. The largest component (30%) of overall IT spend is labor. Of this, the vast majority (77%) is just keeping the lights on (system & network management, HW & SW support and maintenance). And just to be clear, human costs for “running technology” will continue to increase as a percentage of overall costs unless you take a new approach. But unlike your relationship with the IRS, you have a choice. You can opt to pay much less of your “lights on” taxes. The key to this particular reduction is automation - the only long term answer to reducing management costs.

So why automation?

A: Because my company sells software that automates the manual efforts currently required to manage the performance of your mission critical applications and services, of course!

But seriously…

A: IT is an essential foundation required to conduct business. Without IT, you have no business – it is lifeblood if you will. But in times of belt-tightening, organizations are looking closely at returns on investments in terms of productivity and impact on revenues and profitability (because they totally forget about that stuff when the threat of the recession isn’t on the front of every paper). The usual “enabler” status widely bestowed to IT is replaced with a rationalized view of IT as a critical, yet costly, utility. Businesses therefore look to reduce the unit costs of IT as a factor of production through strategies such as consolidation, transformation, standardization, shared services, managed services, outsourcing, multi-sourcing and yes – automation!

Many of the large organizations we speak with rely on manual analysis of alerts from multiple siloed monitoring tools when troubleshooting performance problems. While these tools are great for deep-dive analysis at each silo point, the manual effort required to correlate monitoring data is at best hit-and-miss decision making. These organizations are often working from flawed assumptions that lead to significant costs, downtime and wasted resources. At worst, their attempts to humanly correlate and analyze what amounts to hundreds of thousands of metrics and tens of thousands of monitoring alerts are setting themselves up for major disasters – recent examples include that wonder of efficiency called Heathrow Airport’s T5 and SaaS champ Salesforce.com.

Not to say that you need a major debacle to generate a significant “labor tax.” If you still find yourself in firefighting mode, sifting through tons of alerts and spending hours on bridge calls looking for the source of problems – then you’re wasting labor resources. At a very basic level, just look at the efforts a typical company dedicates to setting thresholds - much less correlating, chasing false positive alerts, or actual downtime impact – and you’ll find a manual function that can easily be automated for immediate cost savings, not to mention a significant reduction in monitoring events.

Sure fire ways to combat the “Labor Tax”

1. Automate and accelerate problem resolution – reduce the time (MTTI/MTTR) required to identify, diagnose and repair problems (Or maybe you like being on bridge calls…)
   
2. Automate the manual tasks associated with setting static thresholds and correlating events
   
3. Reduce the volume of alerts by consolidating related alerts and eliminating false positives
   
4. Reduce downtime and outages

There are solutions available (like my company’s Integrien Alive) that can learn the normal behavior of your mission critical applications and reduce your “labor tax”. Examples are posted everyday on this very site (e.g., case studies on Northgate and Mohegan Sun, as well as Tim O’Neill’s coverage of PacketTrap, etc).

So you have options. Unless, of course, you enjoy paying your “labor taxes”.

[1] Source: “Virtualization 2.0 – The Next Phase in Customer Adoption”, John Humphries, IDC, 2006

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