The state of IT: Primed for uncertainty

Thanks to shifts since the last downturn, IT is poised to weather economic turbulence with confidence

 

"If you went down to your HR department today and said, 'We're contemplating letting one-third of our software developers go,' they'd say, 'Are you serious? It took us the last two years to get up to full staff,'" McGovern says. "Long-term demographics suggest an incredibly tight hiring market. There are 77 million boomers about to retire, and 48 million Gen Xers coming right after them. There's going to be a big shortage. I'd think twice about letting people go, because it's going to be hard to replace them."

Even so, enterprises looking to control costs are more likely to look offshore than to new hires. Sayeed says many companies have barely scratched the surface of offshoring, especially when it comes to more advanced tasks such as application development and business process optimization. According to Compass Intelligence, budgets for outsourcing will grow nearly 10 percent in 2008.

But at the same time, organizations will be taking a much harder look at their outsourcing agreements and putting the squeeze on vendors, says Barry Jaruzelski, vice president at Booz & Company.

"There was a big wave of outsourcing five years ago, but now enterprises are going back and re-evaluating their contracts, seeing how hard they can squeeze their vendors," Jaruzelski says. "There's a lot more aggressiveness about the prices they got, the terms they agreed to, and the vendors they chose."

Server virtualization: Cost container
The state of IT is increasingly virtual in 2008. Virtualization software can maximize investments in servers and make datacenters more efficient. As a slowdown looms, enterprises will add more virtualization services when consolidating their datacenters as a means for containing costs without sacrificing essential services.

[ Geta hands-on look at many aspects of the technology and project implementation in the Test Center's special report on server virtualization ]

Before server virtualization, average utilization in a server farm was 20 to 30 percent, says Keane's Sayeed. "Now using blade servers and virtualization, you can take that up to 75 percent. You can triple the productivity of your server farm without the added costs."

According to IDC, the worldwide virtualization services market will grow to nearly $12 billion by 2011, more than double its size two years ago.

"According to our April '08 survey of the Data Center Users Group, 84 percent of our customers had implemented some degree of virtualization," says Charles Spears, president of Liebert North America, a business of Emerson Network Power, which makes precision power and cooling systems for datacenters.

By using physical servers more efficiently, datacenters require fewer machines, translating into less floor space, reduced energy consumption, and lower capital expenditures. It helps to free up the three most critical constraints of space, power, and cooling faced by datacenter managers today, allowing for growth in computing capacity.

"Any technology that improves IT productivity also substantially drives up the demand for computing," Spears adds. "And we expect virtualization to be no different."

At the same time, large enterprises are also reducing the number of datacenters they inhabit -- in part because virtualization allows them to get more done with fewer machines, but also because the data they're crunching is more critical to the business, says Spears. In a world where many enterprises take orders across the Web 24/7, it's far easier to guarantee availability and security when you have only two datacenters to worry about instead of 20.