By Mike Herrington
The position of chief technology officer was created for a reason. There needs to be ownership and strategy behind the technology decisions a company makes at the highest levels. Your network is so essential to how you do businesses that it needs a seat at the table. There is an enormous amount of money and frustration that can be saved by having a CTO that can help craft that strategy and provide direction.
The challenge that many small- and medium-sized businesses face is that they don’t have sufficient need or resources to pay a full-time CTO. Technology is an important part of what they do and essential to business functions, but they aren’t currently at a size where they can justify the cost of that full-time employee.
Many businesses have been turning to virtual CTOs to bridge the gap. Virtual CTOs are experienced IT professionals who offer CTO-level guidance and strategy on a consulting basis. They meet with an organization to understand its needs and challenges and help craft and implement IT strategies that help them achieve their organizational goals.
Virtual chief technology officers (vCTO) offer several advantages to the businesses that engage them. The biggest is that their clients get the help and guidance they need to reach their technology goals. In addition, they frequently find that the reduced costs of project completion through sound technology choices offset much or all the cost of the vCTO. A good consultant can also frequently offer solutions on how to streamline your technology solutions, eliminate waste and offer additional value.
I recently consulted with a medium-sized manufacturing firm. They have about 500 employees and at the time of the engagement had just lost a full-time CTO. They had four remaining IT staff that were without a leader and a stack of technology that was an odd pairing of antiquated and new.
One of the things we recognized immediately was that their IT environment was not running efficiently. They had a little over 40 servers and were not leveraging any kind of virtualization technology. That meant that there were 40 physical servers in racks that all needed maintenance, power, bandwidth, etc. Power alone can cost up to $1,000 per year per server. The costs of that footprint were significant.
Another thing that’s often not considered is that the processing power on servers in a scenario like this is typically woefully underutilized. In this case, it meant that most the hardware resources they were paying so much money to feed and maintain were not actually being used anywhere near their capacity. Wasteful!
A strategy was put in place to streamline the network. We would take the very best of the existing hardware that was completely underutilized, and leveraged virtualization technology to be able to do more with less. Virtualization allows you to apply a software layer to the hardware that you can build upon. This makes it possible to put multiple server operating systems on the same piece of physical hardware. In this specific scenario, it meant that they could go from maintaining 40 servers to eight.
The cost savings was dramatic. Over three years it’s estimated that they will save around $400,000 in total costs for power, maintenance, warranties, manpower, etc. That represents a savings of around 70 percent and by eliminating legacy hardware they improved system performance at the same time.
In addition to changes to the hardware, there were staffing changes made as well. The company decided that with a vCTO, they no longer needed to rehire for that position. They also decided to eliminate two of their full-time IT staff and hire a managed-service company to help with server monitoring and network maintenance. These changes also represented a significant cost savings and the strategic partnership with a managed-services firm gave them many benefits, tools and resources that they didn’t have before.
At the end of the day, this company saved hundreds of thousands of dollars every year while increasing performance and response times on IT issues. Having the right strategy for IT can pay off big. More than just costs savings and increased efficiency, a vCTO can help you see technology as a strategic advantage for your business. It can empower you and help to push you forward.
Take a little time to think about your strategy for IT. If you don’t have a direction that you’re currently comfortable with, a vCTO might be a great fit for your business. The very best managed-service providers offer vCTO services. That also might be a great option to investigate. Invest in your technology strategy and it will pay you dividends.
Mike Herrington is the manager of business development at i.t.NOW.