Econometrics is nothing but application of mathematics, statistics, and computer science to economic data. By using the theory of Econometrics, CIOs can save costs to make a strong business case to gain management support for investments in innovation. Econometrics is the overarching business theme when an organization is trying to spur business transformation and turn the current datacenter into a next-generation information center. Convergence is the key accelerator of business velocity. Consolidation has given way to convergence to reduce opex.
Tough economic times require new perspectives and strategies for reducing the cost of infrastructure. The past several years have left many IT organizations with over-provisioned and under-utilised IT capacity. Now, with a squeeze on capital and credit, many organizations are faced with diktats to do more with less. It is time for CIO's to understand, how they can save costs to make a strong business case to gain management support for both strategic and tactical investments.
Today, organizations should evaluate new technologies on the basis of how they can contribute to business performance. However, this is becoming increasingly difficult to do. The average IT expenditure to just keep the lights on was about 80 percent, with many of them spending over 90 percent, leaving no room for innovation. The biggest factors contributing to this is difficulty in convincing top management that a transformation project is required and that is difficult for the IT team to demonstrate the value that can be generated in terms of ROI.
One way out is applying the principles of Econometrics. Cloud computing, VM Sprawl, and capacity on-demand architectures sometimes call for a review of existing IT ecosystems especially storage. One of the first steps is to define and measure current costs. We cannot improve what we cannot measure. This is the core of econometrics and key to providing continuous improvement of storage estate.
When seeking to control storage costs, an organization needs to determine which types of costs are most relevant to control and measure them. Reducing costs is often not simply a matter selecting products, but of designing a storage architecture that is more supportive of the organization's cost-reduction goals. Organization should use econometrics to follow the money spent on IT assets over their lifetimes, and map IT investments to business benefits and cost improvements.