Two views on data center budgets

As we continue interviewing IT executives for Nemertes Research’s upcoming benchmark on data centers, we are finding two quite different approaches to budgeting and cost allocation around the data center.

In some cases, data center operational costs are calculated “up to the OS,” with anything related to operating system configuration, patching and the applications running above the operating system considered outside the data center budget. Other IT executives take an “end-to-end” view. All activities related to the delivery of business services from the data center, including operational costs around the operating system and applications, are included in the data center costs.

There are advantages and disadvantages to both approaches, and we can’t consider either “correct.” In fact, each approach will be appropriate for different companies.

At the core of the budgeting question is each company’s IT culture. Is IT viewed as a service or a cost center? If IT and the data center are tasked with delivering infrastructure for business units to deliver services, they will account for the infrastructure without the cost of the operating system and application management. If the data center delivers business services to the end user, not infrastructure, then all the costs for delivering an application from the data center are included.

Outsourcers face a similar conundrum. Traditionally, outsourcers would provide infrastructure for a business to use in the delivery of services. But, with increased adoption of application service providers and utility computing, the line between the underlying infrastructure and the business service is being blurred.

So many outsourcers now see themselves as delivering business services, not infrastructure. This also changes the types of SLAs they will offer: instead of guaranteeing the uptime of the server, you will see more SLAs on the uptime of the service.

Which type of approach is best? Again, it depends on the needs and culture of the business.

One thing is certain, however. It is becoming increasingly difficult to keep a clean separation between infrastructure and business service. As data centers have changed to accommodate new computing and storage paradigms, the one-to-one correspondence between service and server is broken. Virtualization, clustering, on-demand computing and other such developments have made the infrastructure flexible and dynamic. Now a server may serve multiple applications, or several servers may provide a single service.

Clearly, many of today’s applications are composites that involve interactions between many servers. A complex set of interdependencies between servers makes it very hard to manage them “in a vacuum” without looking at the business services for which they are responsible.

A systemic approach to managing business service requires different management tools, but also different accounting practices. If your company’s IT culture is changing, you may need to adjust your accounting practices to allocate IT costs in alignment with your business goals. The different operational and organizational approaches to data center management are among many topics covered in our interviews with IT executives. Stay tuned for more trends and analysis.