Cost-cutting all the rage at IBM user conference

Ken Mazer and Mike Little came to last week's Share IBM user group conference for one reason: bargain schooling.

"It's the cheapest place you can go to get the most diverse training information," says Mazer, a systems programmer at the IRS, who, along with Little, is responsible for handling operating system and hardware installations for the agency's IBM z900 platform.

Some 2,100 IBM users met in Nashville for Share's semiannual conference, which consists of about 1,000 sessions including tutorials, product previews, user case studies and hands-on labs.

While it wasn't a stated objective, the idea of getting more mileage out of fewer IT dollars surfaced in many sessions. Cost-cutting advice ranged from how to negotiate a better software deal, to using Linux to reduce operational costs, to exploring freeware, shareware and open source software options.

David Ochroch, senior consultant at Reiner Associates, shared tips for negotiating software purchases. For one, he says to bring in the competition for demonstrations and trial runs. If your company's business depends on a single vendor's products, "threats about changing products are not going to be taken very seriously," he says. If there are no alternatives, aim to negotiate a long-term contract with price protections.

Ochroch also suggests that if you're in an IT procurement role, make friends with remote staff who are purchasing software. Achieving centralized IT procurement is a commonly cited cure-all, but it's not always possible, particularly in companies that have acquired but not yet integrated other businesses, Ochroch says.

If you can't enforce centralized procurement, try to minimize the damage by broadcasting all volume-purchase agreements and requests for proposal to the distributed procurement team.

A centralized system for tracking software renewals, maintenance contracts and negotiated price caps is critical, Ochroch says. One oversight - such as forgetting to renew a corporate Web domain name - can cost much more to remedy than the renewal would have. Finally, publicize and reward staff for IT spending reductions, Ochroch says. "I've seen very few companies with good IT compensation systems," he says. "Most don't reward for incremental savings."

Paul Giangarra, IBM senior technical staff member, tackled designing a high-volume e-business site - a task he is undertaking in his temporary role as CTO of the Office of the e-Envoy in the U.K. Cabinet. Understanding and designing for Web site traffic patterns is key, Giangarra says. At one online stock-trading site, 40% of visitors requested a quote, but only 3% conducted a trade. Knowing this information, the company could cache its quota queries, speeding transaction times.

By selectively applying techniques such as load balancing and caching, companies can design for better performance, which in turn can protect against revenue loss. Giangarra cited a Zona Research estimate that slow performance costs e-commerce sites $362 million per month.

Another key savings recommendation: Take advantage of IBM's Linux push, says Stan King, president of system integrator Information Technology Company. "Linux is such a major focus for IBM that the best deals with deepest discounts can be had if there is even a hint of Linux implementation in a customer request for bid," King says.

In a session on entry-level mainframes, King said IBM's z800 Linux-only system is the most cost-effective System 390 mainframe environment he's seen. "Not only do you get [a full mainframe], but you also get it at a price that is incredibly reasonable," King says.

The price for a z/800 Linux machine is $150,000. Based on customer experience, King suggests buyers aim for a discount of between $30,000 and $45,000 off the reference price of a z/800 Linux-only model.

King also advised users to consider consolidating server functions on a mainframe rather than operating a mainframe plus a server farm. Linux on the System 390 could process traditional workloads, such as z/OS, VM and VSE, and Linux server functions, he says. "The cost savings experienced when the processing load of a room full of servers is migrated to a single S/390 platform can be quite substantial."

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