2 The Big Server Push

Strong demand for the benefits of virtualization continues to propel server projects -- despite economic uncertainty.

Damn the torpedoes! Full speed ahead! Admiral David Farragut's famous American Civil War exclamation could be the rallying cry of the IT executives behind server and virtualization efforts. Rather than cutting and running as they face deepening economic woes, these IT professionals are pushing harder to complete their projects.

It's easy to understand why: Many server and virtualization projects deliver the kinds of cost savings that businesses crave right now. "These projects affect costs . . . and they affect revenue," says Dennis Smith, first vice president of advanced engineering at The Bank of New York Mellon Corp.

The slowing economy has ratcheted up management's sense of urgency to get those projects done. "Businesses are saying, 'How much faster can you do this, and how much more cost savings can you wring out if we give you more power to do this sooner?'" says James Staten, an analyst at Forrester Research Inc.

Perhaps that's why Forecast Survey respondents said their No. 1 and No. 2 increases in spending in 2009 will be in servers and virtualization technologies, respectively. Those projects are the second- and third-highest priorities, right behind security.

Rockwell Bonecutter, data center technology and operations practice lead at Accenture Ltd., works with IT executives at many Fortune 100 companies. "I haven't seen a significant pullback on refresh spending," he says, although new projects are getting more scrutiny -- particularly capital-intensive ones.

Rather than simply reacting to the recession, some IT executives are leveraging it to push virtualization projects deeper into the business -- and to drive harder bargains with vendors. (Read about managing the complexities of storage virtualization.)

With the increased emphasis on cost savings and the bottom line, IT organizations that have begun virtualization projects and produced results have unprecedented clout to deliver those savings in areas of the business that have resisted the trend thus far. "This is a great time to take advantage of the situation in the economy to let technology do what it is meant to do," says Bonecutter.

Success in consolidation and virtualization is also lowering resistance to change. "We're seeing a lot of interest from other parts of the organization to leverage IT in ways they haven't in the past," says Matthew Clark, director of IT at San Diego-based Qualcomm Inc. "They're asking us."

Smith says the economic crisis has technology vendors banging on the doors of his bank -- and cutting deals. "In our space, there are a number of companies that had large orders, and over a weekend, they disappeared. It's a very, very good time [to buy]," he says. While many banks are struggling, Bank of New York Mellon has remained in a relatively good position to take advantage of those deals, he says.

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