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CIOs take new look at sharing IT infrastructure, apps

Thomas Hoffman | Aug. 28, 2009
The idea of IT services shared among industry rivals isn't new, but attempts to establish them have a spotty track record.

But the odds of success are improving, and with them is a renewed desire among CIOs to engage in shared IT endeavors. For starters, CIOs are under tremendous pressure to reduce costs, but many have exhausted the tried and true techniques for doing so, such as offshore outsourcing, data center consolidation and server and storage virtualization.

Meanwhile, the technological world has been transformed by the global expansion of broadband networks, open source and the emergence of cloud computing, which make any discussion about sharing systems considerably more practical. Together, these developments may induce companies to find solutions to typical obstacles concerning management and control of shared environments.

"With the advent of cloud computing, I think that's going to open up the doors to this type of collaboration," says Conophy.

Why Share Now?

Renewed interest in sharing IT services across companies has been percolating since the economy began to tank last year--and corporate executives began considering nontraditional ways of cutting IT costs.

"Consider a large investment bank that invested hundreds of thousands of dollars in additional server capacity during the last bull market to support additional business," says Howard Rubin, a Gartner fellow and professor emeritus of computer science at Hunter College of the City University of New York. What can that bank do with its excess capacity? Open access to it, says Rubin, through what he calls a "technology commons"--an arrangement to share infrastructure services the way New England farmers used to share grazing lands. By leasing or renting that capacity to other industry firms, an investment bank could generate additional revenues, lower its fixed IT costs and channel more investment into money-making IT and business projects, says Rubin.

Shared IT services have already taken root in academia and among nongovernmental organizations (NGOs--nonprofits that run aid programs). In 2001, NGOs led by Save the Children, along with Cisco, formed NetHope, a nonprofit IT consortium of 26 international organizations whose members now include ChildFund International, Relief International and World Vision. NGOs have extremely lean IT budgets, so they were thrust together by a common need, says Ed Grainger-Happ, U.S. and U.K. CIO with Save the Children. NetHope's slogan, in fact, is, "Collaborate or perish."

NetHope provides its members with technology such as shared satellite services in geographies where connectivity is scarce, including parts of Africa and Asia. Sharing satellites and ground stations is cheaper than having your own equipment, says Khuloud Odeh, former CIO at CHF International, a development and humanitarian aid organization.

As a nonprofit, NetHope operates on grants from companies such as Microsoft and Accenture as well as annual membership fees from its participants. Members pay between $8,000 and $20,000 annually, depending on their size. NetHope recently conducted an ROI study for its members and determined that the typical participant achieved a return of more than 475 percent on their membership fees, says Grainger-Happ.

 

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