“Finally, I do not think the economic case is settled. The thing to bear in mind is that service…”

“Finally, I do not think the economic case is settled. The thing to bear in mind is that service providers operate their DCs as profit centers (its what they do), which is different from most enterprises, which operate their data centers as costs centers (support what they do). This is an important distinction, because the it guides how organizations fund and invest in their IT infrastructure—for the former you optimize you data center to maximize revenue generation capability, for the latter, you optimize to minimize expense. If you are looking to drive revenue, the only hurdle is to show you can effectively monetize the investment—give me $1.00 and I will give you a $1.50 back in a meaningful period of time. If you are looking to optimize for expenses, its a bit more challenging—while there is no inherent limit to how much revenue you can generate, this is a natural limit to how much money you can save (you cannot drive costs below 0). Often, if you have sunk cost in infrastructure that is otherwise up and running well, the best course of action is to do nothing—I find that if you are going to make an “invest-to-save” argument to a customer, you better have some solid, empirical data to back it up. The reality is that all this SDN stuff might end up being amazingly cool and useful but not really do anything meaningful for TCO. In recent history, both cloud and server virtualization were introduced with much heralded costs savings. As we have gained experience with these technologies, we have found them quite useful, but the economic angle has not always played out as expected.”

Cisco Blog » Blog Archive » Final Thoughts on the Open Networking Summit (via irq)

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