Manage Learn to apply best practices and optimize your operations.

ROI analysis the key for green light on your virtualization project

Virtualization might make sense, but how can you convince the business? CEO John Weathington helps you reframe your argument with an ROI analysis.

Is your virtualization project dead on arrival because the business thinks it will take too long to recoup its investment? Believe it or not, you might be the reason. Show business executives the money instead, and they'll open the coffers to get your data center virtualization project under way.

John Weathington
John Weathington

As an IT leader responsible for the company's information management infrastructure, you've probably heard the mantra of keeping costs low for the company chanted to you ad nauseam by the monks of executive management. For this reason, your proposals for virtualization -- a very reasonable and responsible architecture for a midmarket company -- probably have focused on the lowest total cost of ownership (TCO) analysis rather than on an ROI analysis.

As much as I applaud your efforts, TCO won't sell your ideas for one simple reason -- sticker shock. Emotion always trumps logic, especially when a midsized company's executive management team is trying to do the best it can with limited resources. Sticker shock is too visceral a concept when juxtaposed with the more logical concept of low TCO. So, how do you get your virtualization project funded? Let them spend more money.

It's all in how you frame the solution. First, you must let go of the idea of trying to save the company money. Instead, focus on achieving the most business value as quickly as possible. Instead of building an organization-wide virtualization solution (which admittedly will save the company a considerable amount of money in the end), ease into virtualization one business dilemma at a time. Get management's attention by considering an Agile implementation of virtualization.

Getting to yes with an ROI analysis

The key to an Agile virtualization infrastructure buildout is in your value system. Start by focusing on holistic business problems. Fold your data center virtualization project into the solution completely, with no auxiliary concerns whatsoever. Don't worry about what's right for the "larger enterprise" or even about obvious "economies of scale." Just focus on the requirements for the business function at hand, nothing more. Explore use cases where the organization's virtualization requirements are changing constantly. Again, don't worry about cost; you will be fine as long as the return is good. Solving for the business function will give you the flexibility to build small releases in any direction the organization wants to go.

Next, target a small business solution that produces a high rate of return, the kind of thing commonly referred to as low-hanging fruit. The ROI analysis should support the total cost of the project by many factors, so keep the implementation's scope to the bare minimum. For instance, your executive team might have a strategy for a consulting service to a small, lucrative, vertical channel that requires analytics capabilities against some of your current products. You can probably serve the needs of this single, targeted business function for less than $50,000. The return on this project should cover its cost many times over -- and it will give you a terrific opportunity to get your virtual foot in the door.

Now that you've enjoyed a modicum of success, you will face a big challenge with the second request. Scale this second infrastructure project quickly to capitalize on the momentum and excitement created by your first success. Your change management strategy is important here. Because it's much more complicated in an Agile implementation than in a traditional, one-time, big-rollout approach, you must build this out as a key capability.

An ROI analysis against small releases that provide instant value to the business: That's the key to getting a new virtualization data center infrastructure installed. Don't minimize TCO. It invariably implies large upfront costs that will be hard for your senior partners to digest. Instead, focus on your change management strategy, then grow and tweak your infrastructure continually as the business demands more value. If you start today by picking off your company's lowest-hanging fruit, the rest will be as easy as pie.

John Weathington is president and CEO at Excellent Management Systems Inc., a San Francisco-based management consultancy. Let us know what you think about the story; email

Dig Deeper on Small-business infrastructure and operations

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.