Case Study: Cambridge Management Consulting Helps a Banking Corporation Halve their Data Centre Costs

By consolidating their data centre estate and making flagship locations more efficient.

The client, a major financial institution, had a large portfolio of data centres and was initially concerned that one of them was approaching the end of its life. 

After a review of their data centre estate, our consultants identified that not only were operating costs out of control (several times higher than market rates would indicate) but the team in charge of strategy was not aware of the IT strategy or its impact on data centre requirements. 

The hybrid cloud strategy adopted by the CIO team would create a significant reduction in IT load in their data centres—perhaps up to 50% in the long-term. This would have reduced the efficiency of the data centre estate even further. 

Their flagship data centre was under 50% utilised, making it highly inefficient, both in terms of OpEx and energy usage, and these costs would increase significantly if the DC estate strategy was not reviewed.

The Challenge

The bank had two main challenges:

1)  To ensure that their data centres were resilient and stable (a regulatory requirement) and financially efficient. They had a large estate of data centres, including several standalone facilities, and many dozens of on-premise computer rooms in corporate HQ buildings. Many of their legacy data centres were old and inefficient. 

2)  Their flagship data centre was less than 50% utilised and was costing a significant multiple of the standard operating cost for a similar facility. A significant proportion of the extra cost was due to the low utilisation.

As well as the physical and financial issues, the organisation was suffering due to a lack of coordination between the property department, who owned and paid for the buildings and power, and the IT department, who were the customer, but who made no direct financial contribution to data centre costs.

The IT strategy was to adopt a hybrid cloud platform that would reduce IT loads by up to 50%, but the property teams were not even aware of this.

The Solution

Our consultants first had to bridge the gap between the property teams and the IT department at the bank. A lack of engagement between the two teams meant that there was a fundamental lack of understanding of the requirements for data centre capacity in the medium- and long-term. The supplier (the property team) had little or no idea of what the customer (the IT department) required.

The IT department was also finding it difficult to express their requirements in terms that the property team could act on. So, the approach that had been adopted was one of over-engineering and over-provision.

Our team started by analysing the utilisation across the data centre estate and modelling the impact of the hybrid cloud strategy over time. This included a sensitivity analysis that looked at different scenarios that would affect the proportion of IT workloads migrated into the cloud. This gave a clear picture of how total utilisation was likely to look over the two-year period that the cloud migration was forecast to last.

Our main recommendation was to consolidate the data centre estate into the smallest possible footprint. Filling the flagship data centre to a reasonable level would halve the running costs overall and improve total system resilience. 

Emptying older data centres would release properties from the portfolio that could then be disposed of. This had additional benefits in HQ buildings with older computer rooms that had effectively locked the bank into buildings that were of no strategic interest to the organisation.

Outcomes & Results

1. The bank is now on a long-term programme of consolidating their data centres.

2. The target number of standalone facilities was reduced by over 50% and the target number of computer rooms in HQ buildings was reduced by over 90%.

3. The hybrid cloud programme is almost complete.

4. Utilisation in the flagship data centre has increased and will continue to grow as IT systems are migrated out of legacy data centres slate for disposal.

5. The IT team has become significantly more involved in data centre strategy and is working more closely with the property team to ensure alignment.