Why automation leads to greatly reduced IT-costs

Posted by:

07 Feb 2013

At CFEngine we frequently meet companies that save millions of dollars annually as result of working with our tools.

In addition to improved productivity and increased quality of service, automation will make your IT-operations more cost effective. Actually, in order to stay competitive, I would argue that highly automated IT-operations is the only way for IT-organizations to meet the agility and cost requirements of today.

Automate or die

IT-operations that are not highly automated will not be able to keep up with expected productivity, quality of service and costs.  

The industry average for the number of servers managed per system administrator lies between 50 and 100. For companies automating their IT operations with CFEngine that number is much higher. At one company that uses CFEngine, a single system administrator manages more than 10,000 servers and knows he can scale beyond that. Needless to say that everything at that company is in version control and automated – manual changes are strictly forbidden. 

We see that companies that use CFEngine achieve on average a ratio of 500 to 1,000 servers per system administrator. How can you compete if you need 10 times more people than your competitors, especially when you also know that manual work causes mis-configurations, bottlenecks and added costs? The answer is easy: You can’t.

Automate to Reduce IT-Costs

IT-organizations are at risk of becoming obsolete as CMOs and other internal customers use SaaS and PaaS providers instead of internal resources. To get these internal customers back, the first thing needed is to become more productive and cost-effective. Here is an interesting benchmark: 

Salary costs for normal IT-operations: $4.5 million:
Assume a company with 5,000 servers that does not use automation to manage its servers, This company needs between 50 and 100 system administrators, we’ll use the number 75 for the calculation. Using an average salary for a system administrator of $60,000 gets us to total salary-costs of 75  x $60,000 = $4,500,000. 

Salary costs for CFEngine automated IT-operations: $1.8 million
A company that uses CFEngine automation needs 5 to 10 system administrators for 5,000 servers. We’ll be conservative and use 10 for this calculation. At CFEngine we call such automation experts System Engineers instead of System Administrators. They are the “3x-10x-guys”, as they often earn 3x the salary of other system administrators and manage 10x their number of servers. For this case the total salary costs to manage 5,000 servers is 10 x $180K = $1,800,000. 

The conclusions from this calculation are crystal clear. A highly automated organization would save $2.7 million annually in salaries alone compared to a non-automated IT-organization.

The promise of 60% reduction in costs

For companies that migrate from legacy systems, like Bladelogic from BMC or Opsware from HP, we promise the customer a reduction in costs (labor and licenses) of at least 60%.  

By moving to CFEngine and creating a highly automated environment, most tickets for level 1 and level 2 incidents will go away, and the IT-operations will become much more pro-active focusing on how to improve, rather than fire-fighting. CFEngine will take care of the fire-fighting for you

The best way to stay competitive, is to make operations highly automated. CFEngine enables that and is the only solution that offers continuous maintenance, running billions of checks daily, and immediately correcting deviations of policies regardless of the scale and complexity of the IT infrastructure. 

We are proud to have produced some of the most impressive metrics in the industry. If you are head of IT-operations or responsible for IT-operations in your organizations, we would love to hear from you, and share what we think you should expect from next generation IT-operation automation.

Thomas Ryd