PP IT Budget Savings

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IT Savings TIPS

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PP IT Budget Savings

  1. 1. February 27, 2009 Bill Rebello Feb 27 2009
  2. 2. Revealing Where Your Are Clarify IT Costs  Create a baseline operational budget (no projects)  Develop a simple method to identify “internal cost of services” provides insight for IT & Business to understand how to spend.  Bring the finance team & key business folks into cost management discussion  Open Book IT Financial Reporting (Monthly, Quarterly) Bill Rebello Feb 27 2009
  3. 3. Budget Relief - People 37% of IT Budgets dedicated to people (CIO Mag)  Hiring freezes, eliminate special bonuses, reduce training, cut outside contractors, cut all salaries by 10% Flatten the organization- have execs manage 20 people  Consolidate groups into shared services  Consolidate Offices  Reduce services  Bill Rebello Feb 27 2009
  4. 4. Budget Relief – Services HW/SW Big Savings Potential  Hardware & Software Agreements (Maint. & Licensing) You may have to spend in the very short term to save a lot Organize – List all vendors & the spend , renewal dates.  Review agreements in detail validating  Inventory HW/SW are you still using it , over licensed etc.  Renegotiate, yes, no matter the term of the agreement; is maintenance  on net purchase, what is the set limit in % of maintenance increase etc. Do you still need 24x7 support. All this takes time a dedicated focused effort is required for quicker  results. Explore third party maintenance vendors can save 50%  Bill Rebello Feb 27 2009
  5. 5. Budget Relief – Services Telecom More Big Savings Potential  Buy Telecom expense services – monthly billing review Savings from mistakes could be in the $10,ooo to over  $100,000 + annually Renegotiate existing agreements ! Yes this could save another  10-100k + annually. WAN -Using frame relay? Moving to MPLS could save.  VoIP saves -moves adds changes could save LD, Call Center  management etc. Bill Rebello Feb 27 2009
  6. 6. Budget Relief – Mobile Services More Big Savings Potential  Develop written mobile policy and communicate it.  Establish a corporate account not expense allocation.  Leverage discounts - standardize on one vendor  Move to a pooled minute plan (saving 30% +)  Limit choices on hw – reduces management burden  Stay away from flat rate plan they typically cost more  Best in class about $55/mobile phone & $80PDA Bill Rebello Feb 27 2009
  7. 7. Budget Relief – Outsourcing More Big Savings Potential  True cost saving is 15-20% more in only optimal circumstances. Dig deep in to the ROI, consider Travel, Knowledge  Transfer, training, time to evaluate ROI & Agreement etc Review Current Deal Structures are they out dated?  The industry benchmark is 80:20 (80 percent of  resources offshore and 20 percent onsite) go to 90:10? Rates $40/hr for offshore app developer  Standard PC support Help Desk 1200 customers  (12x5 $60 - $70K) other? Bill Rebello Feb 27 2009
  8. 8. Budget Relief –Call Center More Savings Potential  Get workforce management software (IEX, Blue Pumpkin etc) Forecast agent needs and performance.  Use remote agents (low agent cost, real estate, VoIP saves)  Standardize on a single platform (cust exp & support)  Record Agent Customer Interactions this will provide feedback & lower hold times (manage need for agents) Bill Rebello Feb 27 2009
  9. 9. Budget Relief – Data Center More Savings Potential  Combine data centers  Meter electrical usage (going green) then put a program in place that reduces cost. Be sure IT reports the savings.  Reported annual savings of power usage has been reported in the $20K to 200K+ ranges. Bill Rebello Feb 27 2009
  10. 10. Budget Relief – Other Ideas More Savings Potential  Extend the replacement cycle of hardware  Pay for support as you need it. It cost more but it can be less then the cost of an annual agreement. Use VMware  Capacity management program  Look at secondary Internet Providers (RCN 100 meg for  1500 a month) Take a look at the governments new rules on  deprecation Bill Rebello Feb 27 2009
  11. 11. “Money grows on the tree of patience.quot; Realizing Savings When? (From Experience)  Depends! Three –Six Months? It takes vendors time to make changes! There is the potential for some very short term saving  surprises! Remember the bulk of savings can be “Annualized Savings”  from vendors with software, hardware, telecom services products imbedded in the business. Start now! Make IT Savings an Official Project. An IT person  needs run the project team. The team includes finance, the business. Keep to team small as possible. Take publicize IT Savings initiatives in areas outside of IT.  Call Center, Reducing Power Consumption. Bill Rebello Feb 27 2009
  12. 12. Trends-What are other CIO’s doing? CIO Survey Measures Under “Consideration” 2009  Postpone discretionary IT Projects……………..58%  Renegotiate IT vendor contracts………………….52%  Freeze IT hiring……………………………………………59%  Freeze or cancel IT capital spend………………...49%  Reduce IT headcount……………………………………34%  Reduce spend on IT contracts & consultants..52%  Reduce spending on IT Training………………....46%  Restrict IT Travel………………………………………….61% Started in the last 6 months (CIO Mag) Bill Rebello Feb 27 2009
  13. 13. IT Budgets 2009 CIO mag CIO Survey how will you budget change in 2009 Increase Decrease  Hardware…………………………….. 20% 47%  Applications………………………... 23% 41%  Network Infrastructure……….. 26% 35%  Web/mobile………………............ 22% 32%  Outsourced IT Service……….... 20% 48%  IT Comp…………………………….... 26% 35% (Salaries, bonus, benefits) Bill Rebello Feb 27 2009
  14. 14. IT Budget Composition  13% Keep pace with business changing req. (CIO Mag  37% Dedicated to People (Gartner)  75% of companies thinking about IT cost cutting in 2009 (Networld)  80% of the IT budgets just to keep the lights on (CIO Mag) Bill Rebello Feb 27 2009
  15. 15. IT Budgets Savings quot;If at first you don't succeed; call it version 1.0quot; “Happy Savings” Bill Rebello Feb 27 2009

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