Is your business costing you?
ﬁnd extra proﬁt
A guide to reducing IT costs
Issue 6: IT
With each decade since the 1980's, when IT systems began
to take real traction across business, IT has developed and
transitioned its role within the organisation. Gradually, but
increasingly, it has become a business critical function with
Boardroom-level inﬂuence and the power to not only manage
but actually to drive key aspects of your business.
Despite its importance, however, it’s very It includes tips and advice on the
easy to lose sight of the true cost of your IT following areas:
amid the bewildering array of ever-changing
technology and functionality. • Green IT – why helping to protect the
planet through your IT strategy can also
This guide - the sixth in our series looking at deliver benefits to your bottom line
different areas of cost reduction - aims to
provide a range of practical advice and • Office Software – Microsoft is no longer
examples from our expert consultants to the only option – but what are the
help ensure your business is managing its alternatives and how do you go about
IT costs effectively and efficiently. trialling them?
• Hosted IT and Service Management –
the benefits and considerations of letting
a third party take the strain
• Technology Business Management –
your IT infrastructure is a critical business
asset; are you in a position to understand
and maximise its worth?
In the era of climate change levies, corporate social responsibility
and carbon trading, running a ‘green’ business is no longer just an
altruistic option for the environmentally minded.
Despite the growing body of evidence in operate – both in terms of energy usage
support of the need to reduce human and maintenance – as well as providing
impact on the health of the planet, there is more stable and reliable performance.
also a compelling business case for running As an interim measure, consider software
a greener operation. From rising energy options for prolonging the reliable life
costs to increasing customer demand – and reducing energy consumption of
particularly amongst Government existing equipment.
departments – boosting your green
credentials is a win-win strategy. And don’t forget the monitors…they
make up 6 per cent of the total energy
Expense Reduction Analysts consultant, consumption in an office and, once past
Gareth Everson, looks at the options for their best, will waste 60 per cent of the
‘greening’ your IT: energy they consume.
1 Invest in modern machines - or
implement software to make existing
Greening your IT systems
equipment run more efficiently can reduce costs by as
A disproportionately large percentage of much as £50 per system
carbon emissions are shown to come from per year and energy
energy inefficient, unreliable, old IT
equipment. Despite the initial capital consumption by
outlay, newer equipment costs less to
15 per cent
Green IT 03
2 Take a hard look at recycling 4 Look into server virtualisation
Once you’ve invested in the latest Server virtualisation effectively means
machines, you need a strategy for disposal ‘doubling up’ the capacity of your
of the old ones. You probably already hardware by running multiple operating
‘think before you print’ and have a regular systems concurrently on a single machine.
collection for paper, bottles and other Fewer physical machines bring with them
commonly recyclable waste. But don’t all the associated benefits of reduced
forget that IT hardware can – and should – cooling needs and energy use in addition
be recycled too. Reducing your ‘e-waste’ to a lower capital outlay on hardware.
by recycling computers that have passed
their replacement date is not only a
valuable way of doing your bit to reduce
landfill levels but can even generate an
income stream of its own.
3 Put computers in their place
The way you use, maintain and even
position your IT equipment will have a
significant impact on its energy efficiency
so consider these issues carefully. For
example, poor environmental conditions
in a server room can affect the life and
reliability of your machines and their
components, often causing them to
perform erratically, reboot, or crash
altogether. Plus, most businesses haven’t
even enabled the standard energy saving
settings on their computers.
04 Green IT
The Microsoft monopoly on the way we use our computers is
beginning to disappear as Google, and even Amazon, enter the
software market with an attractive range of cost effective and
unrestricted products. Furthermore, as Cloud-based systems
continue to develop, experts estimate that 20 per cent of email
will be Cloud-hosted by 2012.
However, if leaving your trusted Microsoft 1 Assess the complexity of functions that
Office environment to venture into the ‘Office’ software users in your organisation
brave world of OpenOffice or Google currently use by running user
Apps seems like a daunting prospect, questionnaires. Expense Reduction
here are Expense Reduction Analysts' Analysts provides software usage reports
tips on piloting new software: without charge to its clients to assess
software access patterns.
2 Based on the profile of software usage,
determine an appropriate mix of potential
office productivity software suites. In most
organisations, the key to this is finding the
balance between the requirements of
‘power users’ and ‘normal users’.
3 Match the ‘power users’ and the ‘normal
users’ with the appropriate market,
subscription or licensed solution.
Office Software 05
Once you think you have the appropriate solution, it’s still
important to trial the software options in a real office situation
before committing. Consider the following:
1 Assess if you have the internal capacity to 5 Work with finance and IT management
effectively manage a trial with in-house stakeholders to confirm funding or review
staff and if the broad-range of expertise savings that can be achieved.
and experience with alternative software
packages exists. If in doubt, bring in 6 If Microsoft is part, or all, of the desired
external expertise who ensure that the platform, run a tender process. Otherwise,
business case for considering alternative liaise with other providers to complete the
software is a viable one. full rollout across the business.
2 Plan a trial to include 5-10 users from a 7 Support the full roll-out.
variety of teams in a trial of each of the
potential solutions. Head in the clouds
The beneﬁts of a Cloud-based IT system
3 Set up, run and support an initial 3-month
pilot to liaise with trialists, prepare The deﬁnition of Cloud computing is
installations, support software installation, the delivery of hosted software or
review usage, answer questions and help infrastructure services over the
resolve any technical or usage questions. Internet, providing a more ﬂexible and
lower cost solution for your business.
4 Compile a pilot review report that Some of the beneﬁts include:
determines the rollout strategy for the
business – what works best: open source • No capital investment in hardware
‘free’ services, low-cost subscription-based • Opportunity to free up server space
Cloud-hosted solutions or negotiation of for other non-communications
better and more appropriate Microsoft functions
Office contracts? • Ability to integrate functions
– such as SAP, or document
06 Office Software • A range of free, web-based resources
Hosted IT and Service
Hosted IT and Service Management
Releasing generic tactical or operational functions of your IT to a
third party provider allows you the time to focus on more strategic
technologies that improve business performance and create a
solid base from which to plan for long-term IT Cost Management
success. If your organisation already outsources aspects of its IT
services, regular reviews of the service and cost-effectiveness
of it are vital for success.
Gareth Everson outlines the benefits of 2 Technological
IT hosting and some tips for choosing The latest new technology is at your
the right outsourced provider. fingertips without the need for time-
consuming research and trials or
The benefits of using a third party to capital investment.
host your IT services may not only be
financial. They can be broken down 3 Financial
into three key areas: There can be clear business cashflow
benefits to switching parts of your IT
1 Operational spend from CapEx to OpEx but other
Outsourced IT management allows you to cost benefits include instant access to
alleviate any internal skills shortages by upgrades and technological advances
tapping into external support as and when as well as swift responses to changing
you need it. It also allows you to benefit legislation and trends. Consider the
from enhanced scalability of systems and total costs to your organisation of
increased speed to market. running in-house IT services.
Hosted IT and Service Management 07
Hosted IT and Service
A successful outsourced relationship is all 1 Undertaking site visits to get a feel for the
about ensuring a good match between your ethos and culture of the provider.
organisation and the outsourcing provider.
Some tips for assessing the strength of the 2 Holding face-to-face interviews with key
match include: staff who will be handling your work.
3 Understanding how the provider would
deal with the challenges as well as the
day-to-day work – ask them for examples
of their responses to power outages or
4 Speak to other organisations that already
work with the outsourcing provider.
5 When running outsourced services, it
is critical that you conduct annual or
bi-annual reviews of the service. Does
it still represent good value for money
versus alternatives? Are the services
provided a good organisational and
cultural match to your requirements?
08 Hosted IT and Service Management
Technology Business Management
Capital productivity is a key driver of long-term proﬁts and has
always been an area of focus for business leaders. However,
as IT in itself becomes a driver of capital productivity, so its
optimisation is also increasingly a topic for Boardroom discussion.
With Gartner predicting an 11 per cent rise Reviewing IT costs in
in IT costs, and hardware in particular up by
16 per cent, Gareth Everson offers tips on the context of effective
making the most of your technology as a
1 Knowledge is power
Conducting a comprehensive Technology the opportunity to make
Asset Review will give you the vital savings of 35 per cent
information to make strategic decisions
about your IT expenditure, procurement as well as achieve better
and usage. Measure the true value of
performance of assets.
your assets against maintenance and
operational liabilities, remembering
to include full lifecycle costs, not just
2 Take the wider view
If IT is to be a business management
function then it cannot afford to operate
in isolation. Synchronise your IT, finance
and procurement departments through
a technology asset management scheme
to aid decision-making.
Technology Business Management 09
3 Create a ‘Bill of IT’ 5 Consider alternative delivery models
Ensure you have a deep understanding Identify and assess all options available for
of the individual unit costs of your IT operational optimisation – from third party
products and services as well as high services to Cloud-based systems and
quality information on utilisation patterns. workforce management.
Repeat this across business units if
necessary to create a ‘Bill of IT’ for each
part of your organisation and enable a
forensic, line-by-line analysis of costs.
4 Compare apples with apples
Benchmark the cost of your IT products
and services not only against industry
peers but also between your own business
units to ensure an objective measure of
10 Technology Business Management
Expense Reduction Analysts is a global Other topics covered in our series
leader in cost, purchase and supplier of cost reduction guides include:
management consultancy and focuses
on reducing non-core operating costs Issue 1: Property and Premises
for private, not-for-profit and public Issue 2: Banking and Finance
sector organisations. Issue 3: Back Office Supplies
Issue 4: Professional Services
Handling an annual supplier spend of Issue 5: Logistics
millions of pounds on behalf of clients
in all sectors, the consultants at Expense For more information contact
Reduction Analysts use their significant Expense Reduction Analysts
purchasing influence to achieve optimum on: 02380 829 737
value from suppliers, often successfully
retaining incumbents and using expert Or visit our website at:
analysis and market intelligence to www.expense-reduction.co.uk
combat ‘contract fatigue’.
Expense Reduction Analysts have 170
consultants across the UK. It also has a
global influence in more than 35 countries
specialising in more than 100 non-core
business expenditure categories.
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