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Cost Reduction Guide Issue 6 IT


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Cost Reduction Guide Issue 6 IT

  1. 1. Is your business costing you? find extra profit A guide to reducing IT costs Issue 6: IT Expense Reduction Analysts
  2. 2. Introduction 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? 02 Introduction
  3. 3. Green IT Green IT 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
  4. 4. Green IT 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
  5. 5. Office Software Office Software 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
  6. 6. Office Software 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 sharing/collaboration 06 Office Software • A range of free, web-based resources
  7. 7. Hosted IT and Service Management 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
  8. 8. Hosted IT and Service Management 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 security breaches. 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
  9. 9. Technology Business 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 business asset. Technology Asset Management offers 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 initial outlay. 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
  10. 10. Technology Business Management 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 efficiency. 10 Technology Business Management
  11. 11. 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 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. 11
  12. 12. find extra profit Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Cyprus Denmark Ecuador Finland France Germany Greece Hungary Ireland Italy Jordan Korea Luxembourg Mexico Morocco Netherlands New Zealand Panama Philippines Poland Portugal Spain Sweden Switzerland Taiwan United Kingdom United States Uruguay Expense Reduction Analysts