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A guide to reducing IT costs

Issue 6: IT

Introduction

02 Introduction

Despite its importance, however, it’s veryeasy to lose sight of the true cost of your ITamid the bewildering array of ever-changingtechnology and functionality.

This guide - the sixth in our series looking atdifferent areas of cost reduction - aims toprovide a range of practical advice andexamples from our expert consultants to help ensure your business is managing its IT costs effectively and efficiently.

It includes tips and advice on the following areas:

• Green IT – why helping to protect theplanet through your IT strategy can alsodeliver benefits to your bottom line

• Office Software – Microsoft is no longerthe only option – but what are thealternatives and how do you go abouttrialling 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 businessasset; are you in a position to understandand maximise its worth?

With each decade since the 1980's, when IT systems began to take real traction across business, IT has developed andtransitioned its role within the organisation. Gradually, butincreasingly, it has become a business critical function withBoardroom-level influence and the power to not only manage but actually to drive key aspects of your business.

Green IT 03

In the era of climate change levies, corporate social responsibilityand carbon trading, running a ‘green’ business is no longer just analtruistic option for the environmentally minded.

Green IT

Green IT

Despite the growing body of evidence insupport of the need to reduce humanimpact on the health of the planet, there isalso a compelling business case for runninga greener operation. From rising energycosts to increasing customer demand –particularly amongst Governmentdepartments – boosting your greencredentials is a win-win strategy.

Expense Reduction Analysts consultant,Gareth Everson, looks at the options for‘greening’ your IT:

1 Invest in modern machines - or implement software to make existing equipment run more efficiently

A disproportionately large percentage of carbon emissions are shown to come from energy inefficient, unreliable, old IT equipment. Despite the initial capital outlay, newer equipment costs less to

operate – both in terms of energy usage and maintenance – as well as providing more stable and reliable performance. As an interim measure, consider software options for prolonging the reliable life and reducing energy consumption of existing equipment.

And don’t forget the monitors…they make up 6 per cent of the total energy consumption in an office and, once past their best, will waste 60 per cent of the energy they consume.

Greening your IT systemscan reduce costs by as much as £50 per system per year and energy consumption by 15 per cent

04 Green IT

Green IT

2 Take a hard look at recycling

Once you’ve invested in the latest machines, you need a strategy for disposal of the old ones. You probably already ‘think before you print’ and have a regular collection for paper, bottles and other commonly recyclable waste. But don’t forget that IT hardware can – and should – be recycled too. Reducing your ‘e-waste’ 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.

4 Look into server virtualisation

Server virtualisation effectively means ‘doubling up’ the capacity of your hardware by running multiple operating systems concurrently on a single machine. Fewer physical machines bring with them all the associated benefits of reduced cooling needs and energy use in addition to a lower capital outlay on hardware.

Office Software

The Microsoft monopoly on the way we use our computers isbeginning to disappear as Google, and even Amazon, enter thesoftware market with an attractive range of cost effective andunrestricted products. Furthermore, as Cloud-based systemscontinue to develop, experts estimate that 20 per cent of email will be Cloud-hosted by 2012.

However, if leaving your trusted MicrosoftOffice environment to venture into thebrave world of OpenOffice or Google Apps seems like a daunting prospect, here are Expense Reduction Analysts' tips on piloting new software:

1 Assess the complexity of functions that ‘Office’ software users in your organisationcurrently use by running user questionnaires. Expense Reduction Analysts provides software usage reports 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 mostorganisations, 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

Office Software 05

Office Software

Once you think you have the appropriate solution, it’s stillimportant to trial the software options in a real office situationbefore committing. Consider the following:

1 Assess if you have the internal capacity to effectively manage a trial with in-house staff and if the broad-range of expertise and experience with alternative software packages exists. If in doubt, bring in external expertise who ensure that the business case for considering alternative software is a viable one.

2 Plan a trial to include 5-10 users from a variety of teams in a trial of each of the potential solutions.

3 Set up, run and support an initial 3-month pilot to liaise with trialists, prepare installations, support software installation, review usage, answer questions and help resolve any technical or usage questions.

4 Compile a pilot review report that determines the rollout strategy for the business – what works best: open source ‘free’ services, low-cost subscription-basedCloud-hosted solutions or negotiation of better and more appropriate Microsoft Office contracts?

5 Work with finance and IT management stakeholders to confirm funding or review savings that can be achieved.

6 If Microsoft is part, or all, of the desired platform, run a tender process. Otherwise, liaise with other providers to complete the full rollout across the business.

7 Support the full roll-out.

06 Office Software

Head in the clouds The benefits of a Cloud-based IT system

The definition of Cloud computing isthe delivery of hosted software orinfrastructure services over theInternet, providing a more flexible andlower cost solution for your business.Some of the benefits include:

• No capital investment in hardware• Opportunity to free up server space

for other non-communications functions

• Ability to integrate functions – such as SAP, or document sharing/collaboration

• A range of free, web-based resources

Hosted IT and ServiceManagement

Releasing generic tactical or operational functions of your IT to athird party provider allows you the time to focus on more strategictechnologies that improve business performance and create asolid base from which to plan for long-term IT Cost Managementsuccess. If your organisation already outsources aspects of its ITservices, regular reviews of the service and cost-effectiveness of it are vital for success.

Gareth Everson outlines the benefits of IT hosting and some tips for choosing the right outsourced provider.

The benefits of using a third party to host your IT services may not only befinancial. They can be broken down into three key areas:

1 Operational Outsourced IT management allows you to alleviate any internal skills shortages by tapping into external support as and when you need it. It also allows you to benefit from enhanced scalability of systems and increased speed to market.

2 TechnologicalThe latest new technology is at your fingertips without the need for time-consuming research and trials or capital investment.

3 FinancialThere can be clear business cashflow benefits to switching parts of your IT spend from CapEx to OpEx but other cost benefits include instant access to upgrades and technological advances as well as swift responses to changing legislation and trends. Consider the total costs to your organisation of running in-house IT services.

Hosted IT and Service Management 07

Hosted IT and Service Management

Hosted IT and ServiceManagement

08 Hosted IT and Service Management

A successful outsourced relationship is allabout ensuring a good match between yourorganisation and the outsourcing provider.Some tips for assessing the strength of thematch include:

1 Undertaking site visits to get a feel for the ethos and culture of the provider.

2 Holding face-to-face interviews with key 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. Doesit still represent good value for money versus alternatives? Are the services provided a good organisational and cultural match to your requirements?

Technology BusinessManagement

Technology Business Management 09

Capital productivity is a key driver of long-term profits and hasalways been an area of focus for business leaders. However, as IT in itself becomes a driver of capital productivity, so itsoptimisation is also increasingly a topic for Boardroom discussion.

With Gartner predicting an 11 per cent risein IT costs, and hardware in particular up by16 per cent, Gareth Everson offers tips onmaking the most of your technology as abusiness asset.

1 Knowledge is power Conducting a comprehensive Technology Asset Review will give you the vital information to make strategic decisions about your IT expenditure, procurement and usage. Measure the true value of your assets against maintenance and operational liabilities, remembering to include full lifecycle costs, not just initial outlay.

2 Take the wider viewIf 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.

Reviewing IT costs in the context of effective Technology Asset Management offers the opportunity to make savings of 35 per cent as well as achieve better performance of assets.

Technology Business Management

10 Technology Business Management

Technology BusinessManagement

3 Create a ‘Bill of IT’Ensure you have a deep understanding of the individual unit costs of your IT products and services as well as high quality information on utilisation patterns. 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 applesBenchmark 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.

5 Consider alternative delivery modelsIdentify and assess all options available foroperational optimisation – from third partyservices to Cloud-based systems and workforce management.

11

Expense Reduction Analysts is a globalleader in cost, purchase and suppliermanagement consultancy and focuses on reducing non-core operating costs for private, not-for-profit and public sector organisations.

Handling an annual supplier spend ofmillions of pounds on behalf of clients in all sectors, the consultants at ExpenseReduction Analysts use their significantpurchasing influence to achieve optimumvalue from suppliers, often successfullyretaining incumbents and using expertanalysis and market intelligence to combat ‘contract fatigue’.

Expense Reduction Analysts have 170consultants across the UK. It also has aglobal influence in more than 35 countriesspecialising in more than 100 non-corebusiness expenditure categories.

Other topics covered in our series of cost reduction guides include:

Issue 1: Property and PremisesIssue 2: Banking and FinanceIssue 3: Back Office SuppliesIssue 4: Professional ServicesIssue 5: Logistics

For more information contact Expense Reduction Analysts on: 02380 829 737

Or visit our website at: www.expense-reduction.co.uk

Expense ReductionAnalysts

www.expense-reduction.co.uk

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