PP IT Budget Savings

February 27, 2009

Bill Rebello Feb 27 2009

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)


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



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%



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.


Budget Relief – Mobile Services
 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


Budget Relief – Outsourcing
 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?


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)


Budget Relief – Data Center
 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.


Budget Relief – Other Ideas
 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


“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.


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)


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)


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)


IT Budgets Savings

quot;If at first you don't succeed; call it version 1.0quot;

“Happy Savings”


PP IT Budget Savings

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