February 27, 2009

Bill Rebello Feb 27 2009

Revealing Where Your AreClarify 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

Budget Relief - People37% 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

Budget Relief – Services HW/SWBig 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

Budget Relief – Services TelecomMore 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

Budget Relief – Mobile ServicesMore 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

Budget Relief – OutsourcingMore 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

Budget Relief –Call CenterMore 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

Budget Relief – Data CenterMore 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

Budget Relief – Other IdeasMore 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

“Money grows on the tree of patience." 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

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

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

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

IT Budgets Savings

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

“Happy Savings”

Bill Rebello Feb 27 2009