reduction of ict cost: strategies towards clean it audit and it spending 28 may 2013 razak alli
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Reduction of ICT Cost: Strategies towards clean IT audit and IT spending 28 May 2013 Razak Alli . Agenda. Introduction Governance Requirements SITA Initiatives ICT Cost Reduction Strategy Clean IT Audit. 2. Introduction. - PowerPoint PPT PresentationTRANSCRIPT
Reduction of ICT Cost:
Strategies towards clean IT audit and IT spending
28 May 2013
Razak Alli
Introduction Governance RequirementsSITA InitiativesICT Cost Reduction Strategy Clean IT Audit
Agenda
2
Introduction Total annual IT expenditures range from 2% to 15% of annual
revenues (Source: ITGI – IT Governance Performance Case Study)
Reducing the cost of ownership of IT assets directly linked to supporting business process and decision making processes governing IT spending
Moore’s Law—”the number of transistors on integrated circuits doubles approximately every 4 years”. This law correlates with a decrease in the cost of computing power. This availability of cost-effective computing power also corresponds
with an increase in the global generation of data by devices, machinery, appliances and humans.
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King III - King Report on Governance for South Africa 2009
Chapter 5 – The Governance of Information Technology The board/accounting officer should be responsible for information
technology (IT) governance IT should be aligned with the performance and sustainability
objectives of the company/business The board/accounting officer should delegate to management the
responsibility for the implementation of an IT governance framework The board/accounting officer should monitor and evaluate significant
IT investments and expenditure IT should form an integral part of the company’s risk management The board should ensure that information assets are managed
effectively A risk committee and audit committee should assist the board in carrying out its IT responsibilities
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IT Governance Driving Improved Performance Most common IT governance objectives are focused on cost
containment (including efficiency, standardization, and automation) and risk reduction (including compliance, security, and public scrutiny of IT failures).
For most businesses, cost containment is desirable, but not a business strategy.
As IT becomes a more strategic business enabler, organizations should build on existing cost and risk focused IT governance initiatives, and expand objectives to also include meeting strategic business objectives, improve agility to meet changing business needs.
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SITA Initiatives - Partner and Supplier Relationships
Implementation of the Partnership ModelForming strategic partnerships with main suppliers and
industry for high consuming services by clientsRevision of current contracting process with suppliersUsage of State Owned Companies (SOCs)New contracting framework implemented
Umbrella agreements allowing improved cost savingsNot on a transactional basisNegotiating new deals with suppliers for better costing
savings “Lock In” with software vendors (long term better cost
savings)6
SITA Initiatives - Partner and Supplier Relationships (continued)
Negotiations with critical suppliers within the environment
MIOS Compliance (Minimum Interoperability Standard)
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SITA Initiatives - Infrastructure Environment
Cost management and saving initiatives:Targeting transversal systemsShared infrastructure reducing scopeUse of virtualisation and convergenceMoving decentralised infrastructure to centralisedCentrally managed infrastructure environment
leading to improvement of administration and security
Robust and secure infrastructure (preventative)Consolidation and synchronisation of applications
and toolsets used8
SITA Initiatives - SLA Contracting Method
Service Based SLAs - Redevelopment of SLAs according to services provided to clients
Single SLA per client with services identifiedDefine level of performance via standardised manner
(not managed on “per item basis”)Service Based SLAs based on approved Costing and
Pricing Models in alignment with approved Service Level Catalogue
Packaging of services to include value added services
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SITA Initiatives - Strategic Projects
Implementation of key identified projects as per Board approval:Could Computing IFMS E-GovernmentConvergence Partnership ModelCosting and Pricing Model Unified Communication (lowering broadband prices
contributing)
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Supply Chain Management: Strategic Goals
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Provide IT procurement to ensure that the Government gets value for money
Improve Procurement
Processes
Improve Purchasing
Power
Drive Economies of
Scale
Saving on acquisition of ICT goods and services; Number of industry partners established in the acquisition of
ICT delivery of goods and services; and Monitor and enforce supplier performance compliance.
Improved Supply Chain Management Mean Time To Respond;
Drive 30% of acquisition spend through SMME; Automate procure to pay process; and Drive 100% electronic ordering with suppliers.
Improved Supply Chain Management turnaround time: 90 days on Bids 90 days on preferred list RFQs 45 days for contract finalising 30 days for Adhoc RFQs
Create & centralise strategic sourcing Standardise procurement processes.
Improved Supply Chain Management Turnaround Times
Acquisition Method Target Actual
Tenders (Bids) 90 Days 127.55 Days
Preferred list RFQ’s 90 Days 72.23 Days
Contract Finalisation 45 Days 37 Days
Adhoc RFQ’s 30 Days 16.65 Days
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Cost Saving For Government
SITA has entered into four (4) Strategic Partnerships ICT to provide goods and services to government at a discounted price.
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Cost Saving For Government
SITA Supply Chain Management has managed to save government an amount of R 262 652 243.05 on acquisition of ICT goods and services(2012/2013).
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Best Practices from Industry (continued)
ICT Procurement Strategy: Cost Reduction and Integration Strategy
Alignment of IT Strategy with ICT Procurement Strategy
Optimum Return on ICT Investment (usage of COBIT processes)
Controlled IT spending via approved architectures and technology stacks incorporating:IT cost transparencyBenchmarking of IT Service Costs Enforcement of IT Cost reductions
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Best Practices from Industry (continued)
Design to Delivery: contract lifecycle for investing in ICT
On time, within budget, to specification
Strengthen IT-Finance Collaboration to Drive ROIIT Cost quality thresholdsBusiness process harmonisationProcess complexity reviewMetrics and success measurementsTransparent reporting
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ICT Cost Reduction Strategy
Cost reduction should be performed via a structured approach considering the long-term impact
Should be performed for improving efficiency and effectiveness ICT Cost Reduction Strategy similar to Generic Enterprise Cost
Reduction Strategies Examine all IT spend and prioritise the right cost reduction
opportunities Adopt an end-to-end approach by considering:
All sources of IT costs - Leverage multiple views to examine all sources of ICT spend
Analyse drivers of the IT costs Prioritise the right opportunities Create an organisation wide portfolio of investments to achieve
measurable savings17
ICT Cost Reduction Strategy (continued)
Make sure scope includes all components of IT expenditure across the enterprise ecosystem
Ensure proper engagement with the right stakeholders Examine all sources of IT spend using the following views:
Expenses versus Investments Locked in spending per year versus new initiative spend Monitor expenses versus investments ratio
Assets versus IT Capabilities Spend on business applications, infrastructure and data to
deliver IT capabilities Spend on IT capabilities is on people, process and
technology and assets required to deliver IT capabilities
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ICT Cost Reduction Strategy (continued)
Lines of Business (LoB) IT spend by LoB’s provides insight into the IT landscape Best practices to be applied across LoBs Standardisation of processes across LoBs
Fixed versus Variable Maintain a mix of fixed and variable costs Trade off of maintaining capabilities in-house at fixed costs
versus outsourcing them at variable costs.Business Process
Analyse IT spend by business processes to provide the cost to serve the end customer
Identify cost reduction opportunities by business process redesign and supporting IT solutions
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Clean IT Audit
IT Audit is a subset of the overall Audit Department
Cannot achieve Clean Audit ain the absence of issues without the other environments
Size matters – In-house, outsourced or hybrid
If outsourced:Ensure the right to audit by the third party Must be included in signed agreementCompliance to SAS70 (replaced by SSAE16) – Auditor General
provides this service at SITA annually
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Clean IT Audit (continued)
If in-house:Good people and capabilities Core Skills and IT Technical abilities Streamlined processes, policies and proceduresHigh levels of compliance
IT Compliance framework and compliance officer
IT compliance and monitoring activities
SITA can only assist in the achievement of a Clean IT Audit if in control of the full IT function
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Thank You
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