Published on April 28, 2008
Slide1: (INSERT EVENT FLYER) Introduction: Introduction Welcome! Dennis Dearbaugh, DTS Operations Director Presentation Slides will be available on the DTS website soon. Please complete your Evaluation Surveys! DTS Eye on Innovation: DTS Eye on Innovation Technology is changing every day. You are the ones transforming government through innovation. We are your utility to help make it happen. These Technology Days are to support this process. DTS Events: DTS Events We’ve seen over 1,000 of you at our events in the last year! Technology Days (like today) We consider this a service in itself We also host….. Customer Forums To interface directly with you User Groups To establish regular work groups across organizations Introduction (cont.): Introduction (cont.) Upcoming DTS Events 8/15 Gartner Local Briefing – Applications 8/22 DTS 3rd Quarter Security Forum (Filled) 9/06 DTS DB2 User Group Session 9/21 DTS-Gartner Technology Day: Enterprise Content Management & Online Reporting 10/04 DTS Invoice Customer Forum 10/17 DTS 6th Annual IT Security Awareness Fair 10/26 Natural Modernization Strategies Information Forum For DTS Event Calendar, visit here: http://www.dts.ca.gov/calendar/ Introduction (cont.): Introduction (cont.) Please welcome…. Jack Heine, Gartner VP, IT Asset Management Slide7: Best Practices to Save Money in IT Jack Heine Research Vice President Sacramento, CA August 7th, 2007 There are no Silver Bullets out there!!!: There are no Silver Bullets out there!!! Objectives: Reduce costs as much as possible without negatively impacting essential services Cut waste permanently, this will require process and procedure changes Consider charging for all new services, you want it …you come up with the bucks! Cost savings opportunities come in small, medium and large.. go after all of these! Cost reduction plan must include some quick hits Organize a cost reduction program, and keep it alive! Key Issues: Key Issues What specific internal policies and procedures can be can be changed to reduce IT costs? What actions can be taken in the area of software licensing and maintenance services to reduce costs? What actions can be taken in the area of resource acquisition to reduce costs? Use the 25 common IT cost containment techniques framework to identify opportunities: Use the 25 common IT cost containment techniques framework to identify opportunities 18. Refresh/ Upgrade Delay 22. Telephone Bill Audit 10. Automated Software Distribution 14. Open-Source Software Manage Demand Shift to Variable Cost Link costs to demand 2. IT PMO 4. Contingent Workers 5. Software as a Service 6. Capacity-on- Demand 3. IT Governance Improve IS Business Practices 20. Print Fleet Rationalization 19. Asset/License Management Change IS Operating Model 15. Data Center Consolidation/ Automation 16. Standard Operating Environment 17. Teleworking 21. Telephone Expense Management 25. Apps Dev Process Improvement 24. IT Operations Process Improvement 23. Contract Renegotiation Reduce Resource Costs Reduce Technology Cost 11. Server/Storage Virtualization 12. Voice/Data Network Reengineering 13. Voice over Internet Protocol Reduce Labor Cost 7. Staff Reconfiguration 8. Selective Outsourcing 9. Offshore Outsourcing Change Operating Practices IT cost containment Exploit Self-Service Opportunities: Exploit Self-Service Opportunities Self-service platforms offer opportunities to significantly reduce costs and improve service! Password Resets ($5.50 vs. $0.45) IVR Help Desk Diagnostic HR Administration Benefits Selection and Maintenance Financial Planning Career Development IT Supplies Provisioning/Electronic Catalog Ordering Eliminate Release-on-Demand Practices: Eliminate Release-on-Demand Practices Release-on-demand is the practice of continuously modifying software to meet customer requests for “nice-to-have” enhancements. Move toward major scheduled releases for software enhancements. Expect: 30% - 50% reduction in labor associated with applications maintenance. Improved break/fix ratios for applications Better code quality and more effective testing Revisit Disaster Recovery Plans: Revisit Disaster Recovery Plans Establish inter-agency backup sites Review and reprioritize application requirements Review support site tools, keep only essential items Review Telco requirements, consider cost effective alternatives Low-Hanging Fruit — Audit Invoices: Actual Client Study Low-Hanging Fruit — Audit Invoices IT Standardization: The Ongoing Benefits: TCO Reduced 23% Standardized Desktop Configurations IT Standardization: The Ongoing Benefits Key Issues: Key Issues What specific internal policies and procedures can be can be changed to reduce IT costs? What actions can be taken in the area of software licensing and maintenance services to reduce costs? What actions can be taken in the area of resource acquisition to reduce costs? Software Costs, Usage and Smart Contracting: Evaluate against buying only software to be installed in the next 6 to12 months. Negotiate correctly to remove unused licenses from support. Ensure that you understand any license restrictions. In the agreement, include the right to new functionality. What Was Licensed: What Is in Production: Module A $250,000 Module B $400,000 Module C $125,000 Module D $50,000 Module E $35,000 2,000 Named Users @ $1,250 $2,500,000 Total List Licenses: $3,360,000 Discounted 50% $1,680,000 Yearly Maintenance @ 20% $336,000 Module A $250,000 Module B $400,000 Module C $0 Module D $0 Module E $35,000 1,200 Named Users @ $1,250 $1,500,000 Total Software Using: $2,185,000 Discounted 40% $1,311,000 Yearly Maintenance @ 20% $262,200 Shelfware Cost: $73,800 Software Costs, Usage and Smart Contracting Software Maintenance Cost: Five Years: Assume a 50 Percent Discount on the $4 Million Software: $2 Million Initial License Cost Maintenance Maintenance Maintenance and Support and Support and Support at 18% at 20% at 22% First Year: 2003 $ 360,000 $ 400,000 $ 440,000 Second Year: 8% $ 388,800 $ 432,000 $ 475,200 Third Year: 8% $ 419,904 $ 466,560 $ 513,216 Fourth Year: 8% $ 453,496 $ 503,885 $ 554,273 Fifth Year: 8% $ 489,776 $ 544,196 $ 598,615 Total Maintenance: $2,111,976 $2,346,641 $2,581,304 Sixth Year: Maintenance cap is over, based on “then-current” list price: $4,862,025 Due 2008 $875,165 $972,405 $1,069,646 Discuss rights to move to alternative support levels, such as silver/gold/platinum. Software Maintenance Cost: Five Years Key Issues: Key Issues What specific internal policies and procedures can be can be changed to reduce IT costs? What actions can be taken in the area of software licensing and maintenance services to reduce costs? What actions can be taken in the area of resource acquisition to reduce costs? Purchase Used vs. New Equipment: Purchase Used vs. New Equipment Cut acquisition costs by as much as 75% Common business practice, “used” does not mean “junk” Most PCs for example come with 90 day warranty Extended technological life makes this practice more attractive today than in the past May be able to acquire extended warranty coverage Consider replace vs. fix policy Consider “Maintenance” Alternatives: Consider “Maintenance” Alternatives Third party maintenance can be as good or better than OEM ……..at half the cost Consider dropping maintenance after initial equipment warranty period expires, use replace rather that repair mode in out years Explore reduced SLAs for non-critical equipment Explore opportunities to reduce software maintenance costs, audit maintenance billing, and drop maintenance where applicable or chose other maintenance levels Implement Demand Management: Implement Demand Management Reduce Storage Requirements Cull out old and duplicate data files Implement and enforce tiered storage architecture Consider Storage on Demand arrangements for cyclical storage requirements For many organizations storage is growing at 65% CAGR Reduce Print Costs and Demand Charge for all print services (this can significantly reduce demand) Eliminate most personal printers (huge potential savings) Ensure all supplies are centrally purchased Make sure color printers are not used for non-color jobs Cost Reduction Opportunity Analysis: Invoice Reconciliation Sample Scoring Model 8%–15% Cost Reduction Low 0 - 6 Score Weighted Score Weight % Potential Value Mgmt. Priority Months to Value Objectives Probability of Success 0.9 Do This First! Cost Reduction Opportunity Analysis Recommendations: Recommendations If you’re serious about IT cost savings, then have a plan Don’t look for a single panacea for cost savings opportunities Look in new places for your next IT cost savings opportunity Long-term, sustained cost containment is a PROGRAM …………………. not a project ! THANK YOU!: THANK YOU! Please turn in your Evaluation Surveys! Look for future events here: http://www.dts.ca.gov/calendar/ See you next time…….