Asset Review – 15%
An extensive financial review of IT assets by an outside financing organization could result in significant and rapid capital or operational expenditure (CapEx or OpEx) savings. Aside from the traditional financing or leasing deals, these companies are also willing to do asset swaps, lease/buybacks, project financing.
These firms have the ability to work with the corporate finance or treasury department and IT to structure financing terms that map to the requirements and strategies of the enterprise. By bringing them in to work with the appropriate financial unit and IT, there is a good chance that some creative financial opportunities can be identified that can result in reducing major CapEx or OpEx by up to 15%.
Moreover, many potential PC leasing opportunities that could cut acquisition costs by 15% are not able to be executed because the enterprise does not have a decent asset management process. For example, companies without strong asset management processes and controls are in possession of up to 25% more pagers, PCs, PDAs, and other client devices that should have been removed from the companies’ books. Compounding this problem is that most of these unneeded or unused units are still included in the software asset counts.
Thus, the company is paying for installed but unused software and unnecessary network connectivity, and is allowing a sellable asset to depreciate from a residual value of 10-to-15 percent to zero. IT executives have an opportunity to readily fix this problem and start recouping any added expenses within a 12 month period. This is an investment worth putting into the budget as the return on investment (ROI) is attainable in a short period of time.
Strategic Procurement – 40%
On a more global scale is the need for a strategic procurement office and process. By creating an organization that aggressively pursues contract and vendor management, enterprises can shift from being on the defensive in their dealings with suppliers to an offensive posture. This alteration of attitude and position can have impressive results, with gains up to 40%. Moreover, these organizations pay for themselves year after year.
Business Management – 10%
Another area of weakness is business management, including alignment with the business and change, configuration, project and service management. One of the biggest cost items is investment in projects that fail to achieve the desired business objectives.
Studies have shown that companies are spending 20–to-25 percent of their IT budgets on new project development and that more than half of that money (some studies say up to 75%) is wasted in projects that are cancelled, fail entirely, or do not achieve their business objectives. Implementation of better IT alignment and project portfolio management processes can significantly cut those costs.
IT organizations can become more efficient and effective in the delivery of their products and services. A quick hit can be a refinement of the change management process. An effective change management process can reduce the number of changes, improve quality, and shorten time to market and thereby reduce the overall costs of projects by five percent or more.