IT Cost Reduction The current downturn in the market is forcing C-level executives to continuously look for ways to reduce IT costs without impacting business goals. An effective cost reduction strategy looks across multiple dimensions of IT while aligning the cost reduction levers with business priorities. A structured approach to cost reduction supported by strong governance and program management can lead to enduring benefits from the program.
Key Challenges Challenges Imperatives • Lack of clearly defined objectives, goals, constraints, • Clearly establish objectives, measures of success, constraints, parameters and measures of success accountability and ownership from key stakeholders • Lack of commitment, sign-off, ownership and accountability from key stakeholders to actually deliver the savings • Lack of transparency and visibility into current IT costs and cost drivers, including shadow IT spending • Cost reduction addressed via isolated efforts • Multiple efforts addressing the same set of costs
• Understand the life cycle for IT cost reduction levers to evaluate the probability of success • Review IT cost reduction levers along multiple dimensions Assets vs. Capabilities & Investments vs. Expense • Establish a well-defined structure and governance mechanism for execution • Align IT cost reduction efforts and priorities with the business objectives
How Infosys Can Help Infosys IT Cost Reduction Framework The Infosys framework evaluates IT spending across multiple dimensions thereby providing visibility into critical levers to reduce IT costs: • Assets vs. Capabilities • Investments vs. Expenses
The Infosys implementation approach helps you: • Identify the cost reduction opportunities • Analyze and establish the opportunities aligned with business priorities • Formulate an implementation plan
IT COST REDUCTION IMPLEMENTATION APPROACH
Views of IT Spend
Launch
Discovery & Analysis 1 IDENTIFY
Investments Re-prioritize based on business alignment and priorities.
Expenses Reduce discretionary spending (e.g. training, meetings, travel, etc). More reductions require taking a hard look at ‘Assets’ and ‘Capabilities’
Assets vs. Capabilities Investments vs. Expenses Cash ow vs. P/L
OPPORTUNITIES
2 ANALYZE & ESTABLISH
Roadmap 3 DEVELOP PLAN
OPPORTUNITIES
Spend on Assets Reduce operating expenses for assets through rationalization (simpli cation, standardization and consolidation of Infrastructure, Applications and Data)
Fixed vs. Variable
Spend on Capabilities
Lines of Business
Simplify, automate and relocate the execution of the
Business Process
capabilities (e.g. spending on people and process)
Engagement Charter
Establish
Analyze current IT Spend
Review IT simpli cation & cost reduction initiatives
Analyze Investment Opportunities - Assets - Capabilities - Investments
Startup: Ground rules
simpli cation & cost reduction potentials
Validate strategies with stake holders
Prioritize
Develop program plan, Business Case, Proforma IT Budget
Identify Additional Opportunities
Additional Agree on engagement opportunities scope and engage stakeholders
Agree on simpli cation & cost Program plan, redction levers/ strategies business case, proforma IT budgets
Infosys identified potential cost reduction opportunities aggregating to 20% of the IT budget for a large financial services firm
• Infosys developed a strategic IT roadmap presenting the rationale and approach for transforming the client’s IT capabilities. • Infosys identified potential IT cost reduction opportunities in the following areas: • Infrastructure asset utilization • Application portfolio rationalization • Strategic sourcing • Application development and maintenance
Infosys helped one of the largest issuers of Infosys developed a roadmap to reduce IT costs by 10% for a large credit rating agency traveler’s checks in identifying IT optimization and transformation initiatives resulting in reduction of the IT budget by 14% • Infosys defined the baseline IT costs • Infosys defined the optimization & for the organization and analyzed transformation initiatives supported the financials to identify the impact of by business cases, technical various cost reduction levers feasibility analysis, risks and mitigation plan • Infosys then defined key cost • Key initiatives included: reduction initiatives: • Improving the solution delivery processes • Optimizing sourcing model • Streamlining demand management
• Migrating select high cost applications from mainframes to Windows • Consolidating and eliminating high cost infrastructure
• Setting up shared services across business units • Creating CoEs for key capabilities
Allied Services Business Process Outsourcing
Modular Global Sourcing
We offer business process outsourcing solutions to our global clients by leveraging process, domain and people management expertise. We manage risk for our clients through a scalable, cost-effective and predictable delivery platform.
A strategically mature alternative to total outsourcing and ad-hoc offshoring. Align your souring strategy to your business strategy, modularize your applications and processes and leverage the power of Global Delivery Model.
Independent Validation Infosys provides adequate validation and verification services to ensure that you get the best value from your applications. A “must have” service if you are serious about long term leveraging of your application assets.
Enterprise Application Integration Make the whole of your IT applications much greater than the sum of its parts. See immediate and dramatic productivity growth.