Cost Saving for IT Infrastructure Management

In a turbulent economic environment there is tremendous pressure on IT organizations to take a hard look at the cost of running IT operations. Infosys' Rama Murthy Prabhala and Rahul M. Joshi discuss long-term and near-term strategies that will help IT Managers and CIO's reduce the costs of enterprise application operations.

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Medium Term — Reduce Complexity

Consolidate support, platforms and technologies - After elimination of redundant applications, it is prudent to consolidate the application infrastructure and support. Strategies for consolidation could include:

Shared Services - Setting up a shared services model for application support and maintenance activities: Implementation of a mature shared services model leads to support staff rationalization that can help in releasing the work force and re-deploying them to strategic projects. Retraining the support staff will help increase productivity and application per person ratio.

Infrastructure consolidation - Consolidation of application infrastructure and leveraging virtualization wherever appropriate helps drive down data center costs.

Enterprise Architecture consolidation - CIOs need to use this opportunity to assess the application platforms and build long-term and near-term strategies to consolidate and guide the organization toward next generation architecture. This will enable CIOs to be ready for the upturn and position them to support fast changing business demands.

Consolidation of application support - After the standardization of processes, IT managers should look at consolidation of support and maintenance both within and across application portfolios. We have observed savings of 5 to10 percent in overhead as well as operational costs due to consolidation.

Why not open source? - Open source products can be considered a feasible alternative to proprietary products. There are positives and negatives to this, based on the criticality of the use for which an open source product is being implemented. The adoption of open source products is recommended after taking into consideration the maturity of the product and its supportability. Lack of available support is a major hindrance to adoption. CIOs need to make a decision on the correct time to implement these products in their environment. Based on the available data, niche implementation of open source in the Web and middleware platforms has delivered more than 25% reduction in licensing costs for customers.

Standardize IT processes and operations - CIOs can bring in service management best practices; apply six sigma and lean principles to streamline the process of maintenance and support. Typically, organizations may achieve ˜ 5 -10% savings in operational costs due to standardization of processes through improved productivity. These savings vary depending on the nature of the operations.

Automate Manual IT tasks - CIOs need to automate routine activities to reduce manual effort and achieve higher process maturity in operations. Some activities that are natural candidates for automation include reporting, weekly and daily application check, alert monitoring, problem identification etc. We have seen organizations achieve ˜ 10 to 20 percent savings due to automation of processes. Companies must investigate the cost benefits of implementing Run Book Automation (RBA) solutions for operations. RBA tools have matured over the past couple of years and have helped organizations realize substantial savings on operational costs. A task based automation approach could lead to benefits of up to 8-10 % within the first three months. We have seen this consistently work well across 40 varied IT environments with varying degrees of maturity.

Process control - There is a need to evaluate the change and release management processes of applications, infrastructure, etc. CIOs need to implement stringent change control mechanisms to curb unauthorized change, which lead to unavailability of business applications and productivity loss. IT organizations could save ˜ 5 -8% in unplanned costs and better compliance to federal regulations and de-risk the IT operations by achieving process control.

Long Term — Business Innovation

Assess alternate delivery models - CIOs need to consider alternate delivery models to get faster cost benefits. Some of the delivery models that can be successfully deployed include:

• Transaction-based pricing models for support and maintenance.

• Pay-as-you-go models.

• Catalog-based pricing models.

• Unit of Work (UoW)-based pricing models have delivered an immediate cost benefit of up to 15 percent reduction in OPEX to customers who moved from traditional time and materials (T&M) and fixed price (FP) model.

• Managed Application Operations Models.

• Cloud computing: Source e-mail and office productivity applications through the cloud.

The above strategies have been used well as transformation levers in banking and healthcare verticals. Our experience suggests that significant upfront benefits can be achieved by choosing strategies that can be implemented without significant change management to begin with. For example, a leading investment bank saw a 15 to 20 percent reduction in TCO due to consolidation of service desk and movement from a T&M to a UoW model. The second phase is a strategic initiative that could involve multiple levers like automation, consolidation of technology and standardization of processes.

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