Flying with IT through Market Turbulence

Transcription

1 IT ADVISORY Flying with IT through Market Turbulence ADVISORY

2 Agenda Global Financial Crisis IT Strategies for Global Economic Recession IT Consolidation Software Asset Management 2

3 The GFC Global Financial Crisis 3

4 What are the board thinking about? More jobs cuts, that will not look good in the newspapers We need to further cut costs, but where I have no idea what to do Outsource the bloody lot of them! Stop thinking!! ACT!!! The way things are going I am not sure this company will survive Uh?? I wonder what I am having for dinner? 4

5 We have built IT infrastructure to include the icing, cream on the cake 5

6 We have no icing, not even colouring what now? 6

7 IT s share of the cake 7

8 The two of them need to focus on saving the organisation What do we do together now? Cost of compliance is too high Governance Risk and Compliance Cash is king and always will be Cash Management Systems Our balance sheet is too heavy Offshore and outsource We have thirty or forty general ledgers; the cost is killing us One ERP systems please 8

9 People are going to spend money but on what? CEO COO CFO I need to get cash Will sell, beg to get cash Spend if we can stay liquid Find low cost destinations Outsource and offshore operations Get the operations lean and mean Need to reduce expenditure Need to reduce expenditure Where is the money going to come from? 9

10 IT Strategies for Global Economic Recession 10

11 There are four primary value levers for IT executives to help improve IT s impact on shareholder value Improving IT s Impact on Shareholder Value 1. Business Alignment Align IT investments with business priorities Increase Operating Profit (Net, After Tax) Improve Deployment of Capital Decrease Operating Expenses Reduce Operational Risk Increase Revenues Reduce the Cost of Capital Reduce Capital Utilization Improve Capital Productivity Reduce IT Expenses Reduce Business Expenses Reduce Fixed Assets Reduce Working Capital Demand 2. Operational Efficiency Reduce the Cost of Providing IT Services 3. Operational Effectiveness Improve Business Performance Through IT 4. Capital Efficiency Improve the Return on Capital Deployed 11

12 Lever 1 - Business Alignment Increase Operating Profit (Net, After Tax) Improving IT s Impact on Shareholder Value Improve Deployment of Capital 1. Business Alignment Align IT investments with business priorities Decrease Operating Expenses Reduce Operational Risk Increase Revenues Reduce the the Cost of of Capital Reduce Capital Utilization Improve Capital Productivity Reduce IT Expenses Reduce Business Expenses Reduce Fixed Assets Capital Reduce Working Capital Demand Tactical: Shut down/ defer initiatives not aligned with top business priorities Re-scope initiatives to essential requirements Stop working on demand that has bypassed formal approval Halt projects lacking adequate business commitment and involvement Structural: Enhance demand management mechanisms to appropriately prioritize investments Rationalize redundant investments, solutions and operations across business through re-use, sharing and common approaches Invest to accelerate implementation of strategic capabilities Establish governance mechanisms to identify, encourage and enforce business-wide collaboration and sharing 12

13 Lever 2 - Operational Efficiency Improving IT s Impact on Shareholder Value 2. Operational Efficiency Reduce the Cost of Providing IT Services Decrease Operating Expenses Increase Operating Profit (Net, After Tax) Reduce Operational Risk Increase Revenues Reduce Reduce the the Cost Cost of Capital of Capi Improve Deployment of Capital Reduce Capital Utilization Improve Capital Productivity Reduce IT Expenses Reduce Business Expenses Reduce Fixed Assets Capital Reduce Working Capital Demand Tactical Cut non-critical enhancements Reduce contractors Reduce in-house staff Cut service levels Reduce service delivery staff & contractors Reduce capacity/ defer capacity upgrades Analyze third-party work orders to ensure accuracy and compliance with rates, refunds, penalties (e.g., sourcing, assets, energy) Evaluate maintenance and service agreements Cut maintenance or switch to T&M Consolidate, terminate or renegotiate Tighten & enforce policies e.g., cell phones, virtual meetings, off-site meetings and training Accelerate contraction e.g., early retirement, early project completions Structural Develop alternative sourcing strategies Rationalize contractor relationships IT Consolidate and standardize application and technology platforms Implement tiered service levels Enhance vendor and alliance management capabilities Improve purchasing power through buying consortia Implement automation tools for end-to-end IT process improvements Enhance program management capabilities Extend self service/ employ portal capabilities Leverage emerging technologies to reduce expenses 13

14 Lever 3 - Operational Effectiveness Improving IT s Impact on Shareholder Value Increase Operating Profit (Net, After Tax) Improve Deployment of Capital Decrease Operating Expenses Reduce Operational Risk Increase Revenues Reduce the the Cost of of Capital Reduce Capital Utilization Improve Capital Productivity Reduce IT Expenses Reduce Business Expenses Reduce Fixed Assets Capital Reduce Working Capital Demand 3. Operational Effectiveness Improve Business Performance Through IT Tactical Identify focused, quick-win opportunities to accelerate revenues Cut poorly-supported projects Fix systems with high operational failure rates Accelerate implementation of high-impact, cost-reduction projects Structural Enhance business partner relationship management practices Reengineer business processes with improved use of IT Implement IT chargeback mechanisms to link charges for IT services to consumption Develop enterprise architecture to improve technology alignment with business model Sell or license value-generating assets e.g., proprietary software, IT-enabled business capabilities 14

15 Lever 4 - Capital Efficiency Increase Operating Profit (Net, After Tax) Improving IT s Impact on Shareholder Value Improve Deployment of Capital 4. Capital Efficiency Improve the Return on Capital Deployed Decrease Operating Expenses Reduce Operational Risk Increase Revenues Reduce the the Cost of of Capital Reduce Capital Utilization Improve Capital Productivity Tactical Reduce IT Expenses Reduce Business Expenses Sell technology assets and lease back as services Lease rather than buy new technology Increase utilization of existing technology Reduce or defer capacity upgrades/additions Divest capacity and associated support, licensing and maintenance Cut or re-scope discretionary projects & technology upgrades Halt or defer work Save on licensing/ maintenance increases on added Technology Cut/ defer non-critical (major project) development Reduce contractors & in-house staff Defer technology upgrades, support, licensing and maintenance Accelerate existing plans to outsource/ offshore Reduce contractors & in-house staff Reduced demand for technology capacity Reduce Fixed Assets Capital Reduce Working Capital Demand Structural Maximize application development productivity Develop sourcing strategies for capital intensive activities e.g., technology infrastructure, data centers Build to optimum capacity; maximize use of available capacity e.g., server virtualization Outsource peak volume requirements Establish formal demand management process to optimize capital deployment decision-making 15

16 IT Consolidation 16

17 IT Consolidation Key Components IT consolidation enables businesses to reduce costs and improve business agility by: Consolidating existing hardware resources based on virtualization Optimizing physical and human resource requirements, and simplifying physical environment Management console Server Group 1 Server Group 2 Management Consoles Server Group 3 Physical/Virtual Management Fibre Channel Storage Array Fibre Channel Switch Fabric / IP Network iscsi Storage Array NAS Storage Array Consolidated Servers Consolidated Storage VHD 17

18 Server Consolidation Equal or increased capacity with less hardware 6% utilization 10% utilization Server utilization 9% utilization 11% utilization 14% utilization 50% utilization Number of physical servers Power usage Floor space 18

19 Storage Consolidation Storage consolidation optimizes storage implementation for a virtualized environment based on consolidated, shared, and virtualized storage, saving cost, and improving business agility. Storage utilization Business agility VHD Shared Storage Number of physical storage Power usage Floor space Energy for cooling Provisioning 19

20 Physical/Virtual Management Effectively managing physical and virtual entities is critical to improving efficiency of time, cost, and resources. Physical/Virtual Management IT efficiency Resource utilization Consolidated Servers Consolidated Storage VHD Management complexity 20

21 IT Consolidation Dynamic, reliable, and scalable virtualization platform Comprehensive solutions for a data center to maximize resource utilization with longer-term vision of integrated virtualization technology Partner Solutions Storage infrastructure and storage management Flexible integration with storage devices of industry leading partners and support of efficient storage utilization Physical/Virtual Management Unified integrated solution for managing entire environment both physical and virtual assets, and both server and desktop resources 21

22 Sample of IT Consolidation Architecture (Microsoft) Dynamic, reliable, and scalable virtualization platform 22

23 Software Asset Management (SAM) 23

24 SAM Processes Areas and GRC Governance Organizational Management Process Risk Control Environment Planning and Implementing Processes Corporate Governance Process Roles and Responsibilities Policies Processes and Procedures Competence in SAM Planning Implementation Monitoring and Review Continual Improvement Software Asset Identification Inventory Process Software Asset Inventory Management Software Asset Control Software Asset Record Verification Core SAM Processes Verification and Compliance Processes Software License Compliance Software Asset Security Compliance Primary Process Interfaces for SAM Life Cycle Process Interfaces Conformance Verification Operations Management Processes and Interfaces Relationship and Contract Mgmt. Compliance Financial Mgmt. Service Level Mgmt. Security Mgmt. Change Management Process Software Development Process Software Deployment Problem Management Process Acquisition Process Software Release Mgmt. Process Incident Management Process Retirement Process Source: ISO/IEC

25 Software Licensing Reconciliation Perform a software inventory Match licensees with software installed Licensing documentation Software s Manufacture Name Software Title Edition Version Language Operating System/ Platform CPU Machine Name Owner Contract/Agreement/Package/Software Assurance License Duration License Type Installation/Location Number Authorized Purchase Order Number Fee SAM Database Licensees BalanceSheet 25

26 SAM Tools

27 SAM Tools 27

28 Demonstration Sample KPMG Script SAM Audit Tool 28

29 Sample Software License Preview SAMPLE 29

30 Sample of Software Deployment Summary SAMPLE 30

31 Benefits of SAM Risk Management Legal and regulatory exposure (e.g. intellectual property, compliance) Risk of interruption to IT services (e.g. illegal software use, malicious) Cost Control & Savings Reduced direct costs of software and related assets Reduced time and cost for negotiation with suppliers due to information availability Competitive Advantage Support Corporate Governance Better quality decision making because of more complete information availability 31

32 See KPMG Teams at KPMG Booth.. for more information.. 32

33 Presenter s contact details Chanarat Paraaungkul Manager KPMG Phoomchai Business Advisory Ltd cparaaungkul@kpmg.co.th 33

34 Disclaimer The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 34