| What measures CIOs should adopt to cut IT opex without affecting the efficiency and which capex projects should be adopted during this economic meltdown? |
| Posted by Atul Bansal, Stewart & Mackertich Wealth Management Ltd on
12/16/2008 |
Reply |
We CIOs are under immense pressure during this economic meltdown where 'cost cutting measures' is like a buzz words in the CEOs mind. IT became the obvious target and became more poorer day by day but expectations are not.
What specific measures we CIO community should adopt to survive and excel too. Innovative use of IT is the key.
Please share how to reduce opex in organisation without affecting the organisation's efficiency and competitiveness and which specific projects should be taken with the available capital.
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| Re: What measures CIOs should adopt to cut IT opex without affecting the efficiency and which capex projects should be adopted during this economic meltdown? |
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Replied by Arun Gupta, Shoppers Stop Limited
on 1/2/2009
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IT investments need to be separated into 2 buckets, operational costs and projects.
Operational cost comprises of networking, AMC (Hardware and Software), people cost, support services like FM, breakfix maintenance etc. Most of these are cost of doing business and have limited flexibility. Some actions that can help here are:
1. Talk to business to ascertain which locations are critical and which are not. For critical locations, you do not cut anything, whereas for the non-critical ones you could scale down support or networks from Leased lines/MPLS to say IP VPN or broadband services. This will have an impact, but one that business is ready to accept.
2. Review your licenses and their AMC paid. You may not be using all of them and thereby you could reduce your payout in consultation with the vendor.
3. Negotiate differential levels of service for AMC, critical and non-critical equipment, which might give some relief.
4. Cut down non-core activities and outsource them, the flexibility to scale up or down will help.
5. Aggressively manage consumables since you do not control usage of printers etc but pay for toner/refills. Transfer to pay per use model and let the cost be debited to business units based on usage. This will make them aware of their expenses and help in reducing.
Coming to projects, work on fixed cost models rather than T&M. This will give you some benefit and also keep the users on their toes to participate else the cost goes up. Negotiate hard here and use smaller niche vendors who may give you better rates.
Beyond these, if you find other tips, do let me know too. |
| Re: Re: What measures CIOs should adopt to cut IT opex without affecting the efficiency and which capex projects should be adopted during this economic meltdown? |
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Replied by Himanshu Rastogi, Chemplast Sanmar Ltd.
on 4/7/2009
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Arun has really covered most o fthe aspects. Possible addition to these could be
1. Extending the life cycle of assets - is it really required to replace the laptop after 3 years?
2. Introduce sharing of desktops - avoid replacements of old machines
3. Review projects and take up only where the business return is immediate and user too is keen
4. Start using freewares which are commercially free to use in place of some of the office productivity tools - reduces the AMC and additional license costs.
5. Focus projects to consolidate your IT operations - this does not need fresh investments (should result in Quality improvement at lower costs of operations) but gives you the opportunity to complete your documentation and review of Application Portfolio and preparation time for the next upturn cycle. |
| Re: Re: Re: What measures CIOs should adopt to cut IT opex without affecting the efficiency and which capex projects should be adopted during this economic meltdown? |
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Replied by S.P. Arya, Amtek India Limited
on 6/9/2009
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A bit of my thoughts on cost cutting measures to add to the excellent ideas already given by Arun and Himanshu:
1) We have aggressively renegotiated our landlines and mobile plans for whole of the group and could cut communication cost by 30-35%.
2) Since we have more than 15 plants in NCR and 6 in Pune region with MPLS VPN connectivity. We have taken centralized thick internet bandwidth and high end firewall at one place which resulted into cutting of individual plant expenses on internet and firewalls. This has also resulted into a cost reduction to an extent of 40% with central control over internet usage.
3) This one is quite different and challenging as we just scrapped all AMCs except for servers and other critical equipment like UPSs. For desktops, laptops and printers we do it on per call basis which also has resulted into huge saving as we found that during a year only 10-15% desktops/laptops or printer got in trouble and required repairs rest were running smoothly without any trouble. This has resulted into a saving of around 60% or more on their AMCs. I know so many my peers would not agree on this but we did it. For me also it was a tough decision but not regretting now. We avoided trimming the team by extending their responsibility to take care of petty issues with end users.
4) Centralizing all IT purchases from corporate office has also resulted into big savings because of volume we could generate and tough negotiations we did.
Thanks
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