Email a collegue.| Headline: | IT Costs – What Finance Directors Need to Know |
| Description: | Does your IT budget give value for money or add to the value of the business? Asking the IT department can often leave you none the wiser.
Nevertheless it is important to understand the value that your current infrastructure delivers to the company and produce a strategy to maximise its value. Often, this can be difficult because of legacy elements embedded in companies' infrastructure. However, optimising the IT system is a sure-fire way to give your business a competitive edge. So what do you need to know? All areas of the business have some focus on reducing their costs. However, with IT it is not as simple as making someone responsible for making savings. In order to manage and reduce IT expenditure year on year, and do so in a sustainable manner, you must have a complete handle on IT expenditure, contractual conditions, the utility and business benefits derived from the infrastructure, the market place and your supplier. To be successful there must be someone in the business responsible for the following tasks: Gathering all the contract information within the company into one accessible place. Understanding how the IT strategy impacts on the contracts your company has or needs. Understanding how the IT system is structured and managed. Understanding the variable value (utility) your company gains from different IT systems, software and processes. Ensuring that suppliers are managed at an appropriate level and give value for money. Ensuring the support contracts meet your company business continuity needs. Ensuring you do not jeopardise your internal SLA’s, and managing that budget. Understanding the supplier market place. Understanding individual suppliers, their needs and drivers. Planning your strategy and objectives. Consolidating contracts and equipment. Negotiating larger discounts. Revising the levels of cover. Revising and canceling contracts covering non-essential hardware and software. Integrating an ‘overall cost of ownership’ approach into future IT infrastructure strategy and planning. The range of skills and expertise required to perform this function is considerable and include: contract Law, facilitating and influencing, tendering, license management, market and supplier knowledge, negotiation, project management, risk analysis, and service level management to name a few. Getting started isn’t easy and takes time. However, once accomplished, it will expose the value of IT to the business and enable you and the board to make informed decisions on budgets, services and systems with the IT department. This can be a big step and one that IT directors are hesitant about undertaking without help. To see where you stand, you need to consider a number of points: Do you have a manager with full time responsibility for your contracts or cost reduction? You will never get the same results and maximise cost savings if someone has another ‘day job’. Do you have a process in place to ensure you are in charge? If you start your renewal process from a quote or invoice from a supplier, you are catching up and you are not in control. Do you know what the suppliers and the sales director's real drivers are? If you do, you will know when or why your supplier ‘must’ sign a deal with you and you can start to fulfil their needs as part of the deal. Do you know how to negotiate with your supplier? What have you got that’s important to the supplier – can this be conceded at no cost to you, but a big win to the supplier in return for what you want? And finally, don’t blame the IT director or his department if this isn’t the case – you now know what to do. |
| Date: | 06.07.2005 |
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