IT Cost Management with Amalytics Software

Content: Press, Consultants & Analysts have been talking about the ‘New Normal’ 3 core themes that characterise the ‘New Normal’ 3 Quot...

The vast majority of modern businesses take critical decisions based on analysis carried out with Microsoft Excel. But the quantity and complexity of data required for these analyses can result in a large margins of error – potentially leading to flawed decisions. Tools exist in the market that provide an alternative to solely using Excel, but these suffer from the same constraints as Excel even if they can handle the scale of data better.

The transition to a Shared Service Operating model typically involves the creation of new Group-owned Legal Entities (LEs). These LEs may or may not be domiciled in the same location as that of the current legal entities providing the services. While some of these entities are setup as asset holding entities for the purposes of tax efficiency, others are setup to consolidate staff or vendor contracts to maximise procurement and productivity efficiency gains respectively.

IT Costings is a means to an end. It is meant to achieve a business objective typically driven by either the Finance or IT departments. A consumption-based IT Costing Model is complex with many tiers of cost allocation. In comparison, Cost Allocation Models for other departments such as Legal, HR, is far simpler as it doesn’t involve IT Infrastructure.

Our team has several decades of experience in producing cost/value reports for C-level executives. This ‘IT Value Statement’ provides you with an example of what you could prepare for your Management easily in less than an hour.

Digital Transformation shouldn’t necessarily be seen as a Cost Transformation exercise. In a traditional cost transformation exercise, the typical levers to lower costs are a reduction of the unit costs of resources through initiatives such as offshoring or shared services, to leverage economies of scale and standardisation. Digital Transformation, on the other hand, transforms the cost base through the adoption of technology.

Pitfall #1: Attempting to take on too much too soon Pitfall #2: Not employing people with requisite skillsets Pitfall #3: Failure to gain cross-departmental senior ...

Modern businesses are complex. Management do not have the tools necessary to keep the organisation operating as a lean enterprise. This results in ad-hoc periodic initiatives often supported by 3rd party consultants to help with cost reduction. Often consultants have even less information on where the “bodies are buried” and are under pressure to provide answers in very short timescales.

The Finance Departments of Market Infrastructure firms need to provide transparency of internal costs at a segmental level to their regulators, in order to prove they are pricing their services ‘fairly’. They also need to provide evidence to their auditors that the computation of Transfer Pricing charges and VAT recoveries are fully compliant with global accounting standards.

Executive Summary: While migrating servers to the cloud, enterprises need to undertake an accurate cost analysis of the as-is costs as a traditional excel-based “average-of-averages” fails to deliver against the promised ROI benefits of Cloud migration and could result in needless cost increases that are entirely avoidable.

Executive Summary: ‘You can’t manage what you don’t measure’ has never been truer than with modern transformation programmes. Not developing additional perspectives of your Technology costbase beyond the traditional financial perspective results in the inability to determine its benefits in the midst of other cost addbacks.

Most organisations have a rudimentary view of their Technology cost base. Poor transparency of costs results in greater risk of flawed decisions.

Technology is getting ever more complex

IT Cost Management software provides a consistent framework for IT investment decisions. It replaces the dozens (if not hundreds) of ad-hoc, one-off spreadsheets that are put together to support with IT investment decisions.

Understanding the Total Cost of Ownership (TCO) of systems is challenging. With progression within each stage of the application lifecycle, over time costs get “hidden below the surface”.

ACO refers to the Operating Cost of running an application or IT service. It is also referred to as the fully loaded costs of a system that spans all direct and indirect items that attracts costs.

A traditional ‘GL view’ of the Technology costbase is no longer sufficient for modern decision-making.

While most businesses today have revenues generated from multiple business segments, central functions such as Technology tends to be shared. While this sharing results in economies of scale and lower unit costs, not having clarity on the true cost of servicing each business segment can result in poor Product and Technology investment decisions.

There are many datasets used in an IT Costings exercise, none as critical as the IT Service Catalogue. While most the attributes of a typical catalogue are not used, it is essential to get the Portfolio of IT Services well defined.

The term ‘Cloud’ covers a multitude of very different offerings.

Modern technology and business models make today's IT Cost Modelling much more complex. A quick visual on what this entails....

FPM software is well suited to handling all aspects of the costbase except Technology. With Technology increasingly a large (if not the largest) portion of your costbase, basic allocation of technology costs that is not aligned to consumption of technology infrastructure encourages behaviour that increases Technology’s costbase and results in inaccurate technology and product investments.

Accurate benchmarks requires relevant cost components, good quality datasets and accurate modelling of costs to avoid the “irrelevance trap”