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Transformation Journey

(Vision) + (Action) = Transformation

20 years industry experience working with SAP,IBM & EY

Praful Satasia decided to set up Research based consulting firm, where he Praful Satasia
focuses on delivering value to Ariprus clients through his insight and Co-Founder
experience in IT Project Management.

https://www.linkedin.com/in/prafulsatasia

Ariprus Digicon Pvt. Ltd

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IT Cost Optimization

Ariprus Digicon Pvt. Ltd

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What we think

(Vision) + (Action) = Transformation

Vision without action is merely a dream

Action without vision just passes the time

Vision with action can change the world

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Who we are

We Are Startup

Ensuring our clients augment their IT transformation efficiently

We help companies like yours research, evaluate, and select the best enterprise software solutions for unique
business requirements

We don't represent, resell, or implement specific software solutions

We analyze vendor solutions objectively to make sure your interests come first

Our extensive knowledge-base contain data about hundreds of vendors and solutions that you can use to find
the best fit solution for your business

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2017 Economic Landscape Too Many Disruptions

Legal and Regulatory Digital Business Ecosystems

Change?

Trade Relations? Cybersecurity

Economic Uncertainty Digital Disruption

Drives Cost Optimization Drives Revenue Creation

Ariprus Digicon Pvt. Ltd

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IT Cost Optimization Defined

Digital
Business IT Cost Optimization: IT cost optimization is a continuous
discipline to drive spending and cost reduction, while
maximizing business value. It includes:
Renegotiation of contracts for hardware,
software and services
Standardization and simplification of platforms, providers,
applications and services
Automation and utilization of processes,
resources and capacity
Elimination and centralization of redundancies,
organizations, business unit IT and personnel

IT Cost Business Cost Source: Cost Optimization in the Age of Digital Business

Optimization Optimization
4% Spend 96% Spend

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New Cost
Organizations need to cut both IT and business costs.

Optimization
Economic climate makes it challenging for organizations that have

Considerations
delayed digital business investments to catch up.

Today In organizations with declining revenue, there is little money to

invest in digital business.

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Topics

1. Where are your IT Cost Optimization activities focused?

2. What do I need to improve in IT financial transparency to support cost
optimization?
3. How do I identify the best opportunities for IT cost optimization that still ensures value
is maximized?

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Barriers to Effective Cost Optimizations

Politics (silos) Poor IT cost Lack of

transparency accountability

IT lacks
Money Low tolerance for involvement in
risk business strategy

Legal Resource Social

Constraints Availability Constraints

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IT Cost Optimization Framework
Four paths that can be taken individually or together for compounding effect
Business Optimization
Joint Business and IT
Cost Savings Within IT
IT Procurement
Value
4
Use IT to Enable New, Digital
Business Models
Implement process improvement, business
restructuring and innovation
3 Reduce Number of Units seek out
Portfolio Decisions joint
business and IT savings
Implement cost-savings technologies in
conjunction with the business
2
IT Efficiencies - consolidate,
virtualize, outsource, Cloud
Identify opportunities to reduce IT costs
1
IT Procurement/Vendor Mgmt.
Get the best pricing and terms for your IT
purchases
Difficulty
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Deliver Different Units - Reimagine
business service delivery with
technology (e.g., improve customer
experience, new payment models)
opportunities to eliminate / reduce
application footprint (and with it,
infrastructure required to run);
reduce/eliminate services
Deliver Units Differently - Evaluate
changes to service delivery across
major domains looking for
consolidation, streamlining or
outsourcing
Reduce Unit Cost - Identify
opportunities to reduce spend within
existing vendor contracts and service
delivery model
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Ensure that Enterprise IT Spend Is Optimized

Formal IT Spend (78%) BU-Based IT Spend (22%)

Growth rate of 1% to 4% per year Mid-double-digit growth rate

Heavy oversight Light oversight
Perception that cost is more Perception that value is more important than cost
important than value Small(er), simple(r) projects
Large(r), complex projects Failure rate unknown
22%+ failure rate Ad hoc security
Formalized security

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Question 1: Where are your Cost Optimization Opportunities

focused? (Choose one only)

A. Mostly on the supply side of IT procurement and back office

efficiencies within IT.
B. Shifted to the demand side as well focused also on working with clients to eliminate lower
value projects and services.
C. We have also moved to the fourth level and are also evaluating how technology can be
used to optimize cost across the business.

D. Not sure / focused elsewhere.

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Topics

1. Where are your IT Cost Optimization activities focused?

2. What do I need to improve in IT financial transparency to support cost
optimization?
3. How do I identify the best opportunities for IT cost optimization that still
ensures value is maximized?

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The New World Demand-Driven IT That Is Run Like a Business

Recommendations:
CIO CIO
Ensure new demand for IT spend is
largely change- and innovation-driven
Do not let absence of transparency on
enterprise IT spend inhibit the enterprise
from optimizing value delivery

Old World New World Avoid limiting supply as a means of

reducing demand (manage both
Centralized Run Like a Business
together)
Shared Based Competitive Driven
on Supply by Demand Build effective transparency within the IT
budget, but don't stop there
Look beyond IT to optimize enterprise IT
spend

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CIOs Need More Than an Opex Budget and a List of Projects

IT Budget Project Portfolio Service Portfolio

(Opex and Capex)
(Mostly Capex) (Opex)

Benchmarking, Cost Optimization and Business Value Metrics Needed

15

Multiple Views Provide the Transparency Required to Effectively
Communicate and Manage IT Spending
Asset-Based View
Hardware
Software
Personnel
External Services
The general ledger view is
essentially the "IT budget for most
organizations. This view is typically
the foundation from which all
subsequent views are built.
Although business executives
recognize this view, it is difficult
to defend.
How many views of your IT budget are you currently providing?
Technical View
Servers
Storage
Network
End-User Devices
Application Support
Many organizations manage spend in
technology stacks or domains. This
allows for the effective management of
IT spending in the language that most
technologists and technology providers
use. While the technical view provides
additional financial transparency, the
biggest benefit of this view comes
from the ability to analyze (and
benchmark) technology spending on
a unit cost basis.
Business Services View
The business services view takes the
same operating costs as the technical
view, but organizes them in a way that
more clearly communicates the cost of the
services IT provides in business terms.
This view requires the creation of a
service portfolio that lists a set of
services that can be costed and used to
manage services provided to the
enterprise.
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Investment View
Transform
15%
Grow
2 0% Run
6 5%
The investment view divides both operating
expenditure and capital expenditure into a
view that distinguishes the amount of
money (and potential value) spent on
investing in new capabilities from the
amount spent simply running the
business. However, it is increasingly a
source of confusion, because capex may
be needed to refresh existing infra-
structure and services, whereas new
external services can now be purchased
out of operating expenditure.
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Business Service View Best Communicates Costs and Value in a Business-

Centric Manner
An IT business service is a collection of actions performed by IT that provides a measurable
benefit to a consumer outside of the IT organization.
Total IT Business Services Spending Allocation

100%

5% 4% 2%
7% 5% 25%
12%
19% All unassigned resources
need to be investigated as
21% they may represent
enhancement opportunities

Supply Chain Workplace Customer Inventory Corporate Source and Warehouses Distribution Unassigned Total
Management Support Fulfillment Management Services Make Hubs

With this level of IT transparency, optimized IT spend can be determined based upon the
expected or delivered business outcome supported by IT.

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Question 2: How mature is your IT organizations financial

transparency? (Choose one only)
A. Basic still improving overall expense management of both opex and capex.

B. Improving focus on the project portfolio and business case process.

C. Improving focus on IT services and the IT service portfolio.

D. Mature with a focus on overall expense management, solid project portfolio practices and
a service portfolio.

E. Not sure

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Topics

1. Where are your IT Cost Optimization activities focused?

2. What do I need to improve in IT financial transparency to support cost

optimization?

3. How do I identify the best opportunities for IT cost optimization that still ensures
value is maximized?

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How to Identify Cost Optimization Opportunities

Digital
The are no Silver Bullets. Business

But a Good Process Goes a Long Way. IT Cost Business Cost

Optimization Optimization
4% Spend 96% Spend

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IT Cost Optimization Should Be a Discipline

Business imperatives evolve; new technologies mature; IT

assets reach end of life; new service and delivery options
proliferate Manage
Strategize
Best practices include:

Building cost goals into performance management

Having an owner for cost optimization
Having high-level sponsorship

Tackle cost optimization from a cross- Optimize

Evaluate
functional perspective

Execute
Do you have a proactive approach?

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Question 3: Do you have a proactive approach to IT Cost

Optimization? (Choose one only)
A. Yes, we set targets, identify and share ideas and the CIO drives
fiscal accountability throughout the IT organization.
B. Not yet, but are moving towards a more proactive approach.
C. No, IT cost savings are identified within IT silos and not
coordinated across IT.

D. Not sure

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Top 10 Recommended IT Cost Optimization Ideas

1 Create a shared-service organization for some or all IT services.

2 Centralize, consolidate, modernize, integrate and standardize technologies.

3 Leverage cloud services.

4 Increase IT financial transparency to better manage both supply and demand

5 Utilize zero-based budgeting on the right cost categories.

6 Rationalize and standardize applications.

7 Optimize software licensing management and ITAM capabilities.

8 Improve procurement and sourcing capabilities.

9 Invest in Mode 2 capabilities such as agile and DevOps.

10 Re-examine how end-user computing is delivered.

20 2016 Gartner, Inc. and/or its affiliates. All rights reserved.

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IT Cost Optimization Program Formulation

Capture all IT service delivery costs current-year and five-year forecast

1 Establish Baseline Categorize by asset class HW, SW, personnel, services, occupancy, etc.
Allocate into services establish unit cost baseline for market and business tests

Analyze spend gaps against market peers

Identify high-value opportunities for cost reduction, service improvement and
2 Identify Opportunities business enablement
Assess benefit against risk to change (as well as time, investment)

Develop strategy and roadmap for most viable opportunities

3 Develop Strategy Analyze organizational change needs to manage people impact
Create communications plan

Create an IT cost optimization (ITCO) program office

4 Track Benefits Monitor, measure and report
Identify opportunities to accelerate while managing out risk

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Using a Decision Framework to Identify Opportunities

?
For each opportunity generated: Costs,
What's the upside? Time and
Risks
Is it worth the effort?
Benefits
Potential benefit
How big is the saving if the action is implemented and how does it affect cash flow? Small Medium Large

Business impact Negative None Positive

What impact will this have on the business?
Time requirement >18 months 6 to 18 months <6 months
Can you capture the savings in this fiscal year?

Degree of organizational risk High; staff

redundancies,
Moderate; limited
Low; no staff
reduction, nor
and re-engineering changes in roles, changes in
Will your leaders ensure the changes are made? structures and
of processes and organization and
Is your organization capable of adapting to the changes? processes
structures processes

Degree of IT technical risk High; impacts OS,

DB, middleware
Moderate; impacts
few components of
Low; little more
than "moving
Is there a risk that the change will undermine the ability of your systems to deliver? and applications the architecture boxes"

Investment requirement
Does the change require a large upfront investment before savings can be captured?
#GartnerSYM High Moderate Low/None
23 CONFIDENTIAL AND PROPRIETARY | 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it's affiliates.

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Mapping out Your Cost Optimization Strategy

Est. Time to
Customer Org Tech Investment
Opportunity Savings Realize
Application
Is the risk worth
Impact Risk Risk Required
(Annual) Savings
Portfolio
Demand Negative >18 Medium Medium Medium the reward? $8.0M Optimization
1M months
Management Outsource Application Improve
Positive 6 -18 Medium Medium Medium
Data Center months Development Application
750K and Support Delivery
Consolidation
Reform IT $10.5
IT Service Negative > 18 Medium Low Low $5.7M Governance M

Implementation Risk/Time
1.5M months
Management and Demand
Positive 6 -18 Low Low Low
Sourcing months Management
500K $6.0M
Management Improve ILM
Optimize
$1.5M and Data
Consolidate IT Positive <6 Low Low Low $8.0M Infrastructure
months Service Delivery
Management 250K
Negative 6 -18 Low Low Low
Tools months Optimize End
Asset User Support
Management
2.5M $1.5M
Little/None 6 -18 Medium Medium Medium
Service Desk Recompete Data
500K months $2.0M
Management and Voice
Application
Networks
Opportunities likely
taken as natural
1M Negative > 18 Medium Medium Medium
Rationalization
part of business
months
Desktop 450K
Virtualization Negative 6 -18 High High High
Print Fleet 950K
months
Benefits/Cost Savings
Management Little/None 6 -18 Low Low Low

Note: All figures are in millions of dollars

months

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Recommendations for Your Cost Optimization Journey

Gain visibility into enterprise IT spend and optimize all IT costs

Be proactive with IT cost optimization, set targets and use a process that is continuous
Discover and nurture financial and optimization mindsets in your
IT organization
Create a roadmap for IT financial transparency and treat it like a
multiyear program
Maximize cost optimization goals to create a competitive platform for future agility and
transformation

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Ariprus Research Value and Capabilities

IT Cost Transparency
Digital Business Strategies Improve IT financial management IT Spend Comparison
Identify opportunities for innovation and maturity and opportunities. Evaluate competitive market pricing, and
transformation through digital business models. provide industry and peer spending data.
Digital
Business
Bimodal Strategy Contract Reviews
Develop a strategy and operating model Partner with Gartner to get the
to invest in mission-critical innovation best pricing and terms.
while renovating the core of IT.

Cloud Strategy Application Rationalization

Optimize cloud strategy for scale Identify opportunities to reduce
and cost savings. application portfolio complexity and
align to business priorities.

Digitalization of Sourcing Strategy Refinements

Business Operations Refine sourcing strategy to achieve the right
balance between cost and performance.
Automate manual business functions. IT Cost Business Cost
Optimizatio Optimization
n
Shared-Service Organization Business Process Management
Exploit shared services to achieve Standardize and optimize business processes
economies of scale. to improve efficiency and outcomes.
Project Portfolio Management
Align IT initiatives with business strategy
for maximum impact.

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Cost Optimization Insights to Work

IT Cost Transparency Application Rationalization

Assess the productivity and cost-efficiency of IT Identify opportunities to reduce application portfolio
to identify improvement opportunities. complexity and align to business priorities.

Market Perspective Benchmark Sourcing Strategy Refinements

Evaluate competitive market pricing for Refine your sourcing strategy to achieve the
outsourced service contracts. right balance between cost and performance.

Cost
Optimization
Contract Negotiation
Capabilities Shared-Service Organization Redesign
Partner with Gartner for assisted Redesign your shared-service organization
contract negotiation support on design, operating model and performance
large software deals. metrics to align to business priorities.

Cloud Strategy and

Pricing Bimodal Strategy
Leverage cloud decision models to devise Develop a strategy and operating model that
a cloud strategy and determine competitive enables you to invest in mission-critical
market price contracts. innovation while renovating the core of IT.

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Core Competency

Expert in QA advisory
Enterprise Software Selection

Project Management Strong Industry

Experience

Business Transformation Deep Process

Understanding
Security & Risk Management
Trusted Tools &
ERP Audit Methodologies

Digital Strategy Highly skilled

Advisory Team

Neutral &
Independent
Opinion

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Clients

CRM Selection IT Strategy

SAP Audit Process Design

ERP Selection

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Thank You

For more information

Praful Satasia
Founder Ariprus Digicon Pvt.Ltd
Business transformation & Innovation
Cell Phone : +91 99205 10944
Email : praful.satasia@ariprus.com

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