Changing the mindset of cost cutting to value adding
In this digital age, technology has made us think beyond the reality. CIO’s and IT leaders struggle to cut IT budgets and still try to achieve critical digital business initiatives.
Smaller IT budgets are allocated however they are coupled with greater demands of return on investment. Measurement is key!
Most organisations spend a major share of their IT budget on applications. With the challenges and opportunities of digital business demanding more software, organisations need to develop a better understanding of the costs associated with running software over
the entire life of a system.
Where to start
It is always a good start to do an OPEX vs CAPEX analysis for an initial investment decision.
Model the costs of the largest and most expensive applications in the organisation or the applications needed to move forward with the digital strategy.
Need to look at 4 costs components:
Current year costs associated with the operational application including
- Support and
- corrective maintenance
Current year non-recurring application costs such as
- License variations
- Upgrades and enhancements
Expected future costs that are often not understood clearly by the organisation of managing their current applications.
Total cost of ownership that includes the whole of the life cost of the existing applications before investing in new applications. Include the following costs:
- Go live
- Annual cost to operate, support and maintain
- Predictable non-recurring costs such as upgrades
- Future enhancements and extensions
- Post decommissioning regulatory data retention costs
How can we at Adept Advisory help
Effective cost management is the responsibility of all management and technical staff, however without common models, there can be no sharing of data and best practices.
We can assist with building the common models with our expertise staff. Our team is appropriately qualified, equipped with experience and has a passion for hands-on support and/or advice.