LEVERAGING IT LEVERAGING IT CHARGEBACK AS A COST CUTTING TOOL 2009 ITFMA Conference, Charleston, SC
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LEVERAGING IT LEVERAGING IT CHARGEBACK AS A COST CUTTING TOOL2009 ITFMA Conference, Charleston, SC
Presenter
Rob Mischianti
Nicus Software (http://www.nicus.com)
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E-Mail: [email protected]
Phone: 540 387 2287 X22
Abstract
Managing behavior and identifying costs are primary purposes of most IT chargeback applications. But learn how you can also leverage it as a cost optimization tool that can:
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as a cost optimization tool that can: Analyze the impact of new investments in technology Expose inefficiencies in production environments Assist in making informed sourcing decisions Provide metrics to support advanced cost modeling
and analysis that can lead to a better understanding of IT costs
Questions
Who can make the decision that reduces cost and what data do they need to make it?
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need to make it?
Are then motivated to make the change that reduces the cost?
Overview
Alternate Uses for IT Chargeback
Expanded Role of IT Chargeback
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Several forces are causing IT organizations to better utilize existing Chargeback applications
Audit
ITIL, SOX Compliance
Cost CuttingPressure
New Technology (Virtualization,
Cloud Computing)Integration
Requirements (PPM, SharePoint, Financial Systems)
Single Enterprise Solution; not
Multiple Point Solutions
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IT Chargeback
Demand for Transparency
Web ReportingIntegration of
Managed Services
Service Catalog Integration
Forces
Cost cutting pressure is increasing Demand for transparency Internal audit pressures on existing practices
Chargeback processes becoming more labor
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Chargeback processes becoming more labor intensive; analysts care and feeding of existing processes; instead of analyzing data……
Drive towards integration of IT Financial Management processes
Existing COTS solutions need new approach
Cost Cutting: How?8
Leverage Data to Enable Decision Making by Resource Consumers
Extend the Life of Physical Resources; avoid premature resource upgrades
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Extend the Life of Physical Resources; avoid premature resource upgrades
Customer Saves Now; IT Saves Later Methodology Examples Can existing implementation be leveraged
as a cost cutting tool?
Meeting Requirements
Transparency & Detail (Prerequisite)
Cost Cutting
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Structure of Services
Solution Transition10
Decision Support Tool
Cost Recovery Tool
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• Chargeback to End Users
Traditional IT Chargeback
• Chargeback to End Users• Service Catalog Integration• Cost Modeling & Analysis
• Transparency• Additional Utilization Metrics
Next Generation IT Chargeback
Cost of IT Chargeback11
New IT Chargeback: 0.5% of IT Budget
Administration: 0.5% of IT Budget
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Costs Rising
Super Detail, Self-Service Web
Transparency
Transparency: Definition13
Expose Methodologies (Who, What, How and How Much)
Expose Data: Super Detail
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Expose Data: Super Detail
Super Detail14
Deeper• Greater Granularity• Who?
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• Who?• What?
Wider• Additional Metrics• Performance & Usage• Identification
Mainframe
SAN Storage
Mainframe, MidrangeTelecom Systems
Time Tracking Systems
Excel
Access
EMC, IBM, Dell, NetApp, HP
Virtualized Environments
VMware, VMM, XenBatch, TSO, CICS, DB2, MQ, IMS, IDMS, Measureware, VAX/VMS, VM/CMS, VSE, Storage, Tandem, WebSphere
265 + Data Sources Including:Batch, TSO, CICS, DB2, MQ, IMS, IDMS, Measureware, VAX/VMS, VM/CMS, VSE, Storage, Tandem, WebSphere,AIX, Linux, More….
Mainframe, Midrange Distributed & Virtualized
Asset Management Systems
Telecom
Labor
Client Data
Dedicated Resources (HW & SW)
Project Management Tools
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Access
Sequential (CSV & Flat)UNIX, AIX, Linux
• Collect • Consolidate• Aggregate• Normalize
Data Collection
• Provisioning Metrics• Utilization Metrics
• Performance Metrics
Detail Level Metrics
Chargeback Database
Provisioning Metrics
Performance Metrics
Utilization Metrics
Super Detail: Definition16
More Data
Objective: Enable Decision Making
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Customer Focused
Transparency: Obstacles17
Resistance from Service & Product Owners
More Expensive; to collect, store, present and validate
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and validate
Fear
Customer Motivations?
Opportunities for Failure
Cost Transparency Preparation18
Value Requires Super Detail Demand for Super Detail Increases Overall
Cost of IT Chargeback
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Cost of IT Chargeback Larger Data Volumes: More to Process;
More to Retain Increased Cost to Deliver; Web only Part
of delivery Increased Labor to Monitor Validity
Data Collection Requirements19
Data Source Planning
Identify Available Sources
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Identify Available Elements
Alternatives?
Chargeback Monitors v Performance Monitors (Event & Interval)
Current
• Customer Identification (LOB, Agency, Cost Center)
• Product/Service• Unit Volume• Cost
Future
• Customer Identification (LOB, Agency, Cost Center)
• Product/Service• Unit Volume• Cost
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• Cost • Cost• Additional Resource
Information (Program, User, Application, Server, etc)
• Additional Performance & Usage Metrics
Presentation21
Self-Service Web Site Reduce IT Chargeback Administration Costs
(Satisfying Queries)
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(Satisfying Queries) Customers Meet up to 95% Reporting
Requirements Using Web Multiple Logic Views of Data Reports with Drill-Down & Drill-Thru Data Extracts (for large volumes)
Presentation22
Large Data Volume
Requires some performance and capacity planning
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capacity planning
Larger IT Support or Vendor Solution
Product Level
Organizational Level
LOB, Agency, Cost Center, Department
Services (Mainframe Services
(Print)
Services (Server,
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Detail Level
Product Level (Mainframe CPU, Storage)
Job, Transaction,
Program, User
Job, Transaction,
Program, User
(Print)
Document, Device, User
(Server, Storage)
Server, Application
Presentation24
Top Most Expensive Objects (by Application, Cost Center)
Trended Unit Costs
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Trended Unit Costs Top Most Expensive Programs
Top Variances in Unit Cost as Resource Level (Program, Server, Application, etc)
Presentation25
Identify Pain Points
Profile Detail Level Transactions
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Top Most Expensive Programs
Top Variances in Unit Cost as Resource Level (Program, Server, Application, etc)
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Customer Provisions
New Server
IT: Charges Customer for Provisioned Resource
IT:
Allocates Physical
Resources to Pool
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IT: Provides Cost AND Utilization Data to
Customer
Customer Recognizes
Over Allocation
Customer Reduces
Allocation
Resources Returned to Available
Pool
Enable Customer to Control Costs28
Visibility Expose data
Expose methodologies & processes
Proper Cost Allocation Methods
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Proper Cost Allocation Methods Resource based versus allocations
Some services just won’t yield cost savings
Improve Reporting: Super Detail Focus efforts on services that provide potential
for cost savings
Effective Methodologies29
High or Low level allocation of costs versus resource measurement based
Some product and services easier to cut
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Some product and services easier to cut costs with others
Annual Review
Effective Billing Methods30
Construct billing methodologies to achieve objectives
Don’t loose ability to meet original
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Don’t loose ability to meet original objectives (fair, repeatable, etc)
Proper planning and decision making at appropriate levels
Sample 1: Mailbox
• FTE Allocation• $11/Employee
Sample 2: Mailbox plus MB Usage
• Combined FTE Allocation & Measured Usage
• $2/Access Fee
Sample 3: Mailbox plus MB Usage
(Tiered)
• Combined FTE Allocation & Measured Usage
• $2/Access Fee
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• $2/Access Fee • $0.15/MB Mailbox
Size (after 50MB)
• $2/Access Fee• $0.15/MB over
50MB• $0.50/MB over
250 MB
Managed Services
Managed Services Example: Print
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Before
• Departments Own/Lease Hardware
• Departments Pay Paper, Toner & Supply Costs
• No Chargeback
After
• Supplier Owns and Maintains Hardware
• Supplier Provides Paper, Toner, Supplies
• Supplier Invoices IT• IT Charges Departments
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• IT Charges Departments Based on Print Usage
• IT Provides Detail Level Usage Reports: Full Transparency
• Departments Have FULL Control over print costs
• Cost Cutting Possible
Conclusion34
Leverage Data to Enable Decision Making by Resource Consumers
Extend the Life of Physical Resources; avoid premature resource upgrades
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Extend the Life of Physical Resources; avoid premature resource upgrades
Customer Saves Now; IT Saves Later Methodology Examples Can existing implementation be leveraged
as a cost cutting tool?
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