(insert event flyer). introduction welcome! –dennis dearbaugh, dts operations director...

(INSERT EVENT FLYER)

Introduction• Welcome!

– Dennis Dearbaugh, DTS Operations Director

– Presentation Slides will be available on the DTS website soon.

– Please complete your Evaluation Surveys!

DTS Eye on Innovation

• Technology is changing every day.

• You are the ones transforming government through innovation.

• We are your utility to help make it happen.

• These Technology Days are to support this process.

DTS Events• We’ve seen over 1,000 of you at our events in the last year!

– Technology Days (like today)• We consider this a service in itself

We also host…..

– Customer Forums• To interface directly with you

– User Groups• To establish regular work groups across organizations

Introduction (cont.)

Upcoming DTS Events8/15 Gartner Local Briefing – Applications8/22 DTS 3rd Quarter Security Forum (Filled)9/06 DTS DB2 User Group Session

9/21 DTS-Gartner Technology Day:

Enterprise Content Management & Online Reporting 10/04 DTS Invoice Customer Forum10/17 DTS 6th Annual IT Security Awareness Fair10/26 Natural Modernization Strategies Information Forum

For DTS Event Calendar, visit here: http://www.dts.ca.gov/calendar/

http://www.dts.ca.gov/calendar/#Slide%208

Introduction (cont.)

Please welcome….

Jack Heine,

Gartner VP, IT Asset Management

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2007 Gartner, Inc. and/or its affiliates. All rights reserved.

Best Practices to Save Money in IT

Jack HeineResearch Vice President Sacramento, CAAugust 7th, 2007

© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

DTS Technology Day August 7, 2007

8

There are no Silver Bullets out there!!!Objectives:

- Reduce costs as much as possible without negatively impacting essential services

- Cut waste permanently, this will require process and procedure changes

- Consider charging for all new services, you want it …you come up with the bucks!

- Cost savings opportunities come in small, medium and large.. go after all of these!

- Cost reduction plan must include some quick hits

- Organize a cost reduction program, and keep it alive!



9

Key Issues

• What specific internal policies and procedures can be can be changed to reduce IT costs?

• What actions can be taken in the area of software licensing and maintenance services to reduce costs?

• What actions can be taken in the area of resource acquisition to reduce costs?



10

Use the 25 common IT cost containment techniques framework to identify opportunities

18. Refresh/ Upgrade Delay

22. Telephone Bill Audit

10. Automated Software

Distribution

14. Open-Source Software

Manage Demand

Shift to Variable Cost

Link costs to demand

2. IT PMO

4. Contingent Workers

5. Software as a Service

6. Capacity-on- Demand

3. IT Governance

Improve IS Business Practices

20. Print Fleet Rationalization

19. Asset/License Management

Change IS Operating

Model

15. Data Center Consolidation/

Automation

16. Standard Operating

Environment17. Teleworking

21. Telephone Expense

Management

25. Apps Dev Process

Improvement

24. IT Operations Process

Improvement

23. Contract Renegotiation

Reduce Resource

CostsReduce

Technology Cost

11. Server/Storage Virtualization

12. Voice/Data Network Reengineering

13. Voice over Internet Protocol

Reduce Labor Cost

7. Staff Reconfiguration

8. Selective Outsourcing

9. Offshore Outsourcing

Change Operating Practices

IT c

ost

cont

ainm

ent

1. Chargeback



11

Exploit Self-Service Opportunities

Self-service platforms offer opportunities to significantly reduce costs and improve service!

Password Resets ($5.50 vs. $0.45)

IVR Help Desk Diagnostic

HR Administration Benefits Selection and Maintenance Financial Planning Career Development

IT Supplies Provisioning/Electronic Catalog Ordering



12

Eliminate Release-on-Demand Practices

• Release-on-demand is the practice of continuously modifying software to meet customer requests for “nice-to-have” enhancements. Move toward major scheduled releases for software enhancements.

• Expect:

- 30% - 50% reduction in labor associated with applications maintenance.

- Improved break/fix ratios for applications

- Better code quality and more effective testing



13

Revisit Disaster Recovery Plans

• Establish inter-agency backup sites

• Review and reprioritize application requirements

• Review support site tools, keep only essential items

• Review Telco requirements, consider cost effective alternatives



14

$500,000.00

$495,751.36

$400,916.52

$275,357.96

$198,748.96

$146,457.86

$50,949.00

$23,316.42

$20,652.93 $2,095.50

Actual Client Study

Savings by Type500,000.00$ Tax Savings fr. Location Change495,751.36$ Rate or Usage Amount Dispute400,916.52$ Maintenance Previously Cancelled275,357.96$ No Bank One Business Owner198,748.96$ Lease Previously Cancelled146,457.86$ Invoice Previously Paid50,949.00$ Supplier Credits Needing Research23,316.42$ Cancel Maintenance Immediately20,652.93$ Exceeded Contract Rates2,095.50$ Short Pay of Cumulative Statement

2,114,246.51$ Total Savings

No Record of Transaction

Low-Hanging Fruit — Audit Invoices



15

Reduce HD Calls

StandardizeSLAs

TCOReduced

23%

Standardized Desktop Configurations

Consolidate Servers

Reduce Hardware Maintenance

Reduce Software License

ImprovePurchasingLeverage

IT Standardization: The Ongoing Benefits



16

Key Issues






17

• Evaluate against buying only software to be installed in the next 6 to12 months.

• Negotiate correctly to remove unused licenses from support.

• Ensure that you understand any license restrictions.

• In the agreement, include the right to new functionality.

What Was Licensed: What Is in Production:

Module A $250,000Module B $400,000Module C $125,000Module D $50,000Module E $35,0002,000 Named Users @ $1,250 $2,500,000Total List Licenses: $3,360,000Discounted 50% $1,680,000

Yearly Maintenance @ 20% $336,000

Module A $250,000Module B $400,000Module C $0Module D $0Module E $35,0001,200 Named Users @ $1,250 $1,500,000Total Software Using: $2,185,000Discounted 40% $1,311,000

Yearly Maintenance @ 20% $262,200

Shelfware Cost: $73,800

Software Costs, Usage and Smart Contracting



18

Assume a 50 Percent Discount on the $4 Million Software: $2 Million Initial License Cost

Maintenance Maintenance Maintenance and Support and Support and Support

at 18% at 20% at 22% First Year: 2003 $ 360,000 $ 400,000 $ 440,000 Second Year: 8% $ 388,800 $ 432,000 $ 475,200 Third Year: 8% $ 419,904 $ 466,560 $ 513,216 Fourth Year: 8% $ 453,496 $ 503,885 $ 554,273 Fifth Year: 8% $ 489,776 $ 544,196 $ 598,615

Total Maintenance: $2,111,976 $2,346,641 $2,581,304

Sixth Year: Maintenance cap is over, based on “then-current” list price: $4,862,025 Due 2008 $875,165 $972,405 $1,069,646

Discuss rights to move to alternative support levels, such as silver/gold/platinum.

Software Maintenance Cost: Five Years



19

Key Issues






20

Purchase Used vs. New Equipment

• Cut acquisition costs by as much as 75%• Common business practice, “used” does not mean

“junk”• Most PCs for example come with 90 day warranty• Extended technological life makes this practice

more attractive today than in the past• May be able to acquire extended warranty

coverage• Consider replace vs. fix policy



21

Consider “Maintenance” Alternatives

• Third party maintenance can be as good or better than OEM ……..at half the cost

• Consider dropping maintenance after initial equipment warranty period expires, use replace rather that repair mode in out years

• Explore reduced SLAs for non-critical equipment

• Explore opportunities to reduce software maintenance costs, audit maintenance billing, and drop maintenance where applicable or chose other maintenance levels



22

Implement Demand Management

• Reduce Storage Requirements

- Cull out old and duplicate data files

- Implement and enforce tiered storage architecture

- Consider Storage on Demand arrangements for cyclical storage requirements

- For many organizations storage is growing at 65% CAGR

• Reduce Print Costs and Demand

- Charge for all print services (this can significantly reduce demand)

- Eliminate most personal printers (huge potential savings)

- Ensure all supplies are centrally purchased

- Make sure color printers are not used for non-color jobs



23

InvoiceReconciliation

Sample Scoring Model

8%–15% CostReduction

Low 0 - 6

ScoreWeighted

ScoreWeight

%

PotentialValue

Mgmt.Priority

Months to ValueObjectives

Probability of

Success

Reduce Telco Requirements

Reduced Charges

0 - 3 Medium 0.7

Life CycleManagement

15%–25% CostReduction

12 - 24High 0.2

ReducedComplexity

23% TCOReduction 18 - 24 High 0.5

Improve Software Acquisitions

Reduced Maintenance $ Medium 6 - 12 0.7

0.9 Do This First!

Cost Reduction Opportunity Analysis



24

Recommendations

• If you’re serious about IT cost savings, then have a plan

• Don’t look for a single panacea for cost savings opportunities

• Look in new places for your next IT cost savings opportunity

• Long-term, sustained cost containment is a PROGRAM …………………. not a project !

THANK YOU!

– Please turn in your Evaluation Surveys!

– Look for future events here:

http://www.dts.ca.gov/calendar/

– See you next time…….

http://www.dts.ca.gov/calendar/

(insert event flyer). introduction welcome! –dennis dearbaugh, dts operations director...

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