Flying with IT through Market Turbulencedownload.microsoft.com/download/C/E/1/CE1A33EA-C0DC-4B23-9F3… · What are the board thinking about? Uh?? We need to further cut costs, but

IT ADVISORY

ADVISORY

Flying with IT through Market Turbulence

2© 2009 KPMG Phoomchai Business Advisory Ltd., a Thai limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Thailand.

Agenda

•Global Financial Crisis

• IT Strategies for Global Economic Recession

• IT Consolidation

•Software Asset Management

3© 2009 KPMG Phoomchai Business Advisory Ltd., a Thai limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Thailand. 3

The GFC – Global Financial Crisis


What are the board thinking about?

Uh??

We need to further cut costs,

but where

More jobs cuts, that will not look

good in the newspapers

I have no idea what to do

The way things are going I am not sure this company will

survive

Outsource the bloody

lot of them!

I wonder what I am having for

dinner?

Stop thinking!!

ACT!!!


We have built IT infrastructure to include the icing, cream on the cake


We have no icing, not even colouring…what now?


IT’s share of the cake


The two of them need to focus on saving the organisation…

What do we do together now?

Cost of compliance is too high

Cash is king and always will be

Our balance sheet is too heavy

We have thirty or forty general

ledgers; the cost is killing us

Governance Risk and Compliance

Cash Management Systems

Offshore and outsource

One ERP systems please


People are going to spend money…but on what?

• Need to reduce expenditure

• Need to reduce expenditure

“Where is the money going to come from?”

CFO

Get the operations lean and mean

COO

• Find low cost destinations

• Outsource and offshore operations

Spend if we can stay liquid

CEO

• I need to get cash

• Will sell, beg to get cash


IT Strategies for IT Strategies for Global Economic Recession Global Economic Recession


There are four primary value levers for IT executives to help improve IT’s impact on shareholder value

2. Operational EfficiencyReduce the Cost of

Providing IT Services

1. Business AlignmentAlign IT investments with

business priorities

Improving IT’s Impact on Shareholder Value

Increase Operating Profit(Net, After Tax)

Increase Revenues

Decrease Operating Expenses

ReduceBusiness Expenses

ReduceIT Expenses

Reduce Operational

Risk

3. Operational EffectivenessImprove Business

Performance Through IT

4. Capital EfficiencyImprove the Return on Capital

Deployed

Improve Deployment of

Capital

Reduce CapitalUtilization

Reduce the Cost of Capital

Reduce Fixed Assets

Reduce Working Capital Demand

Improve Capital Productivity


Lever 1 - Business Alignment

Tactical:•Shut down/ defer initiatives not aligned

with top business priorities•Re-scope initiatives to essential

requirements•Stop working on demand that has

bypassed formal approval•Halt projects lacking adequate business

commitment and involvement

Improving IT’s Impact on Shareholder Value


Increase Revenues



ReduceIT Expenses

Reduce Operational

Risk


Capital



Reduce Fixed Capital


Productivity


Capital



Reduce Fixed Assets



1. Business AlignmentAlign IT investments with

business priorities

Structural:•Enhance demand management mechanisms to

appropriately prioritize investments•Rationalize redundant investments, solutions and

operations across business through re-use, sharing and common approaches

• Invest to accelerate implementation of strategic capabilities

•Establish governance mechanisms to identify, encourage and enforce business-wide collaboration and sharing


Lever 2 - Operational Efficiency

Tactical• Cut non-critical enhancements

– Reduce contractors– Reduce in-house staff

• Cut service levels– Reduce service delivery staff & contractors– Reduce capacity/ defer capacity upgrades

• Analyze third-party work orders to ensure accuracy and compliance with rates, refunds, penalties (e.g., sourcing, assets, energy)

• Evaluate maintenance and service agreements– Cut maintenance or switch to T&M– Consolidate, terminate or renegotiate

• Tighten & enforce policies e.g., cell phones, virtual meetings, off-site meetings and training

• Accelerate contraction e.g., early retirement, early project completions

2. Operational Efficiency

Reduce the Cost of Providing IT Services

Improving IT s Impact on Shareholder Value


Increase Revenues


ReduceBusiness

ExpensesReduce

IT Expenses

Reduce Operational

Risk


Capital


Reduce the Cost of Capi



Productivity


Capital



Reduce Fixed Assets



Structural• Develop alternative sourcing strategies• Rationalize contractor relationships

• IT Consolidate and standardize application and technology platforms

• Implement tiered service levels• Enhance vendor and alliance management capabilities• Improve purchasing power through buying consortia• Implement automation tools for end-to-end IT process

improvements• Enhance program management capabilities• Extend self service/ employ portal capabilities• Leverage emerging technologies to reduce expenses


Lever 3 - Operational Effectiveness

Tactical• Identify focused, quick-win opportunities to

accelerate revenues• Cut poorly-supported projects• Fix systems with high operational failure rates• Accelerate implementation of high-impact,

cost-reduction projects

Structural• Enhance business partner relationship management practices• Reengineer business processes with improved use of IT• Implement IT chargeback mechanisms to link charges for IT

services to consumption• Develop enterprise architecture to improve technology

alignment with business model

• Sell or license value-generating assets e.g., proprietary software, IT-enabled business capabilities

3. Operational EffectivenessImprove Business

Performance Through IT



Increase Revenues



ReduceIT Expenses

Reduce Operational

Risk


Capital





Productivity


Capital



Reduce Fixed Assets




Lever 4 - Capital Efficiency

Tactical• Sell technology assets and lease back as services• Lease rather than buy new technology• Increase utilization of existing technology

–Reduce or defer capacity upgrades/additions–Divest capacity and associated support, licensing and maintenance

• Cut or re-scope discretionary projects & technology upgrades–Halt or defer work

–Save on licensing/ maintenance increases on added Technology

• Cut/ defer non-critical (major project) development–Reduce contractors & in-house staff–Defer technology upgrades, support, licensing and maintenance

• Accelerate existing plans to outsource/ offshore–Reduce contractors & in-house staff–Reduced demand for technology capacity

4. Capital EfficiencyImprove the Return on

Capital Deployed



Increase Revenues



ReduceIT Expenses

Reduce Operational

Risk


Capital





Productivity


Capital



Reduce Fixed Assets



Structural

•Maximize application development productivity

• Develop sourcing strategies for capital intensive activities e.g., technology infrastructure, data centers

• Build to optimum capacity; maximize use of available capacity e.g., server virtualization

• Outsource peak volume requirements• Establish formal demand management process to optimize

capital deployment decision-making


IT Consolidation IT Consolidation


IT Consolidation

Key ComponentsKey ComponentsIT consolidation enables businesses to reduce costs and improve business agility by:

Consolidating existing hardware resources based on virtualizationOptimizing physical and human resource requirements, and simplifying physical environment

ManagementConsoles

Consolidated Servers


Physical/Virtual ManagementPhysical/Virtual Management

Consolidated Storage


VHDVHD

ServerGroup 1

ServerGroup 2

ServerGroup 3

FibreChannelStorage

Array

iSCSIStorage

Array

NASStorage

Array

Fibre Channel Switch Fabric / IP Network

Managementconsole

http://www.microsoft.com/virtualization/default.mspx


Server Consolidation

Equal or increased capacity with less hardware

9%utilization

6%utilization

50% utilization

10%utilization

Number of physical servers Power usageFloor space11%

utilization 14%

utilization

Server utilization



Storage Consolidation

Storage consolidation optimizes storage implementation for a virtualized environment based on consolidated, shared, and virtualized storage, saving cost, and improving business agility.

Storage utilizationBusiness agility

Number of physical storagePower usageFloor spaceEnergy for coolingProvisioning

Shared StorageVHDVHD



Physical/Virtual Management

Effectively managing physical and virtual entities is critical to improving efficiency of time, cost, and resources.

IT efficiencyResource utilization

Management complexityConsolidated Servers






VHDVHD



Unified integrated solution for managing entire environment – both physical and virtual assets, and both server and desktop resources


Comprehensive solutions for a data center to maximize resource utilization with longer-term vision of integrated virtualization technology

Flexible integration with storage devices of industry leading partners and support of efficient storage utilization

Partner SolutionsStorage infrastructure and

storage management


IT Consolidation

Dynamic, reliable, and scalable virtualization platform



Sample of IT Consolidation Architecture (Microsoft)

Dynamic, reliable, and scalable virtualization platform


Software Asset ManagementSoftware Asset Management(SAM) (SAM)


SAM Processes Areas and GRC

Source: ISO/IEC 19770

Organizational Management Process

Control Environment Planning and Implementing Processes

Core SAM Processes

Primary Process Interfaces for SAM

Inventory Process Verification and Compliance Processes

Operations Management Processes and Interfaces

Life Cycle Process Interfaces

Corporate Governance

Process

Roles and Responsibilities

Policies Processes and

Procedures

Competence in SAM

Planning Implementation Monitoring and Review

Continual Improvement

Software Asset Identification

Software Asset Inventory

Management

Software Asset Control

Software Asset Record Verification

Software License

Compliance

Software Asset

Security Compliance

Conformance Verification

Relationship and Contract

Mgmt.

Financial Mgmt.

Service Level Mgmt.

Security Mgmt.

Change Management

Process

Software Development

Process

Software Deployment

Problem Management

Process

Acquisition Process

Software Release Mgmt.

Process

Incident Management

Process

Retirement Process

Governance Risk

Compliance


Licensees BalanceSheet

SAM Database

Licensing documentation

Perform a software inventory Match licensees with

software installed

•Software’s Manufacture Name

•Software Title

•Edition

•Version

•Language

•Operating System/Platform

•CPU

•Machine Name

•Owner

•Contract/Agreement/Package/Software Assurance

•License Duration

•License Type

•Installation/Location

•Number Authorized

•Purchase Order Number

•Fee

Software Licensing Reconciliation


SAM Tools

http://www.bsa.org

http://www.microsoft.com/resources/sam/msia.mspx


SAM Tools


Demonstration

Sample KPMG Script SAM Audit Tool


Sample Software License Preview

SAMPLE


Sample of Software Deployment Summary

SAMPLE


Benefits of SAM

Risk Management

• Legal and regulatory exposure (e.g. intellectual property, compliance)• Risk of interruption to IT services (e.g. illegal software use, malicious)

Cost Control & Savings

• Reduced direct costs of software and related assets• Reduced time and cost for negotiation with suppliers due to information availability

Competitive Advantage

• Support Corporate Governance• Better quality decision making because of more complete information availability


See KPMG Teams at KPMG Booth .. for more information..


Presenter’s contact details

Chanarat Paraaungkul

Manager

KPMG Phoomchai Business Advisory Ltd.

+66 2677 2768

[email protected]

www.kpmg.co.th


Disclaimer

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Documents

Flying with IT through Market Turbulencedownload.microsoft.com/download/C/E/1/CE1A33EA-C0DC-4B23-9F3… · What are the board thinking about? Uh?? We need to further cut costs, but