Empowering IT leaders to understand their true cost of IT and the levers available to ensure the best value for money
There is increasing pressure and focus on IT organisations to design an IT model that is as effective and efficient as possible. IT leaders are expected to lower the IT cost base and improve services to the organisation, while also delivering innovative IT solutions and providing a competitive edge for the organisation.
This pressure has meant that many organisations have seen a proliferation of IT costs and control, with pockets of cost springing up all over the business. This leads to significant challenges in understanding the true cost of IT and the value that it generates for the business.
Gaining transparency and control is desired by most organisations, whilst at the same time trying to keep process and overheads to a minimum to aid agility and adaptability. However, few achieve this, meaning that businesses often do not understand the true cost of IT and cannot reflect the true cost levers in recharging mechanisms, leading to poor decision making.
Coeus Commercial Management services empowers IT leaders by providing them with expertise in implementing successful controls and a variety of tools and methodologies to create the transparency required to make effective IT commercial decisions.
The same expertise can also assist with establishing the correct processes and governance to maintain control and transparency over the long term.
Using our expertise and knowledge we have developed a comprehensive commercial governance model. These tools enable the client to get a firm grip of its third parties and IT supply chain tails from managing costs to monitoring and performance management to resolve service issues and reduce risks. These tools also support benefit realisation and alignment against the book of work/portfolio for demand management.
IT Total Cost of Ownership Review
We perform comprehensive diagnostics of IT organisations to create a ‘C’ level case for cost transformation to ensure there is a comprehensive vision of IT expenditure structure. This includes; benchmark of total IT costs against industry peers using the TCO as a percentage of revenue metric, IS tower analysis to provide a breakdown of costs by functional tower and align spend to industry comparators, cost driver analysis to provide breakdown and comparative analysis of costs including activity, spend type and supplier spend breakdowns.
IT Cost Optimisation
Coeus have developed a strategic approach to immediate and sustainable cost optimisation by providing insight into the right level of IT investment across IT functions, identifying major costs drivers and working to identify cost inefficiencies and ineffectiveness within IT, and improving ROI in specific areas and across the IT organisation. This will develop an overall plan and cost reduction recommendations. To ensure that IT cost drivers are completely understood, a thorough and accurate assessment of the current state cost structure is required.
Through an effective and expedient approach, Coeus can analyse third party spend and contracts to understand your current supplier landscape. Using elements from our sourcing strategy methodology, we can also determine the most appropriate target supplier model, against which a realistic plan can then be developed to allow consolidation and savings to occur.
Coeus have developed an approach to business case management to ensure consistency, clarity and completeness at each stage of the project lifecycle. At each stage of the process, the business case is updated to become more accurate, supporting effective decision making. This continuous development and evolution of the business case also helps to ensure continuity of information and transparency against the original objectives, both during the lifecycle of the project, but also beyond into benefits realisation and tracking.
Recharging of IT
Using Coeus’ standard approach for mapping costs to IT services, it is possible to extend our basic IT commercial model to form the foundation of a cost allocation / cross charging model for IT to the business. Accurate cost mapping is a fundamental step and a required pre-requisite which allows allocation of IT costs to the business. Aside from the essential business requirements of sponsorship and buy-in, the critical steps involved in charging for IT are: defining what IT services are being provided; accurately mapping the components and costs of these services; agreeing upon a unit of measurement and allocation; and then finally linking these back to an accurate means of capturing the business consumption based on the agreed unit model.
IT services benchmarking is core to many Coeus engagements. Coeus maintains a comprehensive up to date benchmark database of IT service contracts, costs and service levels. For example, a sourcing review would typically include an informal benchmarking, or provide an intelligent estimate of what the market rate should be. We believe our combination of technology and commercial skills allows us to provide a fully reflective view of service levels and pricing rather than the ‘database’ approach.
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James is an IT outsourcing and transformation professional with a proven track record in advising and coaching organisations on large complex global outsourcing deals, IT transformation and strategy.