Transforming IT Spending

by Douglas Schlosser

This time last year my manager gave my team a homework assignment to write about one of the The Top 10 Strategic CIO Issues for 2013 by Bob Evans, Oracle in a Forbes online article.

I chose, Simplify IT and Transform Your Spending: Kick the 80/20 Budget Habit. As I look back on 2013, I don’t think IT organizations and their business partners have done enough to break from traditional spending habits. Shifting IT spending from maintaining the systems to looking at new innovative approaches to service delivery is essential for all IT organizations to become a revenue stream for the companies they serve.

The challenge for CIO’s and IT organizations is that business leaders are putting extreme pressure on IT to rebalance traditional 80/20 maintenance to innovation spend. I agree, Mr. Evans states it perfectly:

”The IT policies of the past that resulted in the 80/20 trap are simply no longer able to meet the needs of today’s intensely demanding and always-on business world, and are indeed becoming liabilities not just because they’re inadequate but also because they suck up vast percentages of the IT budget and make it almost impossible for CIOs to fund essential new efforts in analytics or cloud or mobile or social.”

Today’s IT /Telecom organizations need to be serious about rebalancing their spending mix, devoting a larger percentage of their budgets to areas of high business growth and innovation with a smaller percentage to ongoing operations and maintenance. They should evaluate which vendors aggravate this problem, versus which ones offer alternatives that are truly forward thinking.

So how can Arrow SI help? We, at Arrow SI, know it’s a problem, we hear it every day from our customers, “I need to lower my ongoing maintenance costs” or “Vendor “X’s” proposed maintenance costs are less.”

At Arrow SI we assists our customers with this challenge, we provide real-world, practical suggestions on how to actually flip this ratio. Here goes my list of 5 practical tips for Unified Communications to help your Organization flip the 80/20 budget habit:

1. Communication System Modernization: Employ one or more of the various modernization strategies to change the technological domain for the telephony systems being maintained. Reduce the amount of legacy TDM architectures being deployed in favor of IP centric systems. These newer architectures have lower hardware and maintenance costs. Many customer have data networks, some can provide POE, by moving to IP phones customers can eliminate the duplicate maintenance costs associated with line-side telephony services. Caution: don’t fall into the TDM phone reuse trap; keeping your existing TDM phones may avoid the capital spend, but ongoing maintenance costs associated with line-side telephony services delivery are duplicated.

2. Communication System Consolidation: Carefully evaluate your current licensing; Plan for system consolidation and license right sizing where possible. This step alone can provide a considerable return of funds to the IT/Telecomm budget to then spend on innovative projects (i.e. UC and Collaboration projects).

3. Application Consolidation: Does your organization consider voicemail a separate application? Are you sure the answer to that is “YES”. Most CIOs and IT Leaders consider voicemail just another form of messaging that could be handled by a multipurpose platform. By consolidating on a single messaging platform IT organizations can move the costs and maintenance from a separate voicemail system to innovative projects.

4. Centralized SIP Trunking: Many of our customers are considerably over trunked. By evaluating a move to centralized SIP Trunking, you can lower remote site maintenance costs by removing some or all local trunking. For those customers that have mainly TDM systems, I suggest a traffic study of the current systems. The costs of traffic study will more than pay for the savings you could experience.

Here is a great example: I recently worked on a UC transformation project with a customer that consolidated 3 large TDM PBXs into one system served out of two data centers. Before we even deployed the first piece of equipment for the new platform we found 7 PRIs that they were paying for that were never used and 4 PRIs that were only 20-30% utilized. Just think of the additional savings you could find in your organization.

5. Eliminate Application Duplication: Pull back the covers on what you spend on Unified Communications, this includes Audio, Video, IM/Presence and Conferencing. Many vendors’ solutions have overlaps in licensing and maintenance costs associated with the delivery of full UC environments. Investigate the needs of your organization evaluate business users needs and offer alternative, more efficient ways of delivering an overall more efficient environment while adding functionality. One simple question I ask to all the customers I work with, Can we move this service to the “Cloud”? By moving services to the “Cloud” we can greatly reduce the costs associated with infrastructure, electricity, cooling, etc.

To flip your maintenance/innovation ration, you should consider a transformation journey that might be challenging at times, but well worth the effort in the end.

I hope you’ll find my 5 practical tips helpful. I’m interested to hear your own suggestions. What tactics have you tried to flip the maintenance ratio? Where they successful or not? Any reason why you think these tips won’t work? Are there any tips you can add to the list?

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The thoughts and opinions in these blogs belong to the individual blogger and do not necessarily represent the views or opinions of Arrow Systems Integration.