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Strategies for managing IT budgets during an economic downturn Helping CIOs respond to budget pressures Bjørn Roksvold Salgsdirektør 23092009 © 2009 IBM Corporation Agenda Economic downturn and the CIO challenge How IBM Global Technology Services can reduce costs and help improve the ROI of IT initiatives Examples of how IBM has helped other organizations save money and improve productivity Next steps 2 © 2009 IBM Corporation The worldwide business environment is in turmoil Marketplace volatility Credit squeeze Slowing global expansion Banking restructuring Mergers and acquisitions The current economic climate is creating budget challenges and the need to cut costs. 3 © 2009 IBM Corporation Organizations are developing or executing IT contingency plans Strategies for managing in a downturn Cutting operating expense Postponing long-term projects in favor of near-term ROI Deferring or reducing capital expenditures Revisiting existing service contracts Seeking productivity increases in existing infrastructures Postponing the hiring of additional IT staff Postponing the launch of new initiatives 4 © 2009 IBM Corporation Companies must realize near-term cost reductions while continuing to drive structural change Short-term cost reductions Type 1 rationalization Reduce capacity – Hiring freeze x – Termination of subcontracting agreements Cost – New IT project budget freeze – Voluntary departure plans – Early retirement Reduce staff, minimize overlap, improve control X’ Structural cost reductions Volume – Relocation of resources/applications Type 2 structural change Transform fixed into variable costs – Centralized versus decentralized IT governance x – Maintenance/process outsourcing – Process optimization Cost – Strategic alignment and prioritization X’ Change IT operating model Volume 5 © 2009 IBM Corporation IBM can help you gain operational efficiencies and IT capacity to save money and increase investments in new solutions 100% IT spending New solutions Application enhancements Liberated funding for direct saving or transformational investment Strategic change capacity New solutions Cost of operations Operations support Application enhancements Operations support Operations maintenance Operations maintenance Source: IBM 6 © 2009 IBM Corporation Money saving services from IBM Global Technology Services are designed to help you save money and achieve quick ROI Optimize your data center Leverage your existing IT infrastructure Improve security and decrease downtime Increase IT productivity Outsource your IT services Get help with financing 7 © 2009 IBM Corporation Money saving services from IBM—Optimize your data center Actions to take: How IBM Global Technology Services can help: Assessment tools: Find additional ways to save money and/or achieve a strong return on your investment with IBM Conduct an assessment to identify cost savings IBM IT Transformation and Optimization Consulting Services – infrastructure strategy and planning: Establish a comprehensive, highlevel plan for improvement that can lay the foundation for an agile, responsive and cost-effective IT infrastructure IBM IT Facilities Assessment, Design and Construction Services – data center facilities design: Design a new data center and save up to 20 percent for midsize centers, up to 50 percent for enterprise centers and up to 35 percent for high density zones 8 © 2009 IBM Corporation Money saving services from IBM—Optimize your data center (continued) Actions to take: How IBM Global Technology Services can help: IBM IT Facilities Consolidation and Relocation Services: Optimize Simplify and consolidate computing and networking your data center portfolio to cut operating costs up to 50 percent; relocate costeffectively with minimal outage IBM Server Optimization and Integration Services – server consolidation: Reduce server management costs by 30 to 70 percent through performance optimization and consolidation ratios ranging from 6:1 to 20:1 IBM Converged Communications Services: Reduce annual telephony costs 15 to 20 percent with a converged network and IP telephony Virtualize IT to reduce costs and enhance performance 9 IBM Smart Business Desktop Cloud: Reduce infrastructure, end user support and energy costs with virtual desktops hosted in the data center or by IBM and accessed virtually anywhere, with estimated savings of 30 to 40 percent © 2009 IBM Corporation Money saving services from IBM—Get more from your existing infrastructure Actions to take: Ensure that IT is responsive to changing business needs Simplify and consolidate networking Improve infrastructure utilization and performance How IBM Global Technology Services can help: IBM IT Management Consulting Services – business of IT executive workshop: Prioritize IT investments to support the most critical business needs IBM Networking Strategy and Optimization Services: Increase network efficiency, reduce costs and enhance performance IBM Server Optimization and Integration Services – VMware server virtualization: Achieve utilization rates up to 80 percent and consolidation ratios from 8:1 to 30:1 with a VMware server infrastructure IBM Storage Optimization and Integration Services – storage virtualization: Virtualize storage and reduce complexity while increasing capacity 10 © 2009 IBM Corporation Money saving services from IBM—Improve security and reduce downtime Actions to take: Reduce expense associated with downtime and breaches 11 How IBM Global Technology Services can help: IBM Information Protection Services: Save an average of 40 to 60 percent on total cost of ownership with a fully managed information protection service © 2009 IBM Corporation Money saving services from IBM—Improve productivity in your IT operations Actions to take: How IBM Global Technology Services can help: IBM IT Management Consulting Services – service management strategy and planning: Identify opportunities to reduce service delivery Improve the productivity of your staff cost by streamlining and automating manual tasks IBM IT Lifecycle Management and Governance Services – service management implementation: Improve service delivery management through systems management tools (e.g., IBM Tivoli®/IBM Maximo® software) 12 © 2009 IBM Corporation Money saving services from IBM—Outsource your IT services Actions to take: How IBM Global Technology Services can help: IBM Telecom Expense Management Services: Reduce telecommunications expenses—an average of 15 percent in the first year—and increase control over voice, data and wireless Take pressure off your staff by letting IBM manage your IT environment for you IBM Server Managed Services – remote managed infrastructure: Improve infrastructure management and free up staff while reducing costs by 20 percent or more IBM Smart Business Desktop Cloud: Realize greater IT end user support and energy savings with a virtual desktop solution from IBM IBM Managed Security Services: Protect your network assets and data from costly security breaches 24x7 with a “guaranteed” level of protection and cost savings of up to 55 percent 13 © 2009 IBM Corporation Money saving services from IBM—Get help with financing Actions to take: Manage liquidity and risk while making investments necessary to drive business success 14 How IBM Global Financing can help: Struggling with the economic downturn? IBM funds IT. Don't let the economic downturn and dwindling credit options stop you from getting the capital you need to operate and improve your business. While many lenders have drastically curtailed credit availability, IBM Global Financing remains well positioned to support your technology investment needs and help you mitigate financial risk. © 2009 IBM Corporation IBM helps organizations across industries save money and address unique business challenges Industry: financial services Business challenge: Solution: Benefit: Insufficient data center capacity across multiple geographic locations Data center assessment Completed effort in 12 weeks Detailed blueprint saved approximately US$20 million in investment costs Business challenge: Solution: Benefit: Excessive support costs, poor server performance and security concerns IBM Server Optimization and Integration Services – server consolidation Lowered long-term support and maintenance costs Industry: manufacturing 15 Reduced 40 servers down to 3 servers © 2009 IBM Corporation IBM helps organizations across industries save money and address unique business challenges (continued) Industry: banking Business challenge: Solution: Benefit: Ineffective business operations and excessive phone costs Converged Communications Services Reduced phone expenses by 25 percent Boosted employee productivity Implemented IP telephony and converged network Industry: travel and transportation 16 Business challenge: Solution: Benefit: Application performance issues resulting from insufficient network capacity IBM Networking Strategy and Optimization Services – network application optimization Tenfold increase in link capacity US$1.3 million first year savings One month ROI © 2009 IBM Corporation IBM helps organizations across industries save money and address unique business challenges (continued) Industry: electronics Business challenge: Solution: Benefit: Excessive IT support costs Virtualization strategy, based on IBM technology, to reduce server count by 80 percent Saved US$322,000 in server support Achieved total cost savings of 43 percent over three years Business challenge: Solution: Benefit: Limited data center space and rising software, operations and maintenance expenses Server consolidation VMware server virtualization Reduced 76 servers down to 6 Reduced complexity and total cost of ownership Industry: automobile manufacturing 17 © 2009 IBM Corporation And to support a lean IT staff, we provide skilled resources to help improve client productivity and control support costs Industry: financial services Business challenge: Solution: Benefit: Excessive telecommunication expense and no resources to manage Telecom Expense Management Reduced annual telecommunications spending by US$5 million Business challenge: Solution: Benefit: Managing compliance regulations and evolving threats was placing a burden on the IT staff Managed Security Services 24x7 protection by an army of highly trained engineers Gained confidence in network security protection Reduced in-house security costs by 55 percent Industry: healthcare 18 © 2009 IBM Corporation A portfolio view highlights the ITS services that have high savings with rapid payback Savings impact High savings, Rapid payback 50% Server consolidation and virtualization 30-70%, 8-24 mo Managed Security Services Up to 55%,, First year savings Data Center Design and Consolidation 50%, 12-18 mo 40% Information Protection Services Up to 40%, 1-12 mo Storage Optimization 30% or more, 3-12 mo 30% IP telephony 20-40%, 12 mo Telepresence 30%, 12 mo VIA, VIA Managed Services 15-40%, 8-18 mo Business of IT Workshop 15-30%, 12 mo IT Lifecycle Mgmt and Governance 15-30%, 3-18mo 20% Network Optimization 10-30%, 4-12 mo IT Optimization Strategy and Remote Managed Planning Infrastructure Services 20-40%, 3-18 mo 20%, 12-18 mo Telephony Expense Mgmt 15%, 3-9 mo 10% Low savings, longer payback.... 0-3 19 4-6 7 - 12 13 - 18 Payback Period © 2009 IBM Corporation Thank you for your time today For more information: Please visit ibm.com/services Contact: Bjørn Roksvold 92267313 [email protected] 20 © 2009 IBM Corporation Trademarks and notes IBM Corporation 2009 IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with the appropriate symbol ( ® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml. Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron, Intel Xeon, Intel SpeedStep, Itanium, Pentium, IT Infrastructure Library, ITIL, Java and all Java-based trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are trademarks or service marks of others as described under “Special attributions” at: http://www.ibm.com/legal/copytrade.shtml#section-special Other company, product, and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. GTP10912-USEN-00 21 © 2009 IBM Corporation