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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
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© 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.
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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
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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
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© 2009 IBM Corporation
Money saving services from IBM—Improve security and
reduce downtime
Actions to take:
Reduce expense
associated with
downtime and
breaches
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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)
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© 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
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© 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
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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
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 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
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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
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© 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
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© 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]
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© 2009 IBM Corporation
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IBM Corporation 2009
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© 2009 IBM Corporation