IT Focus Area: Infrastructure Optimization
April 16, 2014
Find Hidden Savings Through Maintenance
It is no surprise that maintenance has become a major issue for many companies.
The process can be daunting and complex due to the siloed nature of IT assets within different departments, tracking equipment across the enterprise, and managing contract renewals across a variety of manufacturers and vendors that are due at different times of the year.
Ensuring your IT has the appropriate coverage—while identifying what to replace, refresh or keep—can result in significant hidden savings and help you stay agile in a rapidly changing environment.
According to Gartner research, 92 percent of the cost of an average application occurs after the project has finished as "maintenance."* It is worth the time to do a regular maintenance audit to determine what hardware and software efficiently supports your work and what simply drains your information technology (IT) budget with unnecessary or excessive support.
Once you see the savings add up—at least 10 to 30 percent for the average organization—every moment spent assessing your maintenance will feel worth it.
It may be a painful exercise, but dividing maintenance management into a three-step process makes it less daunting, especially if you work with a partner that can help you.
1. Review Your Assets
Auditing your IT assets should be an ongoing, evolving process so you don’t get bogged down with an overwhelming task. The process can take several weeks to correctly identify whether all the assets you want under support are covered appropriately under contract. Tackling the process on a regular basis with an asset maintenance partner, however, will make the task less agonizing.
Reviewing your maintenance coverage for your IT equipment can be a tedious chore that understandably falls to the bottom of the to-do list. If you are not constantly managing your asset inventory baseline, it very quickly can fall out of line.
That is where some of the risk lies. Businesses often pay for support for assets they have removed from their IT infrastructure or for equipment that may be sitting unused in a closet. Through the review process, however, you might identify opportunities for contract consolidation, coverage alignment, and areas to improve asset lifecycle management.
A partner can help you audit your enterprise’s software and hardware contracts, taking the burden of reviewing the large quantity of assets off the plates of an internal team, freeing them to focus on business objectives and deliver on goals.
One company saw a savings of $1 million (almost 20 percent of its budget) after it adopted a change management process for its IT support contracts. You may discover that you are paying for premium service levels on equipment that is not a critical part of your business. Another company saved $145,000 by decreasing the number of inactive devices and software it was still paying to support.
Some organizations realize that they are using outdated products with expired service agreements. Not only are those obsolete assets creating inefficiencies in the business, they are costly to fix should anything go wrong. An audit can not only help you identify your service needs, but it also gives you a view into when contracts are expiring and where all of your IT equipment lives.
It is important to note that savings are not always in monetary terms. In fact, sometimes businesses can find their assets are under-supported or unsupported, and it is necessary to invest in service upgrades. The dollars spent, however, will result in long-term efficiencies as you uncover challenges and help resolve them. Your IT environment will be safer and, ultimately, your organization will be more effective.
2. Design a Strategy
Once you know what products and service levels you are working with, it is time to strategize how you’re going to manage the ongoing process.
As you develop your strategy, ask yourself questions like these:
How are we tracking IT assets across our company?
How accurate is our tracking?
How are we managing support contracts across all manufacturers?
What change management processes do we have in place?
Who is the business owner of maintenance contracts?
Is it a single individual or an entire business unit?
Companies can benefit from a structured review process of their contracts that includes key products, cost, and lifecycle information to identify changes related to contract consolidation, co-termination, and alternative billing opportunities. Many manufacturers offer additional discounts for multi-year support contracts with options to pay upfront or annually. By locking in a multi-year term, you eliminate year-over-year increases, which can result in savings of five to 10 percent annually.
Implementing a thorough audit of current assets and comparing the budget impact of current operating costs (e.g., maintenance, licensing and labor support) to the budget impact of adding new solutions can assist in discovering that assets are nearing the end of their useful life or are actually past the point when they should have been put to pasture. Though it may seem frugal to extend the useful life of your IT assets, it could be costing you. The older the product, the more expensive it is to maintain—and often 10 to 15 percent of a company’s assets are past their prime.
If you track lifecycles, you can also predict when you have the opportunity to replace multiple products. As a bonus, this kind of monitoring can keep you on top of the latest technology advances so you maintain a fresh, innovative portfolio.
3. Put the Plan into Action
The next challenge businesses face is putting their plan into action. In our experience, less than 10 percent of organizations really have a solid handle on asset management. Today’s environment is so much more complex than it was 10 or even five years ago. Businesses have more and smaller devices connected to their networks, creating a web of products and service agreements to parse through and monitor.
There are tools available to help monitor and manage your environment in real time. They can provide insight to your install base and contract coverage, alerts, notifications, device diagnostics and reports that reflect changes in your environment. This kind of management moves you into a position where you’re dealing with issues proactively rather than reactively—the place you always want to be to keep your business competitive.
For example, a comprehensive network contract review of a privately owned financial services company identified many gaps and inconsistencies in their service agreements, resulting in serious overspending on maintenance. Although unsettling, this quickly became an opportunity for improvement. By consolidating contracts, identifying appropriate service levels, and refreshing product approaching end of service life, the company recognized significant cost savings. They are on their way to successfully implementing their strategy plan for change and contract management.
Hidden Savings Are There for the Taking
A holistic approach to contract management and maintenance renewals can help your company minimize complexity, control costs, and manage risk. By transforming your approach to maintenance into an easy-to-use and proactive program, your company can uncover hidden maintenance costs that can drastically impact your budget over time and make your renewal a nonevent.
By starting with an accurate view of your IT asset inventory, building a strategy around your maintenance coverage alignment, and developing a process to manage costs, you can make more informed decisions about your IT infrastructure. In doing so, you can free up money to funnel toward innovation, elevate your business, and ensure maintenance is less of an issue.
Maintenance is a good way to find hidden savings.
*Gartner, Inc., "Best Practices to Reduce Future Application Maintenance Costs," Andy Kyte, July 10, 2013.