IT Financial Management Series - Part 3: Drive Financial Transparency Across Your Infrastructure Portfolio
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This document discusses improving financial transparency for IT infrastructure costs. It begins with an agenda and overview of key challenges. Infrastructure typically lacks transparency due to its shared service model. The document then discusses creating a service catalog, service costing models, and capacity planning challenges. It emphasizes the need for collaboration between IT and business units on capacity planning. Finally, it discusses optimizing costs, managing consumption, creating a "bill of IT", and running IT like a business to improve transparency and allow informed decision making.
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IT Financial Management Series - Part 3: Drive Financial Transparency Across Your Infrastructure Portfolio
- 3. Running the Business of IT Key Challenges
- 4. The IT House Demystifying IT Financial Management Maintenance& Break/ Fix Development Projects(New / Enhancement / L&R) Services Efficiency& Performance Tuning Projects Applications Infrastructure Efficiency & Availability Optimize Create Capacity Today’s Focus
- 5. Infrastructure Side of the House Average 2012 IT Spend - Cost Drivers for Infrastructure 40% 21% 8% 12% 19% Data Center End-User Computing IT Service Desk Voice Network Data Network Gartner IT Metrics: IT Spending and Staffing Report, 2013 35% 55% 10% Applications Infrastructure IT Management
- 6. Polling Question 1 How much of your IT Spend is allocated to Infrastructure? A. Less than 40% 16% B. Between 40% and 60% 66% C. More than 60% 12% D. We currently don’t track this 4%
- 7. Applications vs. Infrastructure Why is infrastructure perceived as the “black hole”? Applications • Usually decentralized and customer facing providing more natural transparency • Business stakeholders tend to understand the applications they are building and using Infrastructure • Typically a Shared Service where expenses are leveraged across the enterprise creating less transparency • Minimal Finance team involvement leading to lack of cost accounting discipline • More moving parts making the billing process more complicated and sometimes inconsistent
- 8. The Infrastructure Conundrum You only hear from the customer when something goes wrong Systems must perform to SLAs Cost must be minimal Complexity affects everything External benchmarking is often incomplete
- 9. Infrastructure Driving Value while increasing Transparency
- 10. Reaffirm Your Shared Service Model What is the value and what do you get? Value to the Company • Standardization • Leverage Vendor Pricing & Technology • Cost Management • Integration of Services • Risk Management • Auditable Process What Customers Get • Operational Maintenance • Production & Change Management • Incident & Problem Management • Service Restoration • Hardware, Software, Facilities, Network, Other Expenses • Monitoring • Asset & Configuration Management
- 11. Mainframe Z/OS Z/Linux Distributed App Hosting AIX VM Wintel Storage Distributed Tier 1 Distributed Tier 2 Distributed Tier 3 Output Processing Cut Sheet Continuous Feed Fiche Communications Personal Comm (email) Citrix Office Comm Desktop PC Asset Blackberry Metered Services Create a meaningful Service Catalog
- 12. Service Costing & Unit Rates Total Projected Billable Units OH Indirect Expense Direct Expense Rate / = Usage Charge back x =
- 13. Matrix View of Costs Service Consumption Costs by Application
- 14. Polling Question 2 Do you currently have a Service Catalog? A. Yes, without Tiered Service Levels 23% B. Yes, with Tiered Service Levels 39% C. No 37%
- 15. Capacity Planning Challenges Demand on Infrastructure continues to increase • Volume on existing Application continues to grow with increasing number of records year over year • New and enhanced applications are driving increase infrastructure resource requirements • Growth is unchallenged Ability to Influence Growth is limited • Capacity requirements on existing Applications are typically derived through “projections based on current trends” • New Application volumes are often “SWAGs” • Limited interaction with the business stakeholders or IT application managers
- 16. Historical Trends By Service Distributed Web (Actual vs. Planned CPUs)
- 17. Distributed Web Growth Forecast Business Unit Breakdown 27% 54 CPU’s Americas MidRange VMware Wintel 42% 84 CPU’s 31% 62 CPU’s 78 TB’s SAN 202 CPU’s StorageTotal CPU’s 33% 55 CPU’s EMEA MidRange VMware Wintel 40% 66 CPU’s 27% 45 CPU’s 55 TB’s SAN 167 CPU’s StorageTotal CPU’s 80% 38 CPU’s APAC MidRange VMware Wintel 15% 7 CPU’s 5% 2 CPU’s 15 TB’s SAN 57 CPU’s StorageTotal CPU’s
- 18. 7% 51* CPU’s CPU & SAN Capacity Growth by Platform 729* CPU’s 102* TB’s SAN Total Forecast MidRange 33% 237* CPU’s VMware 60% 441* CPU’s Wintel Total CPU’s 574* Additional CPU Growth 155 CPU Growth Trend Distributed Web Growth Forecast Enterprise Infrastructure
- 19. 1,224 CPU’s 334 TB’s SAN Total Forecast Amer: 138 TB’s 41% APAC: 94 TB’s 28% EMEA: 102 TB’s 31% Distributed CPU’s SAN Storage Distributed Web Growth Forecast All Lines of Business
- 20. Capacity Requests by Application
- 21. CPU Demand by Application
- 22. Polling Question 3 How mature is your Capacity Planning process? A. Capacity Planning is the responsibility of the Infrastructure team B. Capacity Planning is a collaborative effort between the business unit and infrastructure team C. We currently do not have a formal Capacity Planning process
- 23. A Partnership Understanding both sides of the story Volume Unit Cost Optimize Cost Tuning & Efficiency Utilization Service Levels
- 24. Optimizing Service Costs Key levers / techniques for IT Sourcing Services Vendor Management Performance Tuning Increasing the variability of cost Benchmark to develop credibility
- 25. Manage Volume & Lower Costs Key levers / techniques for the Business Cloud / SaaS – Increase time to value and variablize costs Tele-presence – Reduce Travel and increase quality of communication BYOD / VDI – Reduce equipment cost while providing flexibility
- 26. Rate / Volume Discussions Reduce costs & increase capacity
- 27. TCO
- 28. Total Cost of Ownership Understanding build vs. operate costs Maintenance Maintenance Maintenance $70k 30k $15k $35k $20k $60k $35k $20k
- 29. Creating a Bill of IT Make it simple and easy to understand May-13 Actual (YTD) Budget (YTD) Variance ($) Variance (%) Applications 32,111,948$ 166,596,147$ 158,421,942$ 8,174,205$ 5.16% New Development 9,921,345$ 59,528,070$ 56,602,244$ 2,925,826$ 5.17% Enhancement 7,953,456$ 39,767,280$ 42,930,045$ (3,162,765)$ -7.37% Maintenance 12,943,693$ 58,246,619$ 50,100,332$ 8,146,287$ 16.26% Legal & Regulatory 1,293,454$ 9,054,178$ 8,789,321$ 264,857$ 3.01% Infrastructure 53,589,203$ 294,740,617$ 241,151,414$ 53,589,203$ 22.22% Strategy & Management 1,500,034$ 7,500,170$ 8,000,000$ (499,830)$ -6.25% Total 87,201,185$ 468,836,933$ 407,573,356$ 61,263,578$ 15.03% Bill of IT Americas - May 2013 35% 63% 2% Applications Infrastructure Strategy & Management 5.16% 22.22% -6.25% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% $- $50 $100 $150 $200 $250 $300 $350 Applications Infrastructure Strategy & Management Variance CostiinMillions($) Actual YTD Budget YTD Varaiance(%) May-13 Actual (YTD) Budget (YTD) Variance ($) Variance (%) Applications 32,111,948$ 166,596,147$ 158,421,942$ 8,174,205$ 5.16% New Development 9,921,345$ 59,528,070$ 56,602,244$ 2,925,826$ 5.17% Enhancement 7,953,456$ 39,767,280$ 42,930,045$ (3,162,765)$ -7.37% Maintenance 12,943,693$ 58,246,619$ 50,100,332$ 8,146,287$ 16.26% Legal & Regulatory 1,293,454$ 9,054,178$ 8,789,321$ 264,857$ 3.01% Infrastructure 53,589,203$ 294,740,617$ 241,151,414$ 53,589,203$ 22.22% Strategy & Management 1,500,034$ 7,500,170$ 8,000,000$ (499,830)$ -6.25% Total 87,201,185$ 468,836,933$ 407,573,356$ 61,263,578$ 15.03% Bill of IT Americas - May 2013 35% 63% 2% Applications Infrastructure Strategy & Management 5.16% 22.22% -6.25% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% $- $50 $100 $150 $200 $250 $300 $350 Applications Infrastructure Strategy & Management Variance CostiinMillions($) Actual YTD Budget YTD Varaiance(%) May-13 Actual (YTD) Budget (YTD) Variance ($) Variance (%) Applications 32,111,948$ 166,596,147$ 158,421,942$ 8,174,205$ 5.16% New Development 9,921,345$ 59,528,070$ 56,602,244$ 2,925,826$ 5.17% Enhancement 7,953,456$ 39,767,280$ 42,930,045$ (3,162,765)$ -7.37% Maintenance 12,943,693$ 58,246,619$ 50,100,332$ 8,146,287$ 16.26% Legal & Regulatory 1,293,454$ 9,054,178$ 8,789,321$ 264,857$ 3.01% Infrastructure 53,589,203$ 294,740,617$ 241,151,414$ 53,589,203$ 22.22% Strategy & Management 1,500,034$ 7,500,170$ 8,000,000$ (499,830)$ -6.25% Total 87,201,185$ 468,836,933$ 407,573,356$ 61,263,578$ 15.03% Bill of IT Americas - May 2013 35% 63% 2% Applications Infrastructure Strategy & Management 5.16% 22.22% -6.25% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% $- $50 $100 $150 $200 $250 $300 $350 Applications Infrastructure Strategy & Management Variance CostiinMillions($) Actual YTD Budget YTD Varaiance(%)
- 30. Polling Question 4 Do you currently build a Bill of IT to chargeback to the Business? A. Yes 48% B. No 51%
- 31. Run the Business of IT You must improve Financial Transparency • Cost • Consumption • Plan vs. Actual Share Data & Collaborate • Be connected – to AD and Business • Talk in Understandable language • Strive for Credibility Create a “Service Mentality” • Understand options • Understand Fixed vs. Variable cost • TCO Allow businesses to make informed decisions