IT and Business Concerns

IT and Business Concerns
Group 14 Term Project Presentation SML 702

The most complex challenge for today's CIOs is to increase
the information technology (IT) organization's ability to
rapidly respond to new business needs while continuing to
cut costs.

Reducing fixed/non-discretionary spending is key to
increasing IT agility; and an often overlooked tactic is
optimizing the IT hardware refresh cycle.

A company's IT hardware refresh policy drives decisions on
millions of dollars in annual capital spending and operating
expense.
Introduction
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Year PT MBA Term Project Presentation SML 701
An effective refresh policy will guide IT and accounting
personnel through the analyses needed to balance the trade-
offs between capital spending, operating efficiency, and risk
mitigation.

A systematic approach to optimizing an IT hardware refresh
policy unhooking technology decisions from accounting's
useful life calendar - in a way that drives savings in capital,
labour, and operating costs.
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Introduction
Technology refresh refers to the adoption of newer
technology to meet changing needs or to mitigate the risk of
obsolescence of existing technology.

As Information Technology changes from a backend support
entity to a strategic enabler, the role of technology refresh
becomes more important.
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Technology Refresh Management
In recent years, technology refresh has seen an expansion of
its scope, going beyond just IT assets to all kinds of items that
may form part of the IT landscape.

Aging/obsolete technology
Out-of-suport technology
Skill set shortage
Compliance
Cost reduction
Standardization
Innovation
Vendor stability
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Drivers
Aging/obsolete technology

Organizations worldwide are stuck with aging technologies
and find themselves in a very difficult situation.
Many of them dont have a proactive approach to regular
technology assessment; its always taken granted that as long
as the existing technology is meeting its stated purpose its
good to go.
Over time, these legacy technologies get heavily customized
to meet the user demands.
Each change makes it more complex and rigid for future
migration to a newer technology.
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Drivers
Out-of-support technology

As organizations continue to use dated technology, they
often land in situations where they are stuck with out-of-
support technology components.
This happens due to the product vendor upgrading its
technology stack and subsequently not supporting the older
versions in an effort to migrate all their customers to their
supported stack.
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Drivers
Skill set shortage

As technology advancements keep happening, the focus
keeps shifting to the newer breed of technologies.
Even the academia focuses on the newer technologies than
the legacy technologies.
This slowly causes a skill set shortage as the people who
know the legacy technology become lesser in number and
getting skilled resources becomes an issue.
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Drivers
Compliance

Regulatory compliance is mandatory for all organizations.
With physical boundaries diminishing and access to
information becoming easy, the chances of security breaches
are also increasing.
This forces organizations to develop controls and procedures
which will prevent any security leak and will ensure all the
established controls are in place to fulfil compliance.
As the technology component enters into a phase of
obsolescence and the existing vendors stop supporting it,
these components become vulnerable to compliance
requirements.
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Drivers
Cost Reduction

Organizations think technology refresh decisions are high
investment items.
On the contrary technology refresh helps in reducing the
operational spend and enhances the organization capability,
which in turn helps to lower the unit cost of IT.
With the passage of time, legacy technology becomes
expensive on account of its maintenance cost.
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Drivers
Standardization

In todays business environment, mergers, acquisitions and
consolidation have become the mantra for growth. M&As
often bring together diverse technology components and the
new organization has to manage them and plan their future
roadmap.
Organizations start considering standardization of diverse
technology components into strategic ones and look at
technology refresh as a way to achieve their standardization
goals.
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Drivers
Innovation

To improve their competitive positions, organizations scan
the technology environment constantly to evaluate the latest
trends and developments in the market.
As they find newer technologies which can provide better
competitive advantage, they start considering technology
refresh as a strategy to migrate to newer technologies.
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Drivers
Vendor Stability

Vendor stability is one of the key factors which drive
technology refresh considerations.
Organizations always want to use products from vendors who
have good market standing and are stable.
If the vendor stability becomes an issue then it affects their
ability to invest and grow the products that they have which
in turn creates issues with competitiveness.
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Drivers
Today technology refresh is managed in a reactive manner.

Organizations treat these investments as capital expenditure
and, based on their performance, earmark a certain
percentage of their IT budget for their technology refresh
initiative.
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How do Companies Handle it Today
As the diagram illustrates, in most enterprises, the time for
technology refresh is rather long because of the processes
involved, and in a dynamic marketplace, such a system is
unlikely to deliver desired results.
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How do Companies Handle it Today
Most of organizations are familiar with the need for
technology refresh, but they are hesitant to grapple with
the issue at hand.
5D approach for managing the technology refresh at
enterprise level:
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Approach for Managing Technology Refresh
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Suggested Model
Technology awareness The awareness level within the
organization on different technologies and innovations happening
within the market place plays a critical role towards building a
technology strategy.
Technology intelligence This involves constant evaluation of the
technology trends, market trends, product plans, budget
constraints, supplier roadmap etc. The technology awareness
feeds into the technology intelligence by means of alerts and
reports.
Health check This involves scanning the AS-IS technology
landscape of the enterprise and using a structured scorecard to
assess the health of each of the technology components or a
group of technology components.
Technology strategy The technology strategy is set at the
enterprise level and it uses the various inputs coming from the
previous steps. This should be a core component of the overall IT
strategy and architecture-guiding principles
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Determine
New license costs: The cost of new licenses will drive up the total cost of
acquisition (TCA), as during the migration from one platform to another;
new licenses will normally need to be purchased.
Ongoing maintenance and support costs: Maintenance and support costs
range from 18% to 22% of the license fees for commercial software and
are fixed-cost (subscription support) for open-source technologies. The
initial costs can be low when calculated as a percentage of a discounted
license base, escalating after the initial contract period. Support and
maintenance costs are among the largest ongoing software costs, so
constitute one of the largest savings when migrating off a platform. It is
precisely these savings that are offset to the initial migration costs,
causing the ROI to require up to five years or more to recover.
Consolidation while migrating: If the organization can consolidate the
technology stack while migrating, the cost savings can certainly be greater.
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Cost Benefit Analysis (Determine)

Analyze the drivers The drivers for technology refresh as applicable
to the organization context should be analyzed. This helps to bring
out the key issues and the risks that the organization may be carrying
from the technology obsolescence perspective.
Identify technology refresh candidates Based on the enterprise
technology strategy, health check outcome of the as-is technology
landscape and the identified drivers, organization has to determine
the potential candidates that will be candidates for the technology
refresh across the enterprise. This can be a multiyear view.
Evaluate refresh options Once the refresh candidates are narrowed
down and the associated risks get identified, then the different
options should be evaluated. The option evaluation should be done
in conjunction with the time horizon, risks and available alternatives
Build a refresh strategy Refresh strategy should clearly articulate
how the technology refresh is going to work, broad solution options,
roadmap, risks involved and mitigation, approach of implementation
etc.
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Design

Refresh Planning Once the overall technology refresh strategy is
built, the next step is to start the planning for its implementation.
This has to be done considering all the other initiatives that may be
happening within the enterprise.
Detailed Solution Design Solution design involves working out the
detailed solution and the necessary changes that need to be carried
out across the different technology stacks.
Test Planning With diminishing knowledge on the legacy footprint
and obsolete technologies its essential for the organization to have a
good testing strategy and plan in place.
Proof of Concept (PoC) The pilot exercise helps in identifying the
issues, validating the workability of the solution. This will also enable
the incorporation of changes that need to be done to the overall
strategy before deploying the technology refresh program across the
enterprise.
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Develop
Execution Here the execution of the technology refresh is done as
per the designed solution and refresh plan that has been built.
Organizational resources are channelized to work on the execution.
Testing Once the changes are done testing is performed as per the
test plan to make sure everything is working fine. There could be
multiple rounds of testing to verify not just the components being
changed but also to make sure the dependent existing components
too work as expected.
Training Technology refresh involves change and to make it widely
accepted and usable proper training should be planned and provided
to the different stakeholders. Many a times organization might have
deployed the best of the breed technology but people dont know
how to use it and leverage it to their advantage. Training plays a
critical role in success of the technology refresh program.
Rollout Rollout is the actual deployment of the new technology
components in production or actual usage by the end users of the
technology components.
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Deploy

Stabilize Once the technology refresh rollouts are happening the
organization should also keep its focus on stabilizing the refreshed
technology components.
Decommission Most of the time, organizations tend to lose focus
on the decommissioning aspects. Once the upgraded or new
technology components are rolled out, the old technology
components should get decommissioned in a phased manner. This is
critical for the organization; the presence of the old components will
delay the benefit realization.
Benefit Measurement During technology refresh ROI analysis, the
benefits are projected and these should get measured on an ongoing
basis after the implementation. Benefit realization is a key element
from the prospective of finding the actual benefits coming from the
refresh program.
Feedback Technology refresh is not a one-off activity. Rather its a
cyclical process and the organization should constantly capture the
feedback and feed it into the technology strategy and solution design
so that new learnings are captured and used for improvements.
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Deliver

Overall benefits gained from a technology refresh program include:

Agile IT Infrastructure
Supported technology components
No risk to compliance
Improves time to market capability
Improves scalability and maintainability
Reduction in OPEX for the IT
Helps in standardization
Helps in improving the overall IT capability
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Recommendations and Suggestions
Listed bellow are some suggestions to avoid the technology
obsolescence trap:

Put IT strategic planning at the heart of the CIO management
agenda
Develop a technology strategy
Do a health check of the AS-IS landscape
Fund Technology refresh program
Focus on retiring older systems

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CIOs are being challenged to increase the business value of
their company's existing investment in IT. Optimizing their IT
hardware refresh policy - replacing accounting's useful life
calendar with a more accurate set of useful technical lives - is a
powerful but often-overlooked way to impact a significant
portion of IT's capital and operating expense budgets.

With a rush of technology investment decisions on the horizon
- broad implementation of server and storage virtualization, PC
upgrades to handle the next-generation of Windows - CIOs
that analyze their current infrastructure landscape and
develop a hardware refresh roadmap provide their IT
organizations with a framework to make decisions that drive
the maximum business return out of tighter and tighter IT
budgets.
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References
1. IBM i 7.1 Technical Overview with Technology Refresh
Updates; March 2013
2. Optimizing Technology Refresh - Closed loop Lifecycle
Planning by Bruce Michelson
3. Shaping the future of end user services by Ian Bradbury
4. Optimizing Technology Refresh Practices -
http://www.archstoneconsulting.com/services/itstrategy-
opeations/white-papers/optimizing-it-technology.jsp
5. Realizing value of Innovation - TCS Journal
6. TCS Case Study Bank
7. HP Case Study Bank
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References
THANK YOU
Group 14 Term Project Presentation SML 702

IT and Business Concerns

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Group 14 Term Project Presentation SML 702

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