In my post about "What can be done with Enterprise Architecture" I mentioned four main areas where I'm using successfully enterprise architecture. I already started to touch IT planning (will dedicate posts for M&A and BCP/DRP in the future) , So this time I want to deal with the hottest topic today : IT cost reduction.
There are six main directions that you can follow to reduce your IT costs. Each one of them required certain level of familiarity with your IT assets, business needs and available technologies in the market today. Those directions are:
- Removing Unused assets. Removing or (reusing for other purpose) assets that doesn't support any business functionality (application, products, hardware).
- Consolidation of servers, databases, technologies and applications.
- Introduction of cost reduction technologies like virtualization, Grid computing, cloud computing, Etc'.
- Freezing high cost low value projects, which will reduce HR costs and technology investment.
- Replacing high cost low usage technologies, which will reduce licensing and support costs.
- Changing agreements with suppliers to reduce cost (to 'site license' and from 'site license' to license by product)
As you can see each one of those direction required knowledge of what we (IT) have, our business environment and where we (Busines) heading. Therefore the first phase will be collecting this information by following a meta-model that suites your enterprise needs. The second phase will be modeling (or enter) the collected data into a tool that will enable you to view the collected data from different angles ( a business intelligence view of your IT assets and business direction). The third phase is running analysis on top of this data to gain success in each one of mentioned above direction. For example give in order technologies by four categories: performing the same technology capability, with the minimum application usage, that has minimum custom code written above the technology and with high cost. Our last step is to create a radmap (that takes in account current IT activities and dependencies) to set when and by whom the needed tasks will be performed.
Lets take a closer look at each one of those phases:
- Collect and model. Collect architecture building blocks and model their relations. The most comon building blocks and relations for cost reduction are:
- Building Blocks
- Business capabilities (name)
- Applications (name, maintenance costs)
- Technologies (name, description, cost – license + maintenance , number of maintaining persons)
- Servers (name, cost)
- Projects
- Relations
- Capabilities to Applications
- Applications to technologies
- Technologies to Servers
- Projects to business capabilities, application, technologies and servers.
- Building Blocks
- Identify duplicate technology
- Execute technology report (technology name + technology description)
- Identify duplicate/overlap technologies by:
- Organization knowledge
- Using technology description
- Group duplicated/overlap technologies together
- Validate conclusions
- Calculate technology cost
- For each technology in each Group calculate technology cost
- Licensing of software
- Maintenance costs
- Servers costs
- Human resources costs
- For each technology in each Group calculate technology cost
- Identify Amount of Customizations
- find any custom code (usually mapped as applications) on top of each technology (to serve as infrastructure)
- Add the following data for each technology:
- Amount of code that was written
- Number of infrastructure applications
- Number of lines of code
- Amount of applications that are using custom code (on top of the technology)
- Amount of code that was written
- Identify Usage & Business Support for Applications
- For each technology list all applications that directly using given technology
- For each technology you should have:
- Application that are using it directly
- Application the are using it indirectly (using custom code)
- For each application that is using one of the listed technologies get all business capabilities, which the application supports
- Add this list to each technology
- Calculate Costs & Model Savings (incl. Cost to Retire)
- For each technology list:
- Total cost
- Amount of custom code
- Application supported by custom code
- Total application being supported by technology
- List of business capabilities being supported by technology
- Identify if one of the given technologies required high costs, has less custom code, support less applications and support less business functions or less core business functions
- Find assets that dosen't support any business capabilities
- Look for technologies that fits into business enviroment and will reduce costs ( can't suggest cloud computing to CIA 🙂 )
- Identify the cost and time needed to convert applications, which are using the suggested (to be removed) technology, to work with the replacement technology
- For each technology list:
- Create road map
- Create migration plan
- For each application that requires a change
- When the change will be done
- What are the resources needed
- Dependencies
- When to retire the technology + Connection with vendor
- For each application that requires a change
- Create migration plan
IT cost reduction is not an east task from many aspects. Using enterprise architecture helps you at least in one aspect, it gives you systematic approach to deal with huge amount of data and possibilities. Such approach helps to reach better results in less time.
