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Using Enterprise Architecture to reduce IT costs ( a cookbook for IT cost reduction)

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.
  • 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
  • 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)
  • 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
  • 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

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.

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