This article is part of the Cost Savings series (part 3 out of 4).
In previous articles we have introduced how to cut IT spend by controlling and reducing usage of hardware or software and by optimizing your infrastructure & licensing. Advantage is that both approaches are applicable in any organization and anytime. Unlike those two methods, standardization (or consolidation) is more long-term strategic approach useful rather in large, complex organizations.
Portfolio standardization is especially efficient in organizations growing inorganically through mergers & acquisitions or with decentralized management of IT. In such organizations there is a high chance (or high risk?) of using multiple software products for the same or similar purpose, as well as having hardware devices from various manufacturers.
Journey starts with building hardware & software catalog
Having the catalog is essential to notice redundancies in your portfolio. The journey (usually not very exciting for most people) starts with collecting data from your entire landscape, discovery tool is a must-have for this step. Next step is normalization of raw data to complete list of software products. Unless you have a sophisticated Software Asset Management tool in your organization, you will have to evaluate each software product individually to understand what it is being used for. Don't forget to also assess software importance from cost and risk perspective (create vendor tiers) and assign IT stakeholder to each item. It is also recommended to split items per infrastructure type (desktop, server or SaaS).
Building hardware catalog is slightly easier as you will probably identify significantly less catalog items. On the other hand, network discovery is insufficient for data collection, other sources must be used to get information about non-discoverable devices like monitors, docking stations or mobile phones. Preferably, data from your Hardware Asset Management register should be used, if you have HAM implemented.
As a result, you gain full visibility over your hardware and software portfolio. Having hardware & software catalog, it is actually quite easy to spot redundant items, while removing them is much harder. It is not unusual to find Microsoft Teams, GoToMeeting and Zoom at the same time or have multiple text editors in your environment. The tricky part is getting IT stakeholders into one room and let them decide what solution will be preferred and used as standard.
Beware of vendor-lock!
Don't try to be a perfectionist. There might be a good reason to have multiple vendors for the same thing. Both Microsoft SQL and Oracle Database have their pros and cons, so don't try to eliminate every redundancy. Standardization may be sometimes extremely difficult, especially consolidation of ERP systems after merging companies is a long-term and painful process.
Purchasing larger quantities from one vendor can be a leverage for price negotiation, you will probably reach better volume discount. But every coin has two sides. Standardization might be also a disadvantage when you can't easily switch to different solution and vendor knows about it. Be cautious when standardizing your portfolio, make sure you have vendor management in place and think about alternative plans (for A-tier vendors) to avoid being vendor-locked. Do you control information shared with your vendors to minimize possibility they will use it against you? Try doing SWAT analysis for your key software and hardware vendors, it may give some hints if you should change your strategy.
Can you calculate reals costs to maintain your software?
Very rarely we work with a customer that has calculated real costs to maintain software in its portfolio. License maintenance or subscription is a fee for vendor to develop new functions and provide upgrades, patches or hot fixes. But is this the only thing you should thing about?
There are more aspects that should be considered. Ensuring trained personnel that is able to install or upgrade the solution as well as handle the first and second level support is more and more difficult. Security team needs to test major versions on vulnerabilities. License terms may change with new versions so your ITAM team may want to review it. Every purchase or maintenance renewal costs time of your IT Procurement and Finance. IT Controlling may build granular budgets on vendor level. And we could continue...
Standardization of software and hardware portfolio will make life of CTOs and CIOs easier. But more importantly, it will reduce your OpEx! Do you have this in your goals from your CFOs? Maybe you could review hardware and software used in your organization to achieve the goal this year.
You can find other articles from Cost Savings series here:
If you want to learn more about cost savings or cost optimization, do not hesitate to get in touch with us using contacts below.
Comments