Cutting Costs Improving Productivity
Cloud Computing and Outsourcing are a major productivity and cost cutting opportunity
Janco has identified a number of ways that CIO can improve the productivity of their enterprises. They are:
- Consolidate information technology infrastructure: Enterprises currently spend billions to support widely-dispersed IT assets. Janco estimates that between 20-30% of that spending could be eliminated by reducing IT overhead, consolidating data centers, eliminating redundant networks, and standardizing applications. One often-cited opportunity for cost savings through emerging technology comes from cloud computing. Enterprises that have moved to cloud computing have generally achieved between 25 and 50 percent in savings associated with information technology operations.
- Streamline supply chains: Enterprises purchase billions of dollars’ worth of goods and services each year. These goods and services are procured largely within departments with independent procurement processes. In addition many purchasing functions are focused too intensively on commodity purchasing and not enough on supplier management.
- Reduce energy use: Enterprises operate multiple “server farms” and data centers, requiring square footage and power. The implementation of new building management technologies can reduce its energy consumption. Advanced PC management systems can reduce the size of the PC fleet and also reduce federal energy consumption by 10-20%. The aggressive adoption of voice, video, document sharing and collaboration tools can reduce travel-related expenses by 10-20%.
Move to shared services for mission-support activities: Why should every agency have its own IT, finance, legal, human resources or procurement operations? For example, when the Federal government consolidated 26 payroll systems to four, the Environmental Protection Agency reduced payroll costs from $270 to $90 per employee, saving $3.2 million a year, and the Department of Health and Human Services reduced costs from $259 to $90 per employee, saving $11 million a year. Likewise, when the government consolidated travel systems, the Department of Labor reduced its costs from $60 to $20 per travel voucher and reduced processing time from about 7 to about 3 days.”
Apply advanced business analytic to reduce improper payments: Industry regularly conducts recovery audits of large-scale transactions; this could be fraud or mistakes, or an unanticipated shift in demand. New analytical techniques can increase the identification rate.
- Reduce field operations footprint and move to electronic self-service: For example, there are more than 10,000 federal government forms in 173 different agencies that could be automated to allow citizens and businesses to conduct their business with government online. Reducing the citizen-related field operations of the Federal government and automating the government’s form processing can generate $50 billion in savings over ten years. The Federal government saved $30 million a day by teleworking during the February 2010 snow storms. The Telework Exchange estimates that, economy-wide, $441 billion in potential U.S. employer teleworker savings can be realized from reduced absenteeism, recruiting costs, and increased productivity.
- Monetize IT assets: IT has a large inventory of assets that could generate revenue. ‘Mining’ the balance sheet through concessions agreements and other opportunities may generate significant revenues. This could include selling surplus facilities and selling and leasing back others. By mining the balance sheet aggressively and centralizing certain operations, enterprises can recover vast amounts of under utilized assets.
