Spend more to reduce costs?

It is becoming increasingly important to not to analyse energy consumption for all utility types, be it electricity, gas, water, heat, renewables, oil etc. The bottom line is both operational efficiency and utility costs monitoring. In the long run, these are management strategies designed to drive energy costs downwards as a continuous improvement cycle and as a measure of reducing carbon emissions.

It is also getting increasingly easier for organisations reduce energy use and achieve this goal using technology without having to “remember” to do it yourself. Organisations can never go wrong by investing in energy management software. There are varied software options to choose from depending on the organisational objective.
Some of the energy management objectives that organisations may need to meet are:

? Establishing baseline energy use

? Carrying out Energy audits

? Monitoring and measuring energy performance against the energy policies of an organisation and objectives

? Achieving energy certification
Energy management software?s come in handy when an organization wishes to achieve either of the above objectives.

Use of energy management software?s also assists organisations in measurement and verification of energy consumption as well as Monitoring and Targeting. Measurement and verification is where a company quantifies energy consumption beforehand (baseline energy use) and after energy consumption measurements are implemented in order to verify and report on the level of savings actually achieved.

Organisations that wish to verify the energy savings achieved by building retrofits can use energy management software?s. This is an important objective for companies that wish to either satisfy internal financial accounting and reporting requirements, or to meet the terms of third-party contracts for project implementation and management. Monitoring and targeting is also made easier by use of software. This is critical as a management technique, regardless of whether an organisation has specific facility retrofits in order to keep operations efficient and to monitor utility costs.
Overall, an investment in energy management software, is worthwhile in the achievement of management strategies designed to drive energy costs downwards as a continuous improvement cycle.

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A Definitive List of the Business Benefits of Cloud Computing

When you run a Google search for the “benefits of cloud computing”, you’ll come across a number of articles with a good list of those. However, most of them don’t go into the details, which nevertheless might still suit some readers. But if you’re looking for compelling business reasons to move your company’s IT to the cloud, a peripheral understanding of what this technology can do for you certainly won’t cut it.

Now, cloud computing is not just one of those “cool” technologies that come along every couple of years and which can only benefit a particular department.?What we’re talking about here really is a paradigm shift in computing that can transform not only entire IT infrastructures but also how we run our respective organisations.

I hate to think that some people are holding back on cloud adoption just because they haven’t fully grasped what they’re missing. That is why I decided to put together this list. I wanted to produce a list that would help top management gain a deeper understanding of the benefits of the cloud.

Cloud computing is one bandwagon you really can’t afford not to jump into. Here are ten good reasons why:

1.?Zero?CAPEX and low TCO for an enterprise-class IT infrastructure

2. Improves cash flow

3. Strengthens business continuity/disaster recovery capabilities

4. Lowers the cost of analytics

5. Drives business agility

6. Ushers in anytime, anywhere collaboration

7. Enhances information, product, and service delivery

8. Keeps entire organisation in-sync

9. ?Breathes life into innovation in IT

10. Cultivates optimal environments for development and testing

Zero CAPEX and low TCO for an enterprise-class IT infrastructure

Most cloud adopters with whom I’ve talked to cite this particular reason for gaining interest in the cloud.

Of course they had to dig deeper and consider all other factors before ultimately deciding to migrate. But the first time they heard cloud services could give them access to enterprise class IT infrastructures without requiring any upfront capital investment, they realised this was something worth exploring.

A good IT infrastructure can greatly improve both your cost-effectiveness and your capability to compete with larger companies. The more reliable, fast, highly-available, and powerful it is, the better.

But then building such an infrastructure would normally require a huge capital investment for networking equipment, servers, data storage, power supply, cooling, physical space, and others, which could run up to tens or even hundreds of thousands of euros. To acquire an asset this costly, you’d have to take in debt and be burdened by the ensuing amortisation.

If you’ve got volumes of cash stashed in your vault, cost might not be a problem. But then if you really have so much savings, wouldn’t it be more prudent to use it for other sales-generating projects? An extensive marketing endeavour perhaps?

A capital expenditure of this magnitude and nature, which normally has to be approved by shareholders, can be regarded as a high financial risk. What if business doesn’t do well and you wouldn’t need all that computing power? What if the benefits expected from the IT investment are not realised??You cannot easily convert your IT infrastructure into cash.

Remember we’re talking about a depreciating asset. So even assuming you can liquidate it, you still can’t hope to sell it at its buying price. These factors are going to play in the minds of your Board of Directors when they’re asked to decide on this CAPEX.

Incidentally, these issues don’t exist in a cloud-based solution.

A cloud solution typically follows a pay-as-you-go utility pricing model where you get billed monthly (sometimes quarterly) just like your electricity. ?In other words, it’s an expense you’ll need to pay for?at the end of a period over which the service’s value would have already been realised. Compare that with a traditional infrastructure wherein you’ll have to spend upfront but the corresponding value will still have to be delivered gradually in the succeeding months or years.

demand expense traditional infrastructure

From the point of view of your CFO, what could have been a CAPEX to acquire an asset that depreciates with time (and consequently reduces your company’s net worth), becomes a flexible operating expense (OPEX).?Truly, it is an operating expense that you can increase, decrease, or even totally discontinue, depending on what the prevailing business conditions demand.

demand expense cloud infrastructure

People who think they have done the math in comparing cloud-based and traditional IT infrastructures claim that, although they see how cloud solutions transform CAPEX into OPEX, they really don’t see any significant difference in overall costs.

However, these people have only gone as far as adding up the expected monthly expenses of a cloud solution over the estimated duration of an equivalent IT infrastructure’s effective lifespan and comparing the sum with that IT infrastructure’s price tag. You won’t get a clear comparison that way.

You need to consider all factors that contribute to the infrastructure’s Total Cost of Ownership (TCO). Once you factor in the costs of electricity, floor space, storage, and IT administrators, the economical advantages of choosing a cloud solution will be more evident. Add to that the costs of downtime such as: interruptions to business operations, technical support fees, and the need to maintain expensive IT staff who spend most of their time “firefighting”, and you’ll realise just how big the savings of cloud adopters can be.

Still not convinced? Well, we’re still getting started.?On our next post, we’ll take a closer look at the additional benefits of paying under an OPEX model instead of a CAPEX model.

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A Business Case for Sharing

We blogged about sharing services in a decentralised business context recently, and explained why we think why these should be IT-Based for speedy delivery. This is not to say that all shared services projects worldwide have been resounding successes. This is often down to the lack of a solid business case up front. We decided to lay out the logic behind this process.

Management Overview ? The overview includes a clear definition of why the current situation is unacceptable, the anticipated benefits of sharing, and an implementation plan were it to go ahead. The project should not proceed until the stakeholders have considered and agreed on this.

Alternatives Considered ? The next stage is to get closer to the other options in order to determine whether an alternative might perhaps be preferable. Substitutes for shared services are often doing nothing, improving the current method, and outsourcing the service to a third party.

The Bottom Line in Business ? Sharing services comes at an initial cost of infrastructure changes, and the impact on human capital (the latter deserves its own blog). The following need careful consideration from the financial angle:

Numbers to Work Through

  • Manpower to design and roll the project out in parallel with the existing organisation.
  • Capital for creating facilities at the central point including civil works, furniture and equipment and IT infrastructure.
  • The costs of travel, feeding and accommodation. These can be significant depending on the time that implementation takes.
  • The opportunity loss of diverting key staff – and the cost of temporary replacements – if appointing line staff to the project team.
  • Crystal-clear project metrics including (a) the direct, realisable savings (b) the medium and long-term effects on profit and (c) where to deploy the savings

Risk Management

Shared services projects don’t go equally smoothly, although planning should reduce the risk to manageable levels. Nonetheless it is important to imagine potential snags, decide how to mitigate them and what the cost might be.

We believe in implementing shared services on a pilot basis in the business unit that eventually provides them. We recommend building these out to other branches only when new processes are working smoothly.

Moving On From a Decision

We recommend you revisit your management overview, the logic behind it, the assumptions you made, and the costs and benefits you envisage before deciding to go ahead

The final step in proving a business case is doable should be fleshing out your roadmap into a detailed operations plan with dependencies on a spreadsheet.

IT Transformation Defined

Businesses depend on IT to effectively manage business processes and to provide products and services to clients. As IT technologies advance, it is crucial that businesses update their hardware to remain competitive. But businesses should do more than simply upgrade their servers and should really strive to effect IT transformation.

What is IT Transformation?

IT transformation is the ongoing process of changing the way that a company uses IT to better align it with current business goals. Through the IT transformation process, businesses try to determine whether they are meeting mission-critical benchmarks through the incorporation of new IT technologies for corporate transformation.

For example, if one of the current business concerns is whether the company can improve customer service, the IT system will need to evolve in such a way that improves customer service in a measurable way.

Successfully Aligning the Technology to Business Goals

In order to successfully align the IT system with business goals, it is important to understand the newly integrated technologies to understand how they can change business processes. If a new feature is intended to make the server more secure, the management should know exactly how the feature will improve the security of the server and whether the new implementation is redundant.

Once the business objectives have been identified, IT transformation is carried out by changing both the software and hardware used by the company. An example would be the growing trend of server migration to the cloud. Cloud computing is the growing trend of making files and data accessible from anywhere. If an organisation believes that it can improve productivity through a server cloud migration, it will need a way to test this.

The IT Transformation Process

Given that IT transformation is directly related to the core business, the IT transformation process must begin by identifying which aspects of the company must be changed. Then, the company must determine?IT services that could potentially be integrated into the business in a way that will help the company achieve benchmarks. After the key decision-makers understand the IT network well enough to effectively implement it, the company must efficiently manage the transformation process. Then, after the IT has been integrated, the company must have a system in place to measure business transformation in a numerical way.

For example, when assessing customer satisfaction, one effective strategy would be to distribute customer satisfaction surveys that ask customers to rate their experiences on a scale of one to ten. The company can then measure the results of the customer satisfaction survey to determine whether the new IT implementations are accomplishing their intended goals.

If the expected benchmarks are not being met, the next step in the IT transformation process is to determine if there is a specific reason for that. Is there a way that the feature can be better integrated to achieve desired business objectives? Are there other features that can help the company better achieve its goals?

Upgrading a network can be an expensive process and it is important to identify early on which options are the most likely to benefit the company’s bottom line.

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