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  • ISACA Presentation IT Cost Optimisation How can an assurance function add value in this topical area? AUGUST 2009

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Contents

    Purpose Why am I standing in front of you today? What is Cost Optimisation? Challenges and benefits of IT Cost Opt Typical IT Cost Structure Where can you look?

    oFull spectrum oTactical oStrategic

    How do we turn this into value for the business? timeframes real deliverables - measurement General focus areas

    oPhysical Asset Reviews oSoftware Asset Management oContract Compliance Reviews oBusiness Risk vs Service Level Alignment

    Key issues re-cap Questions Presenter details

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Purpose of tonights presentation

    To address members of the ISACA and their guests who are interested in delivering efficient, effective and innovative assurance services for organisations of all sizes and industries.

    Specifically

    How can IT assurance engagements can be structured to meet assurance objectives whilst identifying and delivering cost optimisation benefits to all areas of the IT landscape?

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    About me

    Line of Business Lead for IT Cost Optimisation at KPMG Australia Significant experience delivering assurance engagements including:

    designing, implementing and assessing controls

    Implementation of an IT Cost Optimisation approach which has been recognised by KPMG worldwide

    Recently delivered a number of highly successful IT Cost Baselining and IT Cost Optimisation engagements

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    What is Cost Optimisation?

    IT Cost Optimisation is not only focussed on reducing IT spend we work with our clients to strike a balance where acceptable IT service levels continue to be delivered under an optimised cost structure.

    The devil is, definitely, in the details. In our experience, isolated quick fixes and conventional cost-cutting exercises often fail to identify and address the underlying cost and value drivers. While this statement holds true for cost optimisation programs enterprise-wide, it is particularly relevant for IT as a significant component of the total spend relates to intangible assets where cost and value drivers are not easily identified.

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Some challenges and benefits

    Challenges

    Datasets most likely, there will be many (and conflicting) Sources of truth related to above Communication you may find that you become a communication bridge between

    teams

    Benefits

    Positive return on the assurance dollar Real savings most IT cost optimisation initiatives provide measurable real dollar

    results

    Increased monitoring/reporting controls A balance between cost savings and business risk Increased cost disciplines

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Typical IT structure

    Est. % Cost Savings

    Server Hardware Support and Leasing

    Infrastructure Operating Systems (OS)

    Software License / Maintenance

    Application Software License / Maintenance

    Data Centre

    Flow on savings from higher level optimisations

    >10%

    >10%

    Significant, although can be challenging to realise

    Cost Stack

    Help Desk / Other Support Up to 10%

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Strategic

    Tactical

    Where can you look the full spectrum

    Access to areas of deep specialisation

    Procurement Investment

    and Divestment

    Treasury Finance Function Real Estate Supply Chain and sourcing

    Human Resources Tax

    Cash and Working Capital

    Infrastructure Optimisation

    Software Licensing

    Archiving & Data Management Decommissioning

    Service Level Optimisation

    Physical Audit & IT Asset

    Management

    Sourcing Organisation Restructure Governance PMO Sustainable IT Vendor

    Management Strategy

    Portfolio Management

    Systems and IT

    Full spectrum cost optimisation

    Focus areas for IT Cost Optimisation

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Tactical for clients seeking short-term, tangible, cost optimisation we suggest they consider beginning with the tactical focus areas below

    Infrastructure Optimisation

    Software Licensing Archiving & Data

    Management

    Decommissioning

    Service Level Optimisation

    Physical Audit & IT Asset Management

    Business criticality vs service level Infrastructure capacity management Purchase or re-purpose

    Re-purpose of software from decomm devices

    Check re-purpose pool prior to purchasing

    Duplicate functionality Over-spec software Licence compliance

    Invoice reconciliation Complete and current

    information

    Data centre floor space management

    Variable and fixed costs for each location

    Deletion of data following retention period expiry

    Full vs incremental back-up

    Daily vs periodic back-up

    Invoice reconciliation removal of decomm items

    Power & floor space costs for items awaiting decomm

    Minimise service for items awaiting decomm

    Decomm legacy following transformation or upgrade projects

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

    Strategic we suggest that clients seeking to adopt a more strategic approach for longer term cost optimisation would consider the additional strategic focus areas below

    Sourcing

    Organisation Restructure Governance PMO

    Sustainable IT

    Vendor Management Strategy

    Portfolio Management

    Economies of scale central management

    SLA/KPI monitoring Flexible vendor contracts Are you getting what youre

    paying for?

    Regular review of sourcing options

    Sourcing strategy In-house activities that are not

    part of your core business Breadth of in-house skills to

    deliver the expected business outcomes in the timeframes required

    Alignment of IT Services to business requirements

    Transparency of IT costs Ability to influence re-

    charged variable costs Centralised verses de-

    centralised model Available budget versus delivery expectations

    Assessment of projects to park or discontinue

    Correct identification and focus on critical business projects

    Oversight of project schedules

    Root cause identification of trends in the delivery of IT Projects

    Measurement of benefit realisation post-delivery Better IT Sustainability practices often deliver cost savings

    Value creation through improved corporate reputation

    Additional revenue creation from being a more sustainable company

  • 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under P