It might not be possible to move from 80/20 to 60/40 all in one year, but it might be possible to do so over time.  For example, A $10 million company spending 5% of its revenues on Information Technology (IT) would have a total IT budget of $500,000.  If it spent 20% of the budget on new initiatives, it would be spending $100,000.  By moving that ratio to 30%, it could increase its new initiatives budget to $150,000, a 50% increase in funding for new initiatives AND no increase the overall size of the IT budget.

This means the company would need to find $50,000 in cost savings.  Can savings be found?  Below are 2 true scenarios. 

Scenario 1

A small business wanting to be proactive had signed a contract for a managed care program.  The plan was costing them $4500 per seat per year for 28 workstations and 2 servers for a total of $135,000.  There was just one problem -- the level of support was more than the business needed.  The business did not need 24/7 support, equipment was all under warranty, and employees had been trained in the office products so the level of application help desk was not necessary. 

After clearly articulating the needs and finding a different vendor, the business ended with a new contract with a total cost for the year of approximately $30,000 – over a $100,000 in savings.   

Scenario 2

A small business realized that if they used various domain and server based technologies (such as group policy) to provision workstations with network resources such as mapped drives, network printers, and faxes, support visits to workstations could be reduced.  This resulted in significant savings and efficiencies.  First line technicians were billed at $100 per hour.  Workstation visits averaged 15 minutes – not including the time to move between locations/offices.  The business had 35 workstations.  Each visit required 8.75 hours ($875) of a technician’s time to implement.  Visits occurred once every two months.

Centralizing the activity provided a minimum savings of $5250.  Assume an average of 15 minutes to travel between locations/offices and an additional $5250 is saved for a total of $10,500.  Note the cost of interrupting the employee at the workstation was not calculated, but it should be considered as well. 

Making Every Dollar Count Article

Issue 45, March 2009