By Chris Ginelly, managing director, Civica Services

Unprecedented budgetary constraints are forcing public sector ICT managers to think ‘out of the box’ to find rapid, system-wide cost savings. Corporate software assets can account for up to 20% of many public sector organisations’ ICT budgets.  By conducting their very own ‘spending review’ here, ICT managers could unearth critical savings for the very tough financial years ahead. 

This fresh approach could bring new impetus to enterprises and public sector organisations’ sustainability or energy reduction strategies. These have assumed even greater urgency now that the Carbon Reduction Commitment (CRC EES) due next year has been turned into a tax on enterprises’ operations. For example, Wiltshire County Council has been landed with a £600,000 environment tax bill after the county was left lagging behind in the race to reduce carbon emissions – focusing on ICT’s contribution to the carbon taxes coming down the line…

There are two critical factors that are conspiring against CIOs reducing their ICT spend. First, daily workloads mean that ICT professionals cannot often develop a strategic approach to driving savings based on better asset management. Second, ICT departments may not have the very detailed licensing knowledge or the vendor relationships to drive savings.

So how can CIOs find new system savings when the money has dried up? The key lies in gaining a better understanding of their software investments. They need to work out how these assets support the organisation and the likely financial commitments associated with them in the future. This clearer picture could provide managers with real scope not only for making cost savings but also saving vital staff resources.

Strategic management of assets
A new wave of research validates the view that considerable cost reductions are possible in software procurement and licensing. Technology industry analyst Gartner says organisations can make savings of up to 30 per cent on software budgets within only twelve months.  These breakthroughs depend on IT teams taking a planned approach to software spending over three to five years. This must cover both technology and operational processes to identify and realise potential savings.

To help provide realistic plans for corporate ICT teams, UK experts in software buying and licensing for big firms and the public sector such as Microsoft Large Account Resellers (LARs) have developed very practical frameworks in recent years for savings. These approaches encompass the following core methodologies:

Software Asset Management
Many corporate buying cycles have previously been driven by day-to-day priorities rather than strategic corporate needs. This has often led to poor utilisation of assets and cost control issues.  CIOs need to oversee an enterprise-wide identification and proactive management of hardware and software assets to determine if they support operational demands on the business and whether they are adequately budgeted for.  Expert providers can help different types of public and private sector bodies with special software asset management and system discovery tools that quickly identify the state of play for core software applications and desktop products. 

Since hardware and software products are inevitably subject to lifecycles, supplier agreements and compliance processes, these must be identified and managed to drive costs out.  Properly planned approaches to understanding one’s technology assets can reduce costs, increase asset performance, and improve budget predictability. It also widens the ICT team’s wider resource planning options for the future.

Organisations particularly struggle to review software assets and licences.  This is exacerbated by these renewals not being factored into budgets. By adopting effective software licensing management as a process – with regular audits, harvesting unused licences and forward planning – ICT departments can avoid buying licences by guesswork, unexpected cost spikes, and wipe out overspend.

Despite this being another project to supervise, ICT professionals can take heart from the fact that, with asset management strategies, their organisation will at last properly concentrate its buying power and negotiate ongoing discounts from its many technology suppliers.

Green review
Technology industry researchers such as Gartner also indicate that a substantial amount of an organisation’s carbon emissions are directly related to its ICT estate.  The spend review methodology described above for licences can also be applied to create a planned corporate-level ICT Efficiency Assessment.  The IT director thus identifies the operational demands on technology systems and the impacts of changing ICT operations on levels of energy usage and carbon emissions. This assessment can help pointing the way for the company or department to fine tune, rationalise and replace technology assets to reduce the corporate carbon footprint.

A corporate strategy to reduce emissions likewise sees CIOs moving beyond existing infrastructures in favour of the latest cloud computing -based resources, avoiding the need for expanding the organisation’s existing technology infrastructure.  Planned strategies such as rationalisation of obsolete and duplicated hardware and server virtualisation can be followed by the phased adoption of such cloud computing services.  These platforms enable organisations to add in flexible new service offerings, become more responsive, and boost technology performance, without being drawn into major infrastructure investments. 

Closely related to this thinking, CIOs are also looking at lower-energy ICT developments such as Windows 7 technologies. Specialists such as Civica Services are able to provide flexible, managed services options. These can provide customers with state-of-the-art infrastructures and processes financed from operating budgets that better manage operations to combine savings with progress on carbon reduction.

Corporate savings and beyond
Leading LARs such as Civica have developed corporate-level methodologies such as the Civica Software Spending Review (SSR) to identify cashable savings and demonstrate where greater operating efficiencies can be achieved.  In a recent case, Civica identified £250,000 in savings and a reduction of over 1,000 tons of carbon emissions for a public sector body. The study also helped support the business case for upgrading to a more modern technology set.

Today’s management tools to rationalising technology assets and software licensing are increasingly delivered as integrated offerings or individual elements. Some software suppliers are offering innovative pricing such as ‘no win, no fee’ offers.  In any financial climate, the appeal of rapidly making savings of up to 30 per cent in the maze of today’s corporate technology systems is plain.