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Live Financial Forum July 22nd 12-1pm EST
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Hi TechRepublic members, I'm Peter Hennigan, a senior manager in the IT Business Risk Management Practice at PricewaterhouseCoopers, and I will be leading a live question and answer forum on IT financial issues right here on Thursday, July 19th from 12 noon to 1pm EST. Feel free to post your questions ahead of time or email them to TechRepublic editor Judy Mottl, at judy.mottl@cnet.com. Then tune back in here on Thursday as I answer your questions on a wide range of issues ranging from chargeback, ROI, sourcing issues, to software asset management and contract management. Please note that this event will not focus on personal financial issues but purely on IT financial topics and scope.
I apologize for the typo in Peter's initial text -- completely my fault and not his! Sorry for any confusion and we hope to see you all here Thursday!
I am here and monitoring the discussion queue, but I don't see anything happening. I am refreshing the screen. Am I doing something wrong?
Hi Tom,
Glad to see you here!
We're on, and Peter's answered the first few questions. I've been refreshing the page and that's working ok. You could try going to the discussion center and hitting the link again.
Glad to see you here!
We're on, and Peter's answered the first few questions. I've been refreshing the page and that's working ok. You could try going to the discussion center and hitting the link again.
I apologize for the typo in Peter's initial text -- completely my fault and not his! Sorry for any confusion and we hope to see you all here Thursday!
Peter,
Could you provide some recommendation on how granular a unit charging mechanism can become, before the benefits in cost transparency to the customer are swallowed up by the administrative overhead involved.
Regards,
Tony...
Could you provide some recommendation on how granular a unit charging mechanism can become, before the benefits in cost transparency to the customer are swallowed up by the administrative overhead involved.
Regards,
Tony...
Consider two questions: What level of admin OH can/will the company bear? What level enables users to better manage/control consumption. Right level varies depending on organization.
Peter,
Do you have a sense as to the trend of companies charging back the business divisions for IT services. I worked for a company that wanted to move that direction, and I have also worked for a large company that discontinued the chargeback process - thinking it was causing more accounting work than value. Your thoughts?
Do you have a sense as to the trend of companies charging back the business divisions for IT services. I worked for a company that wanted to move that direction, and I have also worked for a large company that discontinued the chargeback process - thinking it was causing more accounting work than value. Your thoughts?
Don't notice much difference either for or against. Large companies tend to use CB. Mid-smaller companies often try & retreat. very easy to generate armies of 'junior accountants' who spend there day debating numbers.
Peter,
Do you have any opinion as to whether a company should or should not be using chargeback to allocate people costs fot the IT organization back to the business units receiving the services?
Do you have any opinion as to whether a company should or should not be using chargeback to allocate people costs fot the IT organization back to the business units receiving the services?
Generally I think people costs should be charged back. Certainly app dev't & support folks should align directly with apps that support specific business processes. Their cost should flow to the business or at least be transparent to the business. Infrstructure people are a bit different, but usually they can be aligned with a service (e.g., desktop support) or an application.
Whouln't Chargeback make your dept look like a service, therfore open the door for outsourcing?
If mgt. is going to consider outsourcing, they will whether IT chargebacks or not. Doubt that the existence of CB raises the outsourcing risk.
Participants in today's forum will need to consistently 'refresh' or click in/out of the discussion page to read new posts during the one-hour event. Just want to make sure there are no technical difficulties!
What is the cost associated with setting up an in-house small email sever (less than 100 people) with great security? thanks!
Can't answer specifically, but consider these costs" hardware, software, installation, ongoing maintenance, impact on existing support staffing.
We are going to replace our desktops (approx 400 machines) this Fall. Previous management was very strong in Life Cycle Management and leasing. The reality of our situation is that, in the past, we have either had to extend of lease or deploy with an old image.
Is there a way to analyze lease/buy calculating the effects of cases where the lease time needs to be extended at the end of the lease because of outside factors? We currently have a very low internal cost of money and are paying a 2% admin fee to the leasing company to meet the requirements of an operational lease>
What factors should be included in the cost comparison between leasing and buying in calculating total cost of each method, ex. disposal fees?
Thanks.
Shirley McCleer
Infrastructure/Client Services Manager
Is there a way to analyze lease/buy calculating the effects of cases where the lease time needs to be extended at the end of the lease because of outside factors? We currently have a very low internal cost of money and are paying a 2% admin fee to the leasing company to meet the requirements of an operational lease>
What factors should be included in the cost comparison between leasing and buying in calculating total cost of each method, ex. disposal fees?
Thanks.
Shirley McCleer
Infrastructure/Client Services Manager
Extending operating leases will almost always make the lease choice a worse economic choice than your original buy option. Can vary depending on extension/renewal options negotiated at the front end.
Perfroming some 'what if' scenarios in your lease/buy analysis can give you an idea of the impact of extending the leases.
Need to consider all costs in the comparison. Also, must consider residual value & be honest about whether you will realize the RS & the costs associated with selling/disposing.
Perfroming some 'what if' scenarios in your lease/buy analysis can give you an idea of the impact of extending the leases.
Need to consider all costs in the comparison. Also, must consider residual value & be honest about whether you will realize the RS & the costs associated with selling/disposing.
I'm the IT Director for my company and I'm looking for a benchmark figure. What is an acceptable range of IT spending per employee? I'm interested because my company spends what I consider to be a large amount on cell phones and BlackBerries, but a comparatively small amount on infrastructure, application software and security.
Bryce White
Director of Information Systems
Bryce White
Director of Information Systems
This metric varies significantly by industry. The analyst groups (Gartner, Meta, etc...) publish this info-some may be avaialble at no cost. Also, can often find these metrics in IT trade literature. What industry are you in?
As Mr. Bryce can't attend the forum today I was able via email to determine his industry --it's the hotel industry.
Industry surveys tag this metric @ $3-$14k/employee based on industry. Various manufacturers tend to be on the lower end. Financial service companies tend to be on the high end. One quoted average figure is $6k/employee.
Our company recently bid on a proposal for a government agency. There were maybe 20 criteria to meet. The last area on the RFP was to provide a price quote on a separate document. The agency reviewing the RFP said that they would evaluate the proposals based on the non-price criteria, and then they would only look at the prices of the top two ranked vendors.
The proposal received six responses and the prices ranged from 40K to 200K. The agency selected the highest bidder at almost 200K, since this company ranked highest on the non-price criteria.
Do you know if this is common practice to ignore pricing and only consider the price at the end. It seems that this government agency spent perhaps five times the money they could have if they had seen the proposal prices ahead of time.
The proposal received six responses and the prices ranged from 40K to 200K. The agency selected the highest bidder at almost 200K, since this company ranked highest on the non-price criteria.
Do you know if this is common practice to ignore pricing and only consider the price at the end. It seems that this government agency spent perhaps five times the money they could have if they had seen the proposal prices ahead of time.
When evaluating proposals, it makes sense to save pricing review & negotiation till last. You first must ensure that the response meets the requirements & that you can compare on an apples to apples basis. Then you look @ price. Bottom line: Negotiate deliverables & terms & conditions first, price last. Not all companies do this. Nice to know some Gov't Agencies do.
What are the keys to developing an IT budget that is aggressive but achievable?
(Member email; no identity provided)
(Member email; no identity provided)
Peter,
Do you have tips that will help me in presenting my budget so it gets approved?
(Email from an IT manager)
Do you have tips that will help me in presenting my budget so it gets approved?
(Email from an IT manager)
The business need drives the budget. Whoever on the business side is drving your budget should be on the front line for supporting your budget. This is a bit more challenging with infrastructure type investments, but still holds true
How do you handle a situation when an unplanned project is assigned in mid-year that will cause you to exceed your budget?
(Email from an IT project manager)
(Email from an IT project manager)
Same answer-the business either has to decide what other planned project(s) won't be done or pony up the funds for the new project.
Do you have insight into or reference information that discusses industry trends in their IT expense as a percentage of company revenues?
(A post by Mike Sisco on another site discussion)
(A post by Mike Sisco on another site discussion)
these metrics vary by industry & company size. the analysts (Gartner, Meta, Forrester, etc.)track this info & it is often available publicly.
Not sure if any recent trends have been apparent. IT spending generally decreased post 2000, but so did revenue for many industries.
Not sure if any recent trends have been apparent. IT spending generally decreased post 2000, but so did revenue for many industries.
I've been observing cost and security concerns increasing interest in formal IT asset management strategies and processes.
Anyone seeing that in their organizations?
Anyone seeing that in their organizations?
The last company I worked for started asset management precisely for those reasons. This was three years ago. It's a real pain to get started. I was recently consulting at a company that was also starting formal asset tracking and management. So, based on those two obnservations, I would say there is increasing interest for sure.
I'm seeing more interest in IT Asset Management and interest in how to approach it from a practical sense that doesn't require an inordinate amount of administrative time and effort.
It's definitely important in my judgement in order to reduce risk, stay in compliance, and reduce cost in a company.
It's definitely important in my judgement in order to reduce risk, stay in compliance, and reduce cost in a company.
Peter,
What would you recommend to a new IT manager who has never budgeted before as an effective approach in learning what to do and how to go about it?
Mike
What would you recommend to a new IT manager who has never budgeted before as an effective approach in learning what to do and how to go about it?
Mike
Mike,
In addition to the advice Peter may have, check out this article about free budget tutorials:
Free tutorials help managers write better budgets
http://techrepublic.com.com/5100-6317-1030265.html
In addition to the advice Peter may have, check out this article about free budget tutorials:
Free tutorials help managers write better budgets
http://techrepublic.com.com/5100-6317-1030265.html
I recall a web site of a consulting company that had some free info on this topic. I'll post their site some time before the next forum.
Some basics: think of your budget in two views:
Committed: what you have to spend just to keep what you have running.
New: new investments-new projects, required upgrades.
Apply those views to two general expense categories: People and non-people (e.g., hardware, software, services)expenses
Some basics: think of your budget in two views:
Committed: what you have to spend just to keep what you have running.
New: new investments-new projects, required upgrades.
Apply those views to two general expense categories: People and non-people (e.g., hardware, software, services)expenses
Peter Hennigan suggests members check out this site:
http://www.rms.net/index.shtml
as it's chock full of budget resources and online tutorials.
http://www.rms.net/index.shtml
as it's chock full of budget resources and online tutorials.
Ramon Padilla's proposal to establish an IT governance committee caught my attention and i see it fit in our college. At present i don't know where to start if i establish one. Anyone who could extend a helping hand please?
(Post by vince_clores@yahoo.com)
(Post by vince_clores@yahoo.com)
A lot of research/articles exist on this topic. Try searching CIO.com & other IT trade sites. Analyst community has lots of material on this topic.
Anybody out here have a sample on how to write Proposals to increase IT Staff in an organization so i can get some help?I need to submit a proposal to the Management that we need to increase IT Staff. I have experience on making Request For Proposal(RFP) but never had a chance to make a Proposal, so if any, please mail me at walavi@west-group.com would be very thankful
(Post from walavi@west-group.com on another discussion)
(Post from walavi@west-group.com on another discussion)
Your proposal should present a viable business case. What's the business need driving the request? What will it cost? What's the benefit?
If you can tie it to a specific business need and get a business person to also support the proposal, you will increase you chance of success.
If you can tie it to a specific business need and get a business person to also support the proposal, you will increase you chance of success.
Today's forum hit a variety of IT financial issues and topics and we're hoping it has helped members with the tough budget and costs tasks facing them today. Please return next Thursday, July 29th at 12noon EST for the next one-hour live discussion right here with Peter Hennigan! If you want to email a question ahead of time send it to judy.mottl@cnet.com.
My boss has tasked me with drafting a proposal for the possibility of purchasing a server.
I'm thinking that an ROI would be critical information to place in the document.
This the first such request that I've ever had.
Any assistance from anyone would be greatly appreciated. Thanks!
From: rcrc001@hotmail.com
I'm thinking that an ROI would be critical information to place in the document.
This the first such request that I've ever had.
Any assistance from anyone would be greatly appreciated. Thanks!
From: rcrc001@hotmail.com
A few things to include in your proposal:
-business reason for acquiring it (e.g., does it support a specific business project?, are you replacing existing server?)
-Projected cost of server (purchase price, maintenance, any impact on internal support needs?)
-plan for installing
Regarding the ROI, I think that depends on who has to approve this. If you can identify real benefits than putting together a rough ROI will help you sell the idea. I wouldn't try to get too sophisticated. A simple payback projection might suffice.
If the server is part of a larger project, then any ROI analysis should be focused on the larger project.
-business reason for acquiring it (e.g., does it support a specific business project?, are you replacing existing server?)
-Projected cost of server (purchase price, maintenance, any impact on internal support needs?)
-plan for installing
Regarding the ROI, I think that depends on who has to approve this. If you can identify real benefits than putting together a rough ROI will help you sell the idea. I wouldn't try to get too sophisticated. A simple payback projection might suffice.
If the server is part of a larger project, then any ROI analysis should be focused on the larger project.
The company I work for currently uses Track-It for call tracking and inventory management. Track-It is great at finding every executable on any PC on our network. The question I am posing is what procedures to other companies adhere to in an effort to maintain licensing compliance? For example, what hard copy information do other companies keep for each piece of software that is purchased? Any input provided is greatly appreciated.
From: tlnarc
From: tlnarc
This varies depending on the size of the organization and how you acquire your software. Larger companies that negotiate enterprise type agreements rely more on their purchasing records to add to their license inventory data. They often utilize auto-discovery tools for ongoing monitoring of their license data.
Smaller organizations without often attempt to centrally gather actual license documentation that comes with a purchase.
Smaller organizations without often attempt to centrally gather actual license documentation that comes with a purchase.
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