Planning for Long Term SuccessPosted 2010-08-18 Print
Year 5: Along with continued business restructuring, globalization put additional burdens on IT. The implementation of a global product data management system increased service demands across applications and infrastructure teams.
Also, although the IT organization did not own the telephony budgets at that time, it adopted the responsibility to slash costs. The piloting of voice over IP (VOIP) telephony helped determine the feasibility of a global rollout and cost benefits.
The data center consolidation was completed with a single global data center in the United States, along with a secondary development/disaster recovery center. Data storage technology was standardized and consolidated from three solution providers down to a single vendor, EMC. Attention then turned to the consolidation of physical servers with VMware virtualization technology.
Further restructuring of personnel reduced the need for regional management layers, and the organization became a truly global structure.
Year 6: An external cost analysis firm recognized the organization as “best in class” in cost management. Although IT no longer had to make reductions, it set a reduction target with a commitment to a multiyear vision of innovating with cost cuts.
After several years of increasing demands for services, coupled with annual reductions in personnel, the organization restructured as a single IT entity, eliminating regional boundaries and formalizing a global structure to remove any remaining functional silos operating across regions, countries and divisions.
Success with the VOIP pilot the previous year led to the implementation of VOIP across 40 percent of the high-telephony-cost sites, with open-source IP PBX
technology from Asterisk providing an innovative approach to unified communications. Likewise, success with the implementation of a global pricing system from Model N provided an innovative pricing capability unmatched by our competitors.
Year 7: As the actions of Year 6 resulted in an actual-to-budget spend reduction of 6 percent, Year 7’s budget was set with a 5 percent decrease from the previous year’s actual level. The implementation of an accounts receivable package from GetPaid offered functionality outside the realm of the corporate ERP.
With service-desk costs dramatically reduced across all regions, FCI set up a new call center in the Republic of Mauritius. This provided a low-cost, multilingual service center at a previously unknown site. At the same time, consolidation in the data center resulted in a fully virtualized environment, reducing the footprint of the facility by 75 percent, while more than doubling the number of virtual systems operating.
In addition, recognizing the advantage of the global network and the successes in cost reduction of the VOIP program, IT embarked on a project to promote video conferencing as an alternative to increasing international travel costs. It was clear by Year 7 that while projects were not necessarily a direct result of a budget reduction initiative, organizational restructuring and resource allocations across high- and low-cost countries over the previous years facilitated IT’s ability to support a global implementation without increasing the budget.
Year 8: FCI set the budget at the previous year’s actual spend level, but it turned out that the forecast was overly optimistic. The annual review of the multiyear strategy showed a focused realignment based on the change in ownership of the company in the last quarter of the previous year, and IT again faced a targeted budget reduction.
Despite that, IT maintained its course to deliver additional business value with the implementation of a software-as-a-service CRM solution from Salesforce.com and a complete functional redesign of the corporate portal.
Year 9: Facing a forecast of continued pressures due to the economic downturn, the company continued restructuring. IT maintained its position as a cost-management and service-delivery leader, so its budget was not challenged and was instead maintained at the previous year’s level, despite the forecast decline in the business.
Year 9 progressed with an unplanned divestiture of one division of the company, which happened to include the facility hosting the global data center. As a result, the data center had to be relocated, and a strategy had to be quickly defined that would align the IT operations to the company’s projected evolution. With prior efforts culminating in several years of innovating actions linked to the reducing-the-budget strategy, FCI relocated its data center and operational support to Singapore. In addition, it once again reduced the operational budget. In light of economic turmoil, the relocation strategy went uncontested, even though it included a capital investment for a full data center technology refresh equating to 12 percent of the entire IT budget.
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