Visibility into IT usage and spending is a lot like eating right and exercising. Companies spend a lot of time talking about it, they know they should do it, many of them have good intentions of doing so, but few actually manage it. Yesterday I gave a shout-out to Nationwide Insurance as a company that followed up on good intentions with action, by appointing an internal CFO within the IT department to make IT spending more transparent and to ensure companies get maximum efficiency.
A Computerworld article spotlights another company with an interesting approach to cost transparency, Cummins, Inc. The company's business services unit, which is in charge of IT infrastructure delivered to business units, including PCs, networks, storage, hosting, and cell phones, details its bill for these services down to the individual user level.
Floyd Rutan, the unit's executive director, said the awareness created with this approach not only invites added scrutiny of costs but also puts users more in control of their own destinies so, for example, they might cancel a cell phone or eliminate software licenses they aren't using. Said Rutan:
I think it's made people much more aware of their consumption and how their behavior drives costs that previously was hidden from them.
Cummins uses software from Digital Fuel Technologies Inc., to monitor and bill its usage. The widespread need to cut costs has apparently been good for the business of companies like Digital Fuel Technologies. Forrester Research projects the broader business management services market, which includes such software, will exceed $800 million this year. That's growth of 27 percent over 2008.
Cummins, a $14.3 billion company, collects 400,000 records each month to calculate service demand and prices. In the first year of usage management, billing to business units fell some $12 million, out of a total of about $300 million. Billing fell another $10 million the following year, and Cummins expects a similar decline this year. The company has instituted several new usage management policies. For instance, it now automatically uninstalls software if workers haven't used it for three months.
The Computerworld article rightly notes that ITIL (IT Infrastructure Library) and other IT services management disciplines go hand-in-hand with these kinds of cost reduction efforts. The shared services approach stressed with ITIL makes all IT spending variable, said Rutan, and thus makes it easier to identify opportunities for trimming.