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IT Cost Optimization
(Focusing on ERP)
Definition of Optimization
• Spend less on IT and
deliver more value to
the business.
IT
Executives
• Spend more on a new
products to show IT
value to the business.
Vendors
F
A
C
T
S
BUDGET AND EXPENSE:
Maint.
Human
F
A
C
T
S
BUDGET AND EXPENSE:
20%
80%
BUDGET
Running Existing
IT Solution
IT Enhancement
F
A
C
T
S
The Biggest Expense of the 80%:
20%
60%
Annual Maintenance Contract and Depreciation
Most Expensive AMC are Software:
100%
DP +
AMC
80%
DP +
AMC
60%
DP +
AMC
40%
DP +
AMC
0%
DP +
AMC
1st yr. 2nd yr. 3rd yr. 4th yr. 5th yr.
20-25%
CAPX
OPEX
60% expense – after depreciation period, the asset value becomes zero. You still
continue paying maintenance (20-25%) on original value of the investment.
Most Expensive Software is ERP:
BUSINESS VALUE of ERP Maintenance:
1st Year
2nd Year
3rd Year
After
(3)
Years
Min.
Business
V
A
L
U
E
Environment is stabled.
All functions are already available.
Most of the time, technical support /
resolutions from AMC are not
satisfactory.
Min.
SUGGESTION FOR OPTIMIZATION:
SUGGESTION FOR OPTIMIZATION:
Start the negotiation early.
Consider 3rd party support as an
option.
Give the vendor customization
options.
Contact “Forum”
SUGGESTION FOR OPTIMIZATION:
“SaaS” Software as a Service
“IaaS” Infrastructure as a Service
“PaaS” Platform as a Service
Cloud DR “Disaster Recovery”
It’s your TURN!!!
Thank
You!
Sukriah!
Shukran!
Gracias!

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Imad Sweidan, CIO at Almansoori Specialised Engineering - Cost optimization on software / ERP maintenance