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Business and Systems Aligned. Business Empowered. TM BearingPoint IT Operating Costs Analysis Five Year Period 2001-2006 AuthorChas M. White, MS EVP &

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Presentation on theme: "Business and Systems Aligned. Business Empowered. TM BearingPoint IT Operating Costs Analysis Five Year Period 2001-2006 AuthorChas M. White, MS EVP &"— Presentation transcript:

1 Business and Systems Aligned. Business Empowered. TM BearingPoint IT Operating Costs Analysis Five Year Period AuthorChas M. White, MS EVP & Corporate CTO Date25 January 2006 Business and Systems Aligned. Business Empowered. TM

2 1 © All Right Reserved – BearingPoint 2003 BearingPoint Timeline & Impacts $158M $146M $138M $128M $107M IT Annual Operating Costs $95M Year 1 – aggregated budget based upon various LLP TSA allocations – planning decision made to take no IT systems or staff from LLPs – LLP model was a loose federation of national practices & therefore systems Year 2 – separations and TSA terminations in ASPAC & LA; creation of BENet MPLS WAN & global messaging for network consolidations based upon centrist, corporate model Year 3 – termination of Andersen practice TSAs and integration of OneTeam HR system across all entities; adoption of middleware for data brokerage Year 4 – termination of KCA TSAs and integration of OneView CRM system across all entities; VoIP begins Year 5 – final TSA terminated in US; VoIP completes in US; OneGlobe replaces PEAT Year 6 – IT steady state – includes OG support costs in IT for first time

3 2 © All Right Reserved – BearingPoint 2003 Distribution of IT Spend Global IT Costs (Headcount & SLAs essentially flat) Organic Labor Amortization & Depreciation Outsourced Services Contracts Amortization & Depreciation Office migration hardware Software Systems hardware Organic Labor ~115 Employees globally Service Delivery Managers Moving support functions for OneGlobe (MSO), SAP and iDEV off-shore Outsourced Contracts Variable cost – consumption based (WAN, Apps hosting, deskside support, etc.) There is no BE data center (~15%) (~34%) (~51%) ~ 63% of labor driven costs are provided outside North America

4 3 © All Right Reserved – BearingPoint 2003 Services Contracts Benchmarking 2001 – Jim Pitchell, KPMG World Class IT, performed study of nature and quality of IT services in provided by LLP firm preparation for formation of KCI entity Reported that services were above average as specified in SLAs and service definitions Verified the services catalog was appropriate for a professional services firm SLAs have remained the same or improved through – Gartner Study in cooperation with KPMG Intl to set best practice costs for professional services organization Comprehensive study involving multinational firms (approx cost was $250k) Study determined 2001 pricing was essentially at industry standards Adopted as standard for BE IT cost targeting with goal of 25% reductions 2003 – Engaged HedgeHog to manage a reverse, blind auction for laptops and desktops 2004 pricing was ~10% lower year over year despite loss of LLP procurement volumes 2005 pricing was again ~10% lower year over year Average laptop cost reduced to ~$1000/unit

5 4 © All Right Reserved – BearingPoint 2003 Services Contracts Benchmarking 2004 – Contracted with RiverMine to benchmark telecom services Targeted US telecom services to benchmark pricing (WAN, dialtone, conference calling, remote access and toll) Lowered MPLS WAN pricing through renegotiation ~$4M/yr Negotiated other telecom contracts to ~3% below benchmark data 2005 & 2006 – BE Analyst Relations IT Benchmarking exercise (Tom Wilde) Internal group captured Gartner, Forrester, InformationWeek and other market analyst data Interviews were conducted with Gartner and Forrester Benchmarked against professional services firms in general Benchmarked against Accenture and McKenzie in particular

6 5 © All Right Reserved – BearingPoint 2003 Benchmarking Results Summary StudyIndustry BE Actual 2002 Gartner Study ($250k)3.9% GR3.9% GR 2005 Gartner/Forrester4%-6%GR3.1% GR 2006 Gartner/Forrester/Information Week Industry4%-6% GR Accenture6%-7% GR McKenzie4%-5% GR Analyst target for BE ~6% GR BE 2006 Budget2.6% GR Notes: Costs are reported as published IT budget as a percentage of stated Gross Revenues (GR) Most competitors are a generation behind in technology deployment (e.g. MPLS, VoIP, etc) BE will continue to harvest savings from technology deployments through FY07 and beyond

7 6 © All Right Reserved – BearingPoint 2003 Technological State of BearingPoint IT … a case of harvested savings not deferred cost Fully deployed, single vendor, global, managed IP/VPN MPLS WAN (Equant) 14,000 seats of Active Directory enabled VoIP across all regions with significant applications integration and global Cross-Cluster Extension Mobility (Cisco) All major backoffice systems are < 3yrs old and web enabled Single global CRM system (Siebel) Single global HR/RMIS system (PeopleSoft) Single performance evaluation/rewards system with integrated business metrics Regional Finance systems (NA, EMEA & LA-ASPAC) Enterprise Integration Broker allows single authoritative source for all discreet data elements across applications via publish and subscribe technology (WebMethods) Single PC platform and standard desktop image worldwide supporting 8 languages via Microsoft MUI for OS and Office along with backoffice application language support Standard global SOW and SLAs for desktop support, office server support and IPT IMAC and a single service provider (Siemens SBS) Good process and SOP documentation Established IT Portfolio Management process Nearly all services contracts are 2 nd generation with established SOWs & SLAs Architecture and solutions are scalable to support 40,000 users within technology and economic parameters (growth costs would be essentially linear) The journey from a loose federation to a corporate enterprise!

8 7 © All Right Reserved – BearingPoint 2003


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