Boost machinery sector profits with cloud, digitalization

CIO Insight offers thought leadership and best practices in the IT security and management industry while providing expert recommendations on software solutions for IT leaders. It is the trusted resource for security professionals who need to maintain regulatory compliance for their teams and organizations. CIO Insight is an ideal website for IT decision makers, systems integrators and administrators, and IT managers to stay informed about https://www.globalcloudteam.com/ emerging technologies, software developments and trends in the IT security and management industry. How does a 170-year-old financial institution deliver a new, fully modernized technology strategy while supporting 24×7 service to their customers across a multitude of platforms, including point-of-sale, mobile, and web services? We realize that commercial and Federal CIOs approach technology cost accounting and management very differently.

Servers, routers and other assets are processing, recording, classifying and summarizing business data for interpretation and management decision-making. But having IT assets in your organization is one thing and getting it on the right path is another. Though IT, simplifies and fasten your business growth, you may end up with business inefficiencies with inadequate knowledge of the resources. It is also important to mention IT cost optimization, which is an important feature of transparency. When a department achieves cost optimization, it can guarantee that the strategic initiatives will be met even with budget constraints.

[Case Study] State IT Agency Simplifies Cost Allocation to Gain Visibility and Trust

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Connect the right data with the right people to support informed decisions for continuous improvement.

When IT departments achieve cost optimization, they are guaranteeing strategic initiatives can be met and supported while budgets remain appropriately constrained. Creating cost transparency, and further on cost optimization, in the IT department requires a complete understanding of not only what the business needs from IT but also of the current IT cost baseline. IT infrastructures are now profit centers, which is exactly why today’s CIO must see and share the value of a long-range IT strategy that drives business growth. IT leaders must now work to turn IT into a competitive service provider aligned with every department in the business or run the risk of failing to deliver digital transformation.

Pillar 6: Demonstrate the Business Value of IT

IT cost transparency is basically tracking the total price of the delivery and maintenance of the IT services provided to a certain business. Various management applications are used to calculate all the expenses and make sure that the budgets are not drained for nothing. However, overemphasis on short-term wins risks missing the long-term opportunities in bold strategic bets that deliver long-term IT cost transformation. A short-term focus could lead to a vicious cycle of degraded IT quality, agility and flexibility of IT capabilities leading to a greater perception that the IT function does not deliver value and is not a true business partner. If not planned carefully, IT organizations might find themselves in a difficult situation, with limited runway to grow and play offense after a sustained period of defensive cost reduction.

Sales teams use these models in negotiations to ensure that the prices they offer reflect current production costs. Automations, improvements in data analysis, and more can increase efficiencies and free up employees to focus on higher-level improvements that lead to further savings and product innovations. These efficiencies could yield cost savings of up to 20 percent in some functional areas. General and administrative expenses could be reduced by 10 to 20 percent by implementing, for example, a digital spend control tower (SCT) or robotic process automation (RPA) for enterprise resource planning (ERP). In this article, we illustrate how machinery and equipment manufacturers could realize considerable competitive, operational, and sustainability gains with a holistic digital transformation enabled by cloud-based services. We highlight examples of leading-edge organizations that optimized their operations and strengthened their resilience with digitally enhanced supply chains, production, product development, aftersales, and more.

Reasons to Use Cloud Integration Services in Your Business

More than ever, as COVID-19 has accelerated the pace of digital transformation, the role of the IT organization has been put under the spotlight, to pivot from that of defensive position to that of business and strategic enabler. The opportunity is ripe for IT organizations to create some fundamental shifts in IT cost structure, governing IT cross-functionally and increasing collaboration with CFOs and the business while reducing a high dependency on 3rd party providers. Together, these measures will enable a more sustained approach to IT cost transformation that likely lasts beyond the current crisis and can convert the rusted  IT department to a strategic business partner. Fumbi Chima has led technology teams across multiple organizations throughout her esteemed career, including retail, manufacturing, media, and financial services. As a turnaround and high growth leader, Fumbi has leveraged TBM as a foundational practice to bring repeatable processes, purchasing guidelines, and cost/resource savings.

In short, IT cost transparency is tracking the total cost it requires to deliver and maintain the IT services that are provided to the business. By making all costs and expenses highly transparent through management software and systems, organizations are better able to ensure business growth is not impaired by the pressure of IT budgets. To find out whether an IT organization is cost-effective and spending the right amounts towards business goals, benchmarking is important. IT cost transparency solutions comes with the ability to track operational metrics such as utilization, service levels cost and support tickets. By incorporating effective benchmarking into the annual planning process, organizations can identify areas of opportunity that need to be addressed.

[Datasheet] Advanced Cost Transparency

To improve its planning and scheduling processes, the company developed a mathematical model of its entire production process. The model included all relevant constraints and cost drivers—45 nodes, 80 flows, and 50 technical constraints—and was used to build an optimization tool that helped the company achieve a 25 percent increase in throughput. The cloud made it possible to break down data silos and provide a single, uniform source of the data needed for the model, as well as the computing power needed to run it. Companies that scale digitalization successfully view digitalizing as an investment in their future growth and profitability rather than as an IT project. Such organizations apply a broad portfolio of use cases driven by their respective business, following a careful prioritization based on business impact, feasibility, and ease of implementation.

• Sales teams use these models in negotiations to ensure that the prices they offer reflect current production costs.
• However, public cloud adoption presents significant financial challenges that, when not addressed, inhibit any firm’s ability to exploit the promises of public cloud.
• To address these challenges, customers need to simultaneously resolve current inefficiencies and build capability to ensure avoidance of waste in the long term.
• They need to track their total assets and their cost required to deliver and maintain the IT services.
• Discuss with your table mates, as an overall group, and capture learnings and takeaways to bring back to your own team.
• IT cost transparency shouldn’t be viewed as just another major project that IT departments must undergo in order to check it off the list.

Cost transparency provides a view of where money is actually being spent throughout the business, so IT leaders can use that information to make accurate decisions about current allocations and future investments. For McGraw Hill, having a transparent framework that drives smart investment strategies and a common language across this 135-year-old company is critical. Known as one of the “big three” education publishers, McGraw Hill must stay ahead of their competitors with innovation and value delivery.

Insights

Fact-based conversations help prevent stonewalling because stakeholders have shared their understanding and belief in drivers of the relevant costs, so a more open and honest conversation can take place. On the heels of the recently distributed draft recommendations for FITARA implementation, OMB is eager to support the work being done by the TBM Council. We believe that the Federal IT COST Commission can give the taxpayers a better return on their investment while simultaneously providing Congress and the Administration with better insight into the value provided by technology.

First, due to the uniqueness of the local market, a large percentage of 3rd party providers are local Japanese companies operating across both software development and ongoing maintenance. This highly localized market concentration it cost transparency likely restricts the flow of global innovative solutions into the local market. The accumulative effect is that domestic Japanese organizations have to pay a lot more to develop and maintain their IT assets.

Business system correlation

For example, if companies are able to examine costing data at the customer or product level, they can use this information to make adjustments that focus resources on areas that are the most profitable. Many companies effectively analyze revenue along such dimensions as product, service, and customer. This data is often poorly managed or not attributed to the right products, customers, or business units, which may lead to sub-optimal decisions. To improve performance, companies should aim for cost transparency—obtaining costing data that goes beyond what’s necessary for financial reporting or inventory valuation.