Client Problem

A large printing company was geographically and structurally dispersed and needed to take ownership of IT costs and benefits.

Having evolved through many years of acquisition, divestment and restructuring, the printing company was geographically and structurally diverse. Not surprisingly, this evolution had led to a somewhat fragmented IT operations, with a number of semi-autonomous businesses, a mix of centralised and decentralised IT management, and - in some areas - a lack of strong business ownership and direction of IT resulting in disparate and duplicated IT capabilities across the group.

To maximise the leverage from its IT investment, the company decided to consolidate, rationalise and simplify its IT asset base and establish more rigorous IT management practices. Their specific goals were to: 

• establish an IT service delivery model that gave the ownership of both the costs and the benefits derived from the use of information technology 
• identify IT cost savings

SMS Approach

SMS partnered with the printing company using best practice frameworks to review needs and services.

SMS partnered with the company and utilised industry best practice frameworks, such as COBIT & ITIL^®, to guide the review of the company's ICT needs and services. SMS worked with senior business and ICT management to confirm key business needs and the degree to which these needs were being met by existing ICT services. 

The review:

• analysed the alignment of ICT services to business needs 
• assessed existing ICT service governance, management and delivery processes against industry frameworks and benchmarks 
• established a comprehensive view of the ICT works program and provided an assessment of the portfolio in terms of its ability to meet the objectives of the business
• captured organisation-wide ICT costs and benchmarked these against external industry metrics

Recommendation

SMS recommended ways to better govern and manage ICT services and maximise the leverage from ICT investments and expenditure.

The review has highlighted that the printing company was spending significantly more on IT ($15-20m pa) than the industry average. It identified ways for the company to better leverage and manage its IT investments and reduce current costs:

1. restructure IT budgets to focus immediate attention on reducing IT costs and controlling planned IT capital expenditure (total IT spend was $55m plus)
2. adopt the federated IT management model to provide business autonomy in a controlled and economically sustainable manner 
3. centralise the provisioning of ICT infrastructure services (common ICT operating platform) to derive economies of scale
4. establish ICT strategies and technology architectures to guide the investment in ICT
5. adopt an industry recognised ICT Service Management framework (e.g. ITIL^®) to provide predictable IT service outcomes
6. establish rigorous ICT governance practices to enable informed and transparent IT investment decision making
7. establish a strong ICT Project and Portfolio Management culture and industry standard practices

Outcome

The printing company now has ICT services more aligned to the immediate and long terms needs of the business.

The printing company adopted the recommendations of the review. The IT division established an incremental delivery program, focused initially on implementing the new IT service management structure; controlling IT costs, establishing a clear SLA linked to business needs, safeguarding critical processes and assets, and realising the first tranche of cost savings.

In the first 12 months after execution, the benefits to the company included:

• effective ICT governance balancing group-wide control with business unit autonomy
• transparency of ICT expenditure and investment decisions
• quantum of 1st year cost savings realised
• ICT investment targeted to meet critical business needs
• successful restructure and re-focus of IT to enable better service delivery to customers
• successful adoption of ITIL^® framework to guide their IT service management

SMS undertook this engagement on a capped fee structure basis. The review was completed under the agreed fee cap, with the resultant savings passed back to our client.