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Transcript of THE CMX GROUP, INC 65 BROADWAY SUITE 1806 NEW YORK CITY NY 10006 (212) 346-7560 Consolidated...
THE CMX GROUP, INC 65 BROADWAY SUITE 1806 NEW YORK CITY NY 10006 (212) 346-7560
Consolidated Chargeback for a Consolidated World
Sidney Finehirsh
www.cmxgroup.com
2002
Demand
Technology
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
The 90’s:The 90’s: Motivation to Motivation to DecentralizeDecentralize
Application development logjam in ITApplication development logjam in IT Unreliable response Unreliable response Control of critical business systemsControl of critical business systems High cost of central ITHigh cost of central IT
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
The 90’s:The 90’s: Economies of Economies of ScaleScale
Duplication of effortDuplication of effort Low utilizationLow utilization Hidden costsHidden costs
systems supportsystems support outside servicesoutside services
Absence of standards and proceduresAbsence of standards and procedures Inability to negotiate volume discountsInability to negotiate volume discounts Administrative chaosAdministrative chaos
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
The 00’s:The 00’s: Cost Does Matter Cost Does Matter
Downsizing organizationsDownsizing organizations Driving to efficiencyDriving to efficiency Lowering growth of IT budgetsLowering growth of IT budgets Moving to centralizationMoving to centralization
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
The Shift to CentralizationThe Shift to Centralization
Changing Attitude towards Centralization
No shift Decentralization Centralization
1990
2000
Source: McKinsey Study
21% 23%
51%
18%
28%
59%70%
60%
50%
40%
30%
20%
10%
0%No shift Decentralization Centralization
1990
2000
Source: McKinsey Study
21% 23%
51%
18%
28%
59%70%
60%
50%
40%
30%
20%
10%
0%
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: As New As New Technology Technology
Better, faster, cheaper networksBetter, faster, cheaper networks Central support Central support Rapid application development Rapid application development
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: “The Utility” “The Utility” ModelModel
Plug on the wallPlug on the wall Always availableAlways available Always responsiveAlways responsive
Commoditization of IT ServicesCommoditization of IT Services Demand managementDemand management Measure of successMeasure of success ““The Venture Partner” ModelThe Venture Partner” Model
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: Opportunities Opportunities
Physical co-locationPhysical co-location Server sharingServer sharing Centrally managed networksCentrally managed networks Storage networkingStorage networking
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: Systems Systems Management down on the Management down on the Server FarmServer Farm
Quality assuranceQuality assurance Change controlChange control Security and fraud detectionSecurity and fraud detection Backup and disaster recoveryBackup and disaster recovery ChargebackChargeback
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: Why do Why do Chargeback ?Chargeback ?
An expensive shared resourceAn expensive shared resource It’s unavoidableIt’s unavoidable Provide management informationProvide management information
cost of productioncost of production cost of doing businesscost of doing business
Control the demand for servicesControl the demand for services IT financials for scorecardsIT financials for scorecards
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: The Cost The Cost Accounting Challenge Accounting Challenge
Asset cost transferAsset cost transfer Need for a standard costing modelNeed for a standard costing model Usage Based Billing (UBB)Usage Based Billing (UBB) Activity Based Costing (ABC)Activity Based Costing (ABC)
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: The Technical The Technical ChallengeChallenge
Spanning the number of server and and Spanning the number of server and and network technologiesnetwork technologies
Identifying business ownersIdentifying business owners Standardizing units of measures in a Standardizing units of measures in a
diverse worlddiverse world Mixing dedicated and shared serversMixing dedicated and shared servers
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Consolidation:Consolidation: Costing Costing
Shared n-way
PP11 PP22 PP3…3… PPnn
Dedicated n-way
PP11 PP22 PP3…3… PPnn
Billable Units = C x n x N
C = Effective Capacity %n = Number of ProcessorsN = Normalization Factor
Un = Measured Usage Per UserN = Normalization Factor
Billable Units = Σ (Un x N)
User1
EffectiveCapacity
Limit
U1 U2 U3 U4 U5 U6 Un
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.
Yankee Group Report – Yankee Group Report – Oct. 2002Oct. 2002
The most important chargeback The most important chargeback qualification for a vendor solution is that it qualification for a vendor solution is that it conforms and adapts to the IT cost structure conforms and adapts to the IT cost structure to properly distribute the financial aspect of to properly distribute the financial aspect of service usage. Without an appropriate service usage. Without an appropriate understanding of the cost structure, the understanding of the cost structure, the ultimate goals of chargeback (allocating ultimate goals of chargeback (allocating costs to users) will be lost.costs to users) will be lost.
This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.