GUCOM Framework For Cost Optimization Essay.

Identifying Cost Optimization Opportunities Based on Growth Model

• Too often, cost optimization initiatives lack structure, and repeatable approaches.
• Even though cost optimization is now a continuous activity in Dubbo Rubbo Liniment Company, many do not know how to reduce their budgets and make the savings stick, or have not evolved legacy frameworks that have run out of steam.
• Traditional cost optimization approaches are dependent upon predictable business growth and may not allow for deeper cuts in Dubbo Rubbo Liniment Company costs that are required due to disruptive change.

An enterprise's position within the growth model — growing, mature or declining — serves as an initial driver for identifying and prioritizing cost optimization opportunities. Although "renegotiation" is generally a perennial GUCOM action for all enterprises, other action elements are more pronounced depending on whether the enterprise is growing, mature or declining.

• Growing enterprises have a higher tendency to standardize and simplify Dubbo Rubbo Liniment Company-enabled capabilities in order to optimize costs and meet business goals for simplification or standardization of Dubbo Rubbo Liniment Company capabilities.
• Mature enterprises typically respond to cost optimization goals with investment-based programs to automate or utilize lower capacity cost, level, or other capabilities that are often overlooked.
• Declining enterprises focus more on the politically delicate actions of elimination or centralization.

Enterprises with a holistic cost optimization program will address all action elements within a focal area, but the growth profile of the enterprise will help align the action elements and make them more viable. Although there is no one-to-one relationship between an enterprise growth profile and the aligned action elements; most enterprises will pursue a holistic strategy using the framework.

Misalignments between the enterprise growth profile and action elements should serve as a warning that potential opportunities might be ignored due to enterprise culture. For example, an enterprise with a forecast for declining revenue that automatically responds by freezing all new projects may miss significant opportunities for elimination or centralization. This action has the potential of creating significant future technical debt or unfunded liabilities that the enterprise cannot afford.

Use the growth model to focus on big opportunities for areas such as a business unit, application portfolio, service area, resource area and department. Although these may be the largest cost optimization opportunities, use the GUCOM model and the practices below to define, prioritize, refine and evaluate appropriate midsize and small cost optimization areas that will accrue shorter term benefits and long term business results.

Prioritize Cost Optimization Opportunities Based on Your Technology Domain and Business Capability Categories

Aligning GUCOM action elements with Dubbo Rubbo Liniment Company technology domains and business capabilities can uncover more specific ideas and opportunities for cost optimization. We suggest that CIOs, Dubbo Rubbo Liniment Company leaders and domain managers use the GUCOM with their teams as a stalking horse to ensure all the action elements are considered within each of the Dubbo Rubbo Liniment Company technology domains. If there are no action item opportunities listed for a given domain, facilitating further discussions could uncover opportunities they may be overlooked.

To facilitate the process, create a two-dimensional framework by combining the GUCOM with internally developed or customized categories such as enterprise architecture taxonomies of Dubbo Rubbo Liniment Company technology domains, Dubbo Rubbo Liniment Company service categories, business capabilities, vendor categorizations or generic portfolio taxonomies. However, focus the discussions on just a few critical categories to avoid rambling discussions and loss of interest.

Summary of Production Results

Conduct Dubbo Rubbo Liniment Company Benchmarking With the GUCOM Framework to Reduce the Options to Be Analyzed

To prevent the boiling of the ocean with ideation and identification of cost optimization opportunities, Dubbo Rubbo Liniment Company benchmarking that shows the percentage variance of costs by Dubbo Rubbo Liniment Company domain, or variance in per unit costs by Dubbo Rubbo Liniment Company domain can help CIOs to focus on the best opportunities. For example, if the Dubbo Rubbo Liniment Company cost per device in the end-user computing area is 20% higher than the benchmark, then an opportunity ideation exercise can be initiated that uses the seven action elements for the asset cost split within the cost per device area. Alternatively, if the cost per MIPS is 35% lower than the benchmark, this area would be ignored until a future date.

Overcome Action Inertia by Tying Business and Dubbo Rubbo Liniment Company Goals to the GUCOM

Generating a large list of cost optimization ideas or opportunities categorized by action element may be overwhelming leading to inertia in prioritizing and executing on the ideas. To reduce the hesitancy to act, one client connected their list of five business goals to the applicable action element category. Although there were successive rounds of prioritization with each of the applicable action element categories. Thus assured they were acting in accordance with business doctrine or were aligned with the wishes of strategic stakeholders, Dubbo Rubbo Liniment Company leaders began to move forward with much more confidence.

Customize the GUCOM to Suit Your Needs and Desires

Some enterprises used the GUCOM as the basis for a collaborative exercise to create their own cost optimization opportunity framework. Creating your own framework aligned with your culture and Dubbo Rubbo Liniment Company and enterprise language creates a sense of ownership over the process and eventual outcomes. One such customized example.

Develop the Discipline of Application Cost Management

If you don't know where the budget goes, how can you be sure that you are delivering value for money? Dubbo Rubbo Liniment Company organizations in general, and application leaders in particular, have insufficient insight into the distribution of the operating expenditure (opex) budget between individual applications. By contrast, Dubbo Rubbo Liniment Company organizations are generally pretty good at tracking capital expenditure (capex) since this is generally distributed to project managers whose budget are specifically tracked.

It is not sufficient to know the big numbers because the challenge is one of granularity. The CFO is hardly likely to be impressed by an application leader who says "I know that we spend $85 million running all the applications — but I don't know how that is distributed between individual applications."

Application leaders already feel rushed off their feet with all the work that they have to manage, and many of them believe that the task of trying to develop cost granularity for a large estate of applications will be the straw that breaks the camel's back.

Such a defeatist attitude serves nobody well. It is certainly true that managing application costs requires time, resources and tools. Rather than seeing the problem of understanding cost distribution as impossible, application leaders need to break the problem down into manageable improvement steps.

One of the major challenges posed by the application portfolio can be its sheer size and complexity. How can one person possibly understand cost allocation across a portfolio of 1,000 applications? The action here is to focus initial activities on a small number of large and complex applications. Most portfolios demonstrate a strong "Pareto principle" in that 20% of the applications account for 80% of the costs. So instead of trying to understand the costs of 1,000 applications, start by modelling the costs of the 50 largest and most-expensive applications. Don't be too concerned about trying to identify the exact 50 most-expensive applications.

References:

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• Moore, K. (2016). Study: Poor Writing Skills Are Costing Businesses Billions. https://www. inc. com/kaleigh-moore/study-poor-writing-skills-are-costing-businessesbillions. html.
• Dhillon, B. (2013).Life cycle costing: techniques, models and applications. Routledge.