- Greg Hall
- Reading Time: 3 minutes
Cost optimization is a doctrine that IT organizations have continuously lived by, but it has taken on a higher degree of urgency given the current economic environment. Existing cost structures are under scrutiny to uncover opportunities to drive out costs in ways which may not have been evident before. This new environment has also presented unprecedented opportunity for those organizations who are brave, informed, and creative enough to test the boundaries of what is possible when seeking cost reduction opportunities.
Most companies support their applications and their infrastructure quite differently. When choosing AMS or Infrastructure Management Services (IMS) vendors, IT leaders often look at vendor experience with their particular applications or infrastructure area of responsibility missing out on the opportunities and synergies of addressing their IT run support needs holistically.
Infrastructure provides operational support for hardware, data and connectivity of your systems and the applications running on them. Infrastructure refers to the underlying technology that your application runs on top of. Broadly speaking, it refers to the hardware and software that enables network connectivity, server operations, databases, etc.
In the past, using separate providers for application and infrastructure support meant getting best of breed support for each environment. While this separation allows for very focused, highly specialized providers to deliver superior infrastructure or application support services, it requires autonomous staffing and coordination between functions to first ensure the origin of issues and incidents and then add follow-through if the resolution of incidents requires changes at both layers.
But large AMS providers like IBM, TCS and Accenture have begun to demonstrate the synergies and prove the benefits of using a single source for management of both applications and infrastructure, and large companies are now more receptive to the possibility. As IT run support costs continue to be a drain on operating expenses, companies are looking for areas to increase efficiencies and reduce the costs of IT run services.
Single Sourced AMS and IMS Support
Companies having the most success realize that their service provider has capabilities that span both AMS and IMS and they see synergies in soliciting these vendors to consider consolidating services. The combination of management of both by a single company is evolving as the next big opportunity in decreasing IT run support costs. Benefits include:
- Reduction in management oversight required
- Streamlined information shared
- Aggregation of tickets and incident management
- Opportunities for automation within and across applications and infrastructure.
Consider the situation where a support ticket comes in without knowing if it is impacting applications or infrastructure. Using a single organization for support for a single intake, they can leverage their runbooks to coordinate efforts between the two areas and determine where to assign the ticket. It is a self-contained provider capability, which means the outcome can get into the right hands faster.
The management of AMS and IMS is prevalent in the SAP space when third party Infrastructure Management Support (think SAP BASIS) is paired with SAP Application Management & Support. An infrastructure stack houses all of the SAP software on dedicated servers with very specific server-based software updates, called BASIS support. This is the support of the infrastructure where the SAP software resides. In the past year, clients have been seeing a 20%–30% reduction in fees from their incumbent provider when executing an RFP, and over 40% (including migration fees) if the organization is willing to change providers.
Retailer Reestablishes Leverage with Preferred Provider
A global F100 retailer that worked with UpperEdge wanted to reduce OPEX through outsourcing both infrastructure and application support. They had multiple data centers and an application management inventory of over 100 applications. They needed to identify and select an outsourcing provider for end user services, help desk, hosting network security, and application support services.
After issuing an RFP to ensure market favorable commercial terms supported its business case for the transformation, the company was able to reestablish leverage with their preferred supplier and strengthen the supplier’s value proposition. By combining and awarding AMS and IMS support to a single vendor, they achieved exponential efficiencies and:
- Realized 13.8% in negotiated savings representing $28.8M in I&O savings over a 5-year term
- Secured an additional $4.2M in savings via negotiated deadbands to resource unit (RU) baseline volumes over the term
- Obtained up to $4.1M in volume rebates via tiered rebates based on annual spend
- Ensured in-year and over-term reduced ARC/RRC tiered pricing valued at $200K-$2.1M based on actual RU volume fluctuations.
The majority of the synergies achieved by combining the two support organizations are not only advantageous to the retailer, but the cross-training of resources allowed the provider to reduce its headcount in the support environment, where resources can shift from AMS to IMS services more fluidly and with greater efficiency.
For example, if you look at the entire headcount of your application support (A) and your entire headcount of your infrastructure support (B), combining them would not equal A+B. It would be (A+B) – synergies. Using this model, resources were able to be more fluid and shift to areas where they were most needed at a given time. The shared resource model created stronger support stability as resources are cross trained to support either environment.
All in all, the benefits of a single vendor approach for AMS and IMS services bring efficiencies, predictability, higher client satisfaction, and an environment best positioned for continuous improvement over the support term.
