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We provide expert advisory services in managing the costs of corporate IT departments. We do this by providing senior IT and Finance managers with transparency over the true costs of providing any IT service. This includes all infrastructure, services and applications.

We work for the senior management of organisations ranging in size from a few hundred people to many thousands. Our clients operate in the UK and across the rest of Europe and come from a diverse set of industries. Most, but not all are public listed organisations. We typically work with the senior executives of the finance organisation, the IT organisation and the general corporate executive office.

Morgan Hill Financial Model

  • Achieve IT cost transparency
  • Show the real value of IT
  • Choose peers to benchmark service costs
  • Realise significant IT cost reduction for your organisation

About the model

The model delivers an accurate and agreed cost for any process or service. It combines financial data with IT services information and provides complete transparency on what it really costs to deliver a process or a service.

Armed with this knowledge your organisation can: reduce cost, compare alternative services and vendors, assess the impact of new technologies and recharge costs based on consumption levels.

All deployments of the model have led to significant reductions in cost.

How the model is being used

  • To reduce IT costs by showing the financial impact of alternative IT technologies and vendors
  • To reduce IT costs by providing accurate re-charges to users
  • To reduce facilities costs by showing the type and location of the most cost effective processes
  • To manage and control budgets
  • To create trusted communities of peers willing to develop and share best practices for optimising the delivery of services and processes

What we do

Obtain visibility and control over IT service costs

The problem

Today many organisations struggle to measure the real cost of IT services. Services such as data centres, applications, email, and networks can be hard to define and even harder to cost. It is also hard to know if costs are reasonable.

The causes: In large part this is because accounting systems and accounting disciplines are not setup to either define or report on these types of services. Without a great deal of time and effort it can be very difficult for organisations to establish fully effective IT service cost control mechanisms. In addition, the existence of complex IT infrastructure built up over time, a lack of transparency in vendors’ costs, and the arrival of new technologies with very different pricing models can all contribute to making cost transparency a real challenge.

Finance systems have all the numbers and know where the big costs are, however, they are rarely able to convert these costs into specific IT services, such as the running of a particular data centre. On the other side, IT organisations have all the equipment and services and know where all the various technologies are deployed, but usually lack the detailed financial data which maps easily onto the IT services they run.

The solution

We solve this problem by running a specially configured IT cost allocation model. The model is designed to present IT costs in a manner that provides for inter and intra organisational comparison. This allows IT and Finance professionals not only to see what the real costs are, but also to see where in the organisation the most cost efficient use of technical services exists and which technologies underlie that efficiency.

The results

Demonstrably lower cost, more effective IT; facilitated through greater visibility and control over IT service costs.

it-cost-control-tree

How we do it

How the model works, how we drill down into IT service costs and how you can benefit

IT cost transparency

The advent of cloud computing and specifically its highly transparent pay as you go usage model has provided a new imperative to solve the difficult question ‘What is the real cost of IT?’

Our model answers this question in a straight-forward and rapid manner using technical and financial expertise, along with the power of community based knowledge. Our model harnesses the knowledge already present in your people and provides them with the means to very rapidly describe the composition of individual IT services and to allocate validated costs to each area.

This community based approach provides a very rapid solution because it focuses on and utilises the knowledge and experience of people as well as making use, where appropriate, of technology. It is an approach that leverages the important, existing assets residing in an organisation’s people, whilst at the same time creating a consensus view.

Aligning IT and finance systems

The key consensus is that between the finance team and the IT team. Our model provides the fundamental basis for such alignment. Once obtained it is very easy to establish valid IT benchmarking measures in different parts of an enterprise. With effective benchmarking in place, we have found that IT cost reductions will almost certainly follow.

How the model works

Building on the highly effective frameworks and templates in the model, the community delivers and helps validate the information required. This drastically reduces the implementation time whilst also providing a common platform for shared understanding of the composition of IT services and associated costs.

Our model is specifically designed to facilitate the sharing of information followed by collaboration to achieve results. Very often collaboration is around sharing best practices within an organisation and or, selected and trusted peers.

The financial case

In this example, based on a real deployment of our model, we are comparing costs amongst a trusted internal corporate company. The sharing of WAN costs within a group structure using our model clearly identified some substantial cost saving opportunities.

The chart below demonstrates that not only could we identify where opportunities might exist to extend internal best practice, but we could also drill into high unit costs and explore the financial impact of alternative technologies.

Screen Shot 2015-07-05 at 15.04.03

Alternative technologies

We could then drill down further into data centre costs for Division B, and identify areas where new technologies, such as Amazon Web Services, could have a directly beneficial financial impact.
In this case, ‘Backup, failover, and archive look like good potential candidates for the Cloud.

Drilling down

Drilling down even further into the ‘Backup, failover, and archive’ we could identify that nearly 50 % of the associated cost is for failover servers. The production systems these support are up at least 95 % of the time, and therefore we could demonstrate that almost all of the annual cost was effectively un-used.

A comparable reserved Cloud-based instance would cost less than 10 % of this figure, with no capex.

The results

 The result, in this example is that the financial impact of a potential range of strategies matched against individual services becomes possible.

Service Total £ Efficiency Amount £ % of Tot saving Strategy
WAN 2,167,514 10% 216,751 10% Internal best practice use of technology
Internal best practice supplier contracts
Internal best practice – reduce bandwidth use with accelerator technology
Make greater use of the lower cost public internet
Data Centre 2,192,247 22% 482,294 22% Anywhere between 20% and 50% of servers are running at less than 15% of capacity
Virtualisation of servers
Migration of storage into centrally managed facility
Locate facility (s) in the Cloud
Voice 2,792,084 15% 418,813 19% Internal best practice use of technology – VOIP
Internal best practice supplier contracts

Strategies such as internal best practice, virtualisation, supplier negotiation, cloud, and VOIP are enabled by the cost transparency afforded by the model, and can lead to substantial cost reductions in your organisation’s IT budget.

Clients

We have industry leading clients in the following sectors:

  • Financial Services.
  • Industrial Services.
  • Logistics.
  • Manufacturing.
  • Petrochemical.
  • Pharmaceutical.
  • Telecommunications.

Engagement:

We are engaged by the senior management of large corporations. People who are concerned with maximising value from important investment portfolios and controlling risk.

Most engagements include a significant element of investment in technology.

About us

Who We Are

We are a team comprising strategists, technologists and senior business managers.

Our objective is to help clients deliver measurable value from their investment in technology at an acceptable and controlled level of risk. Our people have backgrounds in industry, consulting, finance and technology.

What We Do

  • Morgan Hill started providing advisory services in 2005.
  • We work with the senior management of large organisations to provide certainty in technology investment and direction.
  • We show the real costs of delivering IT services and help senior management to choose the most appropriate technologies at an acceptable level of cost and risk.
  • We help clients align strategy with IT by relating corporate objectives with all elements of the IT investment.
  • We transfer the skills required to govern investments from a value and risk perspective. We set up or improve the corporate structures that control those investments.