Join BearingPoint Managing Director, Julien Courbe, as he walks us through the latest edition of BearingPoint’s Financial Services Technology Journal on cost management for IT organizations. The fluctuations of financial services firms’ business volumes reflect the cyclical nature of the overall financial markets. These dynamics are often caused by specific crises or a slowdown in the economy. Professional IT managers know that controlling costs and aligning expenditures with overall business goals and spending are critical to organizational health. But it’s a classic case of “easier said than done.” With continuing overcast skies forecast for the global economy, every step you take to infuse your IT organization with fiscal agility now should be appreciated – at the bottom line and in every line of business.
The November 2008 issue of BearingPoint’s Financial Services Technology Journal offers effective, up-to-date thought leadership on IT cost planning. From the critical right-now technologies (e.g., service-oriented architecture, cloud computing) to practices that involve outsourcing and out-tasking (i.e., outsourcing simple tasks) to new paradigms in service models, executives and technology leaders should find this journal to be an invaluable resource in their efforts to improve their organizational operating leverage.
The fluctuations of financial services firms’ business volumes reflect the cyclical nature of the overall financial markets. These dynamics are often caused by specific crises—such as the most recent subprime mortgage problems—or a slowdown in the economy. These fluctuations require that executives and technology leaders have the ability to restrict spending levels in market downturns and quickly scale up when business volumes rise again.
During previous periods of market turbulence, executives have demanded budget cutbacks and cost savings from their IT organizations. However, because many IT costs are fixed, IT executives have limited options for reducing expenditures. Typical cost-saving initiatives entail rationalizing IT assets and resources and renegotiating vendor contracts.
Fixed IT costs cannot be scaled back easily to react quickly and appropriately to market downturns. Optimization of the “operating leverage,” which is defined as the percentage of fixed costs relative to overall operating costs, increases a company’s ability to lower its IT operating expenses quickly during an economic slowdown.
This issue of the Financial Services Technology Journal discusses approaches to optimizing operating leverage. We examine key areas or “levers” that often transition well from a fixed- to a variable-cost basis. Including articles that relate to these levers and provide key considerations for defining and assessing how to better manage IT costs.
A podcast with Awi Federgruen from Columbia Business School- Series 3 of 4
During our recent Enterprise Performance Improvement Briefing with the Financial Times in New York City, we interviewed the experts to give their input into the latest strategies for cost reduction.
In this podcast, the third of 4 from our FT event, we have for you Awi Federgruen, Professor of Management, and Chairman of the Decision, Risk & Operations Division at Columbia Business School, as he discusses reducing operation costs and the key issues that people should be informed about. Awi explains the need for cost reductions and how you can still delivery the right technology at a reduced price.
(Financial Times 2008 – Awi Federgruen, Professor of Management at the Columbia University Graduate School of Business)
About Awi Awi is Charles E. Exley Professor of Management at the Columbia University Graduate School of Business at Columbia University. He was Senior Vice Dean from 1997-2002. Professor Federgruen is known for his work in the development and implementation of planning models for supply chain management and logistical systems. His work on scenario planning is widely cited, the field has gained prominence as computers now allow the processing of large masses of complex data. His work on supply chain models has wide applications in, for example, flu vaccine and the risks of relying too heavily on a single vaccine supplier.