$13 Million Annual IT Budget
A high-profile dental service provider was interested in putting a business process in place where all future IT investments were appropriately allocated with the expectation that it would generate revenue and increase work productivity. After talking with the client further, they were concerned about the amount they were spending on IT expenditures and the lack of transparency and control over IT-related operating and capital expenditures.
IVIONICS provided the client with a zero-based budget approach. All IT operating and capital expenditures, including in-house/external staffing resources were discovered, centrally documented, and analyzed. Each expense line item was classified appropriately by type, amount, and level of urgency. Through this approach, each expense was either eliminated, renegotiated, or reclassified as necessary to ensure that the company was only incurring the expenses that it truly needed. IVIONICS worked with the client to review, document, and remediate the following areas:
- Yearly IT Budget: The budget development process and ongoing budget management/reconciliation process which included standard/ad-hoc accounting system reports. Checking if IT expenses were included in the company’s central IT budget process or were carried by other business cost centers.
- IT Processes: IT capital expenditures approval standards and process, IT chargebacks to other business cost centers/entities, IT project ROI and prioritization process (including management and justification of investments overtime), IT-related accounts payable process, and IT-related fixed asset and depreciation schedule.
- Contracts: Renegotiating inflated/one-sided license and maintenance contracts
The client was able to gain a full, clear understanding of every IT operational and capital expense within their business. The zero-based budget approach allowed the customer to successfully reduce their annual IT budget spending by 16%. The reduction did not affect the quality and quantity of IT necessary services provided to the end-user base.
- Eliminating unnecessary functions/services and outdated/unused technology components.
- Reducing capital expenses to only those that were critical or advantageous to the business.
- Organized a yearly IT budget & developed a process to eliminate the number of adjustment entries to the accounting system. Thus, allowing the IT and Finance departments a consistent and accurate view of all IT expenses.
- Organized the classifications of fixed assets & developed a process of eliminating outdated assets, ensuring the fixed asset repository was up-to-date and reflected the new fixed asset classifications.
- Modified the way IT-related invoices were evaluated and developed a process that provided the necessary approval and coding to ensure timely payment. Resulting in a more accurate representation of the company’s IT-related accounts payable component, and improved relationships with suppliers/providers resulting in a reduction in spending.
- An accurate view of all IT-related capital expenditures and current budget spending gave company stakeholders an understanding of their ROI position and the ability to make informed business decisions.
- Based on the processes set forth, it allowed IT and company stakeholders to ensure all IT processes and investments were transparent and managed closely to ensure the expected ROI.