Essay - Riordan Budget Reduction Recommendations Paper Riordan Budget Reduction Analysis and...

Riordan Budget Reduction Recommendations Paper

***** ***** Reduction Analysis and Recommendations

***** redefining the IT cost center consolidated operating budget for Riordan Manufacturing, a 4% increase in spending on selected hardware software, services including access charges yields a net gain in spending of $5,764.16. When taking into account the 4% ***** in IT spending ***** the 2% reduction in the total *****, ***** annual IT budget is restated from $1,901,300 to $1,863,27*****. The 4% increase in IT spend*****g has been applied to the baseline figures for hardware, ***** licenses, contract services, and leased lines, which are critical for managing Electronic Data Interchange (EDI) connections with other manufacturers, suppliers ***** ***** buyers from ***** Manufacturing including its distribution channel partners, many of which rely on EDI to complete bath-oriented transacti*****s. Costs of leased lines are arguably part of IT infrastructure, yet in the context of IT expenses as ********** relate to the Profit and Loss Statement of Riordan Manufacturing, these ***** lines enable transactions with supply chain and distribution *****ners, thereby driving top-line revenue growth. The total increase in spending needs to be *****fset with revenue growth, hence the increase in leased l*****es rates to ***** a higher velocity of tr*****nsactions leading ***** a higher Return on Investment (ROI) in In*****mation technologies.

***** for Offsetting Increased IT Spending

***** is considerable flexibility in re-align*****g ***** IT cost center budget to achieve a 2% ***** in the total budget. Presented below are the multiple strategies that the company can choose from to ***** this 2% reduction in their IT operating budget while increasing selected expenses by 4%. Keeping in mind these are recommendations from an annualized basis, the many options are immediately realizable ***** minimal impact ***** service and investment levels in current projects:

***** of Special Projects Expense from $150,000 to $106,210, a net reduction ***** $43,790, which is needed ***** accomplish a 2% ***** ***** ***** budget planned spend for FY2004.

Shifting away ***** a licensed software strategy to a Softw*****re-as-a-Service (SaaS) model could potentially save Riordan manufacturing $53,500 a year and would accomplish ***** objective of a net 2% reduction in the tot*****l IT operating budget. The use of ***** as a ***** for reducing expenses and incre*****ing the flexibility ***** applications to align with line-of-business objectives has been extensively researched by many IT advisory and consultancy firms including AMR Research, Forester *****, Gartner, Ovum, and **********. The research in***** make SaaS a platform of choice however by Sweeney (*****006) highlights how a lower Tot*****l Cost ***** Ownership (TCO) and lower operating expenses can be achieved.

***** strategy would include eliminate $53,500 ***** accomplishing ***** 2% net reduction in IT ***** center budget. This reduction ***** ***** achieved by completely gett*****g rid of hardware ($8,500), maintenance which would not longer be necessary in a SaaS model ($3,000) and software licenses which average 20% of the purchase price of installed software and are invoiced yearly ($42,000). Clearly there is room for much improvement in the negotiation of *****tter licensing fees