Reducing the Cost to Serve - Application Maintenance Services

About this research note: Operate & Optimize notes provide Reducing Cost-to-Serve: recommendations for effective and efficient IT practices that help Application Maintenance improve the performance or reduce the cost of technologies already Services deployed in the enterprise. Publish Date: April 17, 2009
Cutting back on service levels, negotiating with vendors, and implementing good application maintenance processes can yield short and long-term cost reduction results with minimal consequences on day-to-day business activities. Assess the area of application maintenance for cost saving opportunities to reduce IT's cost to serve the enterprise. © 1998-2009 Info-Tech Research Group www.infotech.com
Executive Summary This research note applies the Cost-to-Serve cost-management approach to identify opportunities for controlling expenses in the application maintenance services area. Coverage includes: » Guidance on when the application maintenance services area is a strong cost management candidate for the organization. » Description of specific cost-reduction measures that can be achieved according to varying time frames. » Case studies that provide real-life insight into experiences with these cost-reduction techniques. Application maintenance services is an area that can offer both short and long-term cost saving opportunities. Short-term gains revolve around the ability to cut back on service levels while maintaining functionality. Long-term targets can be achieved by improving application maintenance practices.
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Introducing Cost-to-Serve
The Cost-to-Serve method examines the relative cost to deliver specific IT services, such as servers and storage services, end-user support services, and application maintenance services. The A Practical Methodology
ultimate goal of the Cost-to-Serve method is to directly map and For step-by-step guidance on forecast the impact that changes in spending on IT services will leveraging the Cost-to-Serve have on the ability to achieve business strategy. method to reduce costs, refer to When activities have been categorized into services, it's much the ITA Premium research note, easier to decide which spending changes to make. Spending "Methodology: Reducing IT Cost-changes that will negatively affect business strategy are avoided, to-Serve." and those that will positively impact business strategy are prioritized and pursued.
Service Description
The application maintenance services area encompasses two distinct sub-services: Optimize the Application » Commercial Off-the-Shelf (COTS) maintenance and Maintenance Process licensing services. Involves maintaining packaged software solutions, including configuration, patching, Info-Tech's own Optimize IT licensing, and upgrading of the product. program provides processes
» Custom and in-house application maintenance. Involves guides and associated tools for
both the ongoing repair of application errors as well as developing strong application
making changes and enhancements to existing enterprise maintenance processes aligned
applications. with best practice methodologies, such as ITIL. These include guidance on change and release management as well as guidance When to Reduce a Service on managing changes with IT leaders should consider the following statements to further version releases. investigate whether application maintenance services offer a potential cost-cutting opportunity.
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» There has been no review of current licenses for COTS applications. » Redundant or seldom used applications are not decommissioned. » There is no formal process for application change management. » Opportunities to bundle work requests and change releases have not been explored to gain efficiencies. » The costs and benefits of software patching practices have not been thoroughly reviewed. » Application modifications are not reviewed and tested to ensure application stability and performance. Enterprises with any of these characteristics should begin to examine the application maintenance services area for possible cost savings.
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