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Briefing: The ‘variabilisation of IT’ towards greater efficiencies

Tao Ai Lei | April 2, 2013
The next big thing in IT is the use of the right level of technology resources that the task requires, which will allow companies to enjoy increased business agility and massive cost savings.

Variabilisation in IT?
Variabilisation is the ability to align IT investments to the needs of the business, where IT companies will provide an agile IT ecosystem which is flexible, adapts to the business dynamics—all thanks to advances in virtual technology, network connectivity and cloud computing, explained Nair.

An example is how telecom players offer a smartphone at a fraction of a cost and variabilise the remaining investment over a period by charging for the telecom services they provide.

Xerox has been able to variabilise the customer cost by charging on a per photocopy basis instead of the customers buying the machine, and then pay for cartridges and maintenance. Variabilisation of IT enables firms to move from a fixed technology cost model to a variable cost model for greater business agility and competitiveness. It also uses tenets like scale, standardisation and simplification to drive efficiency, optimise delivery and lower costs. It enables firms to use computing infrastructure on a pay-as-you-go basis, very similar to electricity, gas and water.

Three pillars of variabilisation
There are three primary ways through which variabilisation can be realised, said Nair. It is also termed the three pillars of variabilisation, which includes:

•  Variabilising business processes
•  Variabilising assets
•  Variabilising infrastructure

Variabilising business processes happens when organisations leverage a shared infrastructure model, to manage the cost pressures more efficiently. They also focus on their core business by outsourcing the support functions to external service providers.

The next pillar of variabilising assets happens when enterprises and end-users no more require to own assets. There is a transformation of IT into a business utility, and new business models are light on capex and high on innovation.

The third pillar of variabilising infra- structure on a business scale occurs when firms can variabilise their infrastructure to scale up or down their operation, as an organisation's fixed scale is a big impediment in times of shorter business cycles.

Internal research at Wipro shows that about 74 per cent of an organisation's IT costs can be variabilised while still retaining the ability to address scale, standardisation and simplification, driving efficiency, optimising delivery and lowering unit costs.

Virtualisation and pay-as-you-go software such as SaaS and Cloud now allow businesses to variabilise their asset inventory, and expand or reduce components or services as the need dictates.

"We think variabilisation of technology is in its infancy, but it is fast gaining ground as a foundational element for growth and capability. It is not here yet, but will be in a few years," said Nair. It will increasingly simplify IT by reducing and masking complexity, and allow IT operating expenses to vary with the expansion and contraction of the business that it supports.

 

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