variabilization of it –transforming the business landscape

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Variabilization of IT –

Transforming The

Business Landscape


Variabilization of IT

Fixed costs have become a thing of the past.

In an ideal world for the enterprises, all IT

costs will be variable. It is a situation where

companies can concentrate on the

business component and the IT component

will take care of itself.

Variabilization of IT is increasingly looked upon as

the key in solving the cost conundrum. This

paper focuses on the evolution of

‘Variabilization of IT’ and the commercial

models prevailing in the markets.


Variabilization – A game changer

Traditional – Fixed Cost The Variabilization Way

Today, service providers are looking at providing IT as a utility service. This change was

a result of the changing business circumstances and the effect of latest technologies like

cloud computing, virtualization and mobility. Variabilization is typically an outgrowth of

this new business approach

Variabilization, typically transforms

fixed costs into variable ones. It

involves variabilizing of operations

and investment to bring in agility

and flexibility. It allows enterprises

to stay nimble in any economic

climate.

The fixed costs involved in IT are

increasingly becoming a liability.

Any market decline results in

significant losses due to these

heavy investments. This is where

variabilization becomes a game

changer


The Current Scenario

A leading provider of healthcare services achieved 66% cost variabilization

after it built an engagement model to address costs across hardware,

software, facilities and services

A leading Dutch manufacturer of paints achieved 35% cost savings due to

variabilization. It deployed the remote backup service, wherein backup cost

was based on volume of business data stored

CIOs across enterprises are looking at variabilization to cut their costs and make

their businesses more agile and flexible

74% is the overall

potential of

variabilizing all

IT components,

excluding SaaS

Currently, in a

‘model’ company,

approximately 36%

of the IT cost is

variable

By transforming

the IT model to

include cloud-

based offerings,

this can be

increased to 60%

QU

ICK

FA

CT

S


Commercial Models of Variabilization

Predictable Cost

Well – defined scope of work

Stable requirements

Measurable success criteria

Accurate baseline

Well – defined, stable requirements

Fluctuations in output or consumption

Well – defined service levels

Supporting culture / governance

Innovate with/low upfront cost

Both sides add value

Executive sponsorship

Accurate baselines

Well-defined goals

Willing to accept provider’s solution

Willing and able to share gains

Fixed Price Pay-as-you-use Model

Outcome Based Model

Gain Sharing Model


Variabilization Brings Strategic Benefits

A cut in overall operational expenditure

costs would result in reduction of IT

spend as well. Later, when there is a

plan to scale up the business,

proportionate IT investment can also be

scaled up easily with lesser effort and

cost

Embracing Variabilization can help

companies align their total IT spending

with overall business growth. If the IT

costs are variabilized, the IT spend would

also be proportionately variabilized.


Looking Ahead

Most enterprises are

already viewing

Variabilization as a

strategy that goes

beyond cost savings,

with increasing focus on

agility, orchestration and

risk management.

Variabilization 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.

Progressive

organizations across

industries are already

surfing this wave of

Variabilization and

seeing growth even in

the face of distressing

economic conditions


For more details please visit the link below:

http://www.wipro.com/Documents/variabilization_of_it_tran

sforming_the_business_landscape.pdf

http://www.wipro.com/Documents/variabilization_of_it_transforming_the_business_landscape.pdf




http://www.wipro.com/Documents/insights/Remote-Healthcare-Device-Monitoring-and-Analytics-Boost-Device-Manufacturers-Bottom-Line.pdf


Wipro set up the Council for Industry Research, comprised of domain

and technology experts from the organization, to address the needs of

customers. It specifically surveys innovative strategies that will help

customers gain competitive advantage in the market. The Council, in

collaboration with leading academic institutions and industry bodies,

studies market trends to help equip organizations with insights to

facilitate their IT and business strategies.

For more information on the Research Council visit

www.wipro.com/insights or mail [email protected]

About Wipro Council for Industry Research

http://www.wipro.com/insights

mailto:[email protected]


About Wipro Technologies

Wipro Technologies, the global IT business of

Wipro Limited (NYSE:WIT) is a leading Information

Technology, Consulting and Outsourcing company,

that delivers solutions to enable its clients do

business better. Wipro Technologies delivers

winning business outcomes through its deep

industry experience and a 360 degree view of

“Business through Technology” – helping clients

create successful and adaptive businesses. A

company recognised globally for its comprehensive

portfolio of services, a practitioner’s approach to

delivering innovation and an organization wide

commitment to sustainability, Wipro Technologies

has over 140,000 employees and clients across 54

countries.

For more information, please visit www.wipro.com

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