Creating a Flexible IT Organisation while Reducing Costs

Hardy ViilupCIO

Statement• I am not giving you theoretical lessons

about IT management• All that follows is based on my personal

opinions and practical experience• Maybe you will find it useful

About Estonian Post• 91 years on postal market• Private company - 100% shares are government owned• Universal postal service provider• Around 90 types of postal services• 6 divisions:

– Postal– Logistics– Information logistics– IT– Administrative– Finances

• 3600 workers• 63M EUR turnover

About IT division• 32 IT division employees• 3 departments

– Development (4 persons)– IT services (13 persons)– IT support (14 persons)

• 360 network connected postal offices• 1 postal bus• 1600 computers• 2000 computer users• 120 servers• 140 IT services

Economical situation• Estonia opened postal market at 01/04/09• Within one year we have lost about 17% of

our income– Global economical crisis– Competitors on the market

• 2010 will not be easy, possible additional market decrease can be 30%

• Traditional postal services consumption is going down

Challenges of the IT• Align to business needs

– IT resources must be scalable according to business needs

– New services are needed quickly– New services must have favorable price tag

• Reducing IT cost– Operational cost– Constant expenses

• Drive innovation in a company– New ideas– New technologies

Align to business needs• Business strategy -> IT strategy• ITIL• Communicate with your customers• Sell your ideas to business

ITIL project• At the beginning of 2008 we started to

implement ITIL v.3 based IT management processes– Incident management (implemented)– Problem management (implemented)– Change management (in progress)– Configuration management (in progress)– Service level management (in progress)– Release management– Financial management– Continuity management

ITIL results• Activity based IT division structure• Better efficiency of IT• Faster response to incidents and problems• Transparency of IT costs• IT costs are now 10% lower

What has to be done?• Educate the business side

– ITIL training– Available IT services– Cost components of IT

• Plan the business services– Teach business, what is needed to plan

IT capasity and etc.– IT services - modules for business

processes

Reducing IT costs• Monitor and manage IT cost• Make business responsible for IT cost

Monitor and manage IT cost• Measure IT costs, IT workforce load• Identify biggest cost components• Make a plan to lower IT costs• Constantly monitor IT costs

Make the business responsible for IT investments and cost

• Project commity– All investments are business investments– Business must protect it’s investments

• IT division cost is zero– Each division has IT cost– IT division cost is part of the services cost– IT division cost is related to business needs

(SLA)

Innovation• New ideas – how to find them

– Idea bank (inside and outside)– Questioning key and biggest customers– Visioning workgroups– Competitor anaysis

• New techologies– Find out how it fits to your business processes– Look for the trends on the market

New CIO role –salesman

• If you don’t have money you have to get it• Sell your ideas - you have to find sponsors

Thank you! Questions?