Marketing Finance – Internal Class Assignment

How technology is reducing Operating cost of

Company?

Costs have been growing faster than revenues....

These days everything is connected to the Internet so all the businesses around the world, Smart
companies have taken advantages of IT and Internet resources to grow their revenue and cut their costs.
In the Era of cloud, Enterprise businesses can reduce their cost dramatically by taking advantages of
online software hosted in the cloud and other Internet-based automation software to address their
requirement like travel, postage, paper & printer services.

Commonly used technology which are helping in reducing the operating costs are:

 CRM Software
 Cloud Storage
 Video Conferences
 Digitized Business
 Automation and Robots

But because of complexity of technology now a days it leads to the business outrage as well. Enterprise
companies are spending tons of money on monitoring solution to address the problem.

If Internet service providers service is interrupted everything will go for toss as it would hamper many
businesses along with itself. In an organization if IT has any issue operation will get impacted. This is the
reason why Internet service provider and Enterprise companies in their IT department spend tons of
money to monitor the services and try to resolve the issue as soon as possible. But the problem is
complexity and dependency of these multitier application which makes the issue invisible for longer
time.

A mid-size company (1000 Employee) with distributed offices across the cities spend lots of money on

Shashi Shekar Yadav 17-M-550 MMM

Marketing Finance – Internal Class Assignment

their monitoring to avoid business outrage. Estimation on monitoring solution for above mentioned
structure would be:

To deploy resources to monitor user Communities: 500K USD Per Year

To deploy resources to monitor Local Network: 500K USD Per year.
To deploy resources to monitor Campus Network: 200K USD Per year
To deploy resources to monitor WAN/ Telco Network: 200K USD Per year
To deploy resources to monitor Application Performance: 200K USD Per Year Per Application.
To deploy resources to monitor ADC: 200K USD Per year per ADC
To deploy resources to monitor Active Directory: 100K USD Per year
To deploy the resources to monitor DNS: 100K USD Per Year.

Even after spending above amount Enterprise companies were facing business outrage very often, if
there was some problem, they always had issues while solving those issues in the complex environment.
In the WAR room situation, every team says their part is service is functioning fine and monitoring
solutions were failed to stich the story of these various dependent applications because of weak
correlation and analytic between these dependent applications.

In the recent past many smart analytic and machine learning solution came into existence and helped a
lot to solve these problems and reduce the number of resources/Employees to monitor such complex
environment. There are many companies like NetScout, Riverbed, Viavi etc. who are providing solution
and helping companies to reduce their operating cost.

Shashi Shekar Yadav 17-M-550 MMM

Marketing Finance – Internal Class Assignment

As per the forrester’s report 2015 & 2016, With old traditional internet monitoring solution in IT services
triaging is emerged as the biggest problem. As per the survey by forresters report 91% of respondent
reported that problem identification and alerting was number one problem in their organization and
they all suggested for improvement in their organization.

50% of respondent reported that 90% of their IT issues takes more than 24 hours to resolve. This
extended mean time to repair cost millions of dollars to the Enterprise business. As per forresters report
on Fortune 100 Companies they spend more than 11 million dollar per year per company.

In last 2-3 decades Internet helped Enterprise business to cut down the cost but due to growing
complexity in the IT now a monitoring became another concern. You can’t leave IT solution standalone
without any monitoring solution and resources. Because of complexity of IT applications, it was leading
towards business outrages in past few years but in recent past with advance technology and stronger
Analytic using machine learning now many IT companies developed the smarter solution.

In recent past, using advance analytic and machine learning you are able to arrive on the root cause of
the issue very quickly in your organization Environment.

If we take the example of Bank’s, most of the bank in the world have multitier applications and these all
tiers are highly dependent on each other. If there was issue on one tier whole application service use to
go down. 5-6 years ago, we were not able to pin point on root cause of the issues quickly and it use to
extend the mean time to repair the issue and use to cost lots of dollars because of business outrage.

Because of these advance visibility solutions with advance analytic and machine learning you can reduce
the head count and efficiently monitor the complex multitier applications.

If we take the example of bank, many years after 2008 global financial crisis, the profit margins of banks
in advanced economies remain at historically low levels. The reason is very simple costs have been
growing faster than revenues. Bank's average return on equity has fallen to unsustainably low levels,
especially in Europe. The trends of this rising costs across all the banks/Enterprise businesses and

Shashi Shekar Yadav 17-M-550 MMM

Marketing Finance – Internal Class Assignment

constrained revenue growth are set to continue owing to several factors. Inflation is expected to be 2%
on average in Europe and in the US through 2022. Nominal annual wage growth in these businesses are
expected to run above its subdued post crisis levels at about 3%. Hence, short of any structural changes
in such Enterprise organizations like bank's staffing and other costs are likely to continue rising in the
coming years. But we can control

Banks have been digitizing their products, services, and processes over the past decade—a shift that was
expected to reduce operating costs. Yet, from 2010 through 2016, banks in the US and the European
Union saw costs increase by 8%, on average. It started fallen in recent past because of advanced
technology and machine learning.

Conclusion: As we progress into the next decade, we shall see technology playing a pivotal role in
enhancing the reach and quality of the deliverables with an added emphasis on reduced operating cost
and better turnaround times. This optimization will pave way for better customer engagement &
retention and help reduce the overhead cost associated with it, thereby creating value for the end
customers and the organizations serving them.

Shashi Shekar Yadav 17-M-550 MMM