Capital Expenses relate to a one-time procurement -- typically for equipment or a fixed asset. There one time expenses might be paid for in phased increments as part of a complex installation project.
- Verify Business Requirements
The first consideration for redirecting a capital expense is to verify if it is needed on the as-purchased form? Does it fit the business? Business Management participation is critical in order to define:- Current Requirements;
- Future Requirements;
- Compliance on security issues; and,
- Business continuity resilience needed.
- Use Proven Project Management Methods
Project Management processes such as those from the Project Management Institute(PMI) can help ensure that the desired results are achieved on scope, on schedule, and on a budget. A Project Board is useful to give key stakeholders oversight and month-to-month leadership. Effective project execution can reduce implementation time by 50% and the cost by as much as 70%. - Leverage Competition
Package the procurement in a favorable manner and release structured Requests for Proposal(RFPs) to at least three competitive vendors. The RFPs should be written as one or more specified solutions with exact capacities and functions rather than as open ended questions. If necessary, release a Request for Information(RFI) in advance of the RFP to determine the preferred solution set.
A weighted evaluation matrix template should be prepared before the RFP is released. Make sure that the critical evaluation points are addressed effectively in the RFP questions. Each vendor proposed is then scored on the evaluation matrix after the responses are submitted. Some clients have one team create the template while a seperate team scores the results to ensure impartiality.
Corporate Purchasing, Finance, and Legal departments should be considered for large capex procurement participation. Important terms and conditions should be included in the RFP to get vendor responses for evaluation. Vigorously negotiate critical terms to protect risk and pricing. - Life Cycles Cost Analysis
Capital Expense based projects inflate operating expenses over time due to depreciation, maintenance, and support costs. This operating expense inflation is a significant problem for most information technology departments. one way to manage this budget inflation is to include a finance representative in theri project team and to formulate a total cost of ownership(TCO) model for each proposed solution. This way, the capes and apex impacts can be balanced evaluated and included in future budgets. - Atlas Group Contribution
Atlas Group can help reduce capital expense costs in several ways:- We provide consulting support to facilitate large competitive procurements with needs analysis, RFI, RFP, TCO evaluation and project management services.
- We facilitate open source solutions to automate information technology functions at a fraction of traditional commerical costs for;
- Enterprise project management software
- Service deskt software
- Infrastructure monitoring
- Infrastructure device discovery
- Asset inventory
- Infrastructure security
- We offer cost allocation services and tools to bill capital expenses back to the appropriate business units.