Workforce Solutions

Variabilization Solutions

Fixed costs turn growth into profit. However, they can also turn declines into big losses. Therefore, fixed costs involved in IT are increasingly becoming a liability. Any market decline leads to significant losses due to these heavy investments. This is where Variabilization comes as a complete overhaul.

Variabilization-turning your fixed costs into variable ones-offers an attractive alternative. Experis IT provides Variabilization Solutions that enable its clients to grow from a fixed technology cost model to a variable cost model, for greater competitiveness and business agility.

Variabilized technology uses tenets like scale, simplification and standardization to drive efficiency, lower unit costs and optimize delivery giving firms the competitive edge in the global market. Firms can afford to use computing infrastructure on a pay-as-you-go basis, very similar to the way we buy gas, electricity and water.

The 3 major ways through which Variabilization Solutions can be provided are:

Internal Variabilization

Setting up a consolidated IT infrastructure requires a significant investment that hardly pays, especially in the short run. With gradual growth and development, organizations become more and more information intensive, thereby calling for a higher maintenance cost for the IT infrastructure. By leveraging a shared infrastructure model, however, companies can tackle the cost pressure more efficiently and therefore, focus on their core businesses, by outsourcing the support functions to external service providers. Cloud based data-centers growing rapidly nowadays, thereby, are promoting variabilization growth further. Multiple data centers maintained across geographies by organizations typically have disparate technologies, including a wide range of servers, some of which are old and obsolete. Many such organizations are now variabilizing their data-center costs by accessing cloud-based services.

Customer Variabilization

Many companies are now providing variabilization solutions to their clients, thereby gaining competitive advantage by delivering highly differentiated services. Variabilization has the potential to transform the nature of competitiveness advantage by switching the emphasis away from competing merely on scale to competing on value chain orchestration, agility and risk management. However, there are limitations. For example, one should not risk making the value of unique assets available to its competitors by variabilizing them through an outsourcer. However, variabilizing a unique fixed cost while keeping it internal is possible.

For example, a biotechnology company developing a promising drug, could variabilize part of or the whole cost of the multiyear research by having a partner pay for that cost now as a prepayment against royalties on future sales. Therefore, today’s fixed cost becomes tomorrow’s % of sales cost.

In IT, the pay-per-use model propagated by Software as a Service (SaaS) providers is a case-in-point. The SaaS model considerably reduces the cost of upgrading from one version of the software to the next, compared with on-premise costs.

Scale Variabilization

Organizations, nowadays, can variabilize their scale of operation to suit the cycle and business dynamics, thereby, making their business more competitive and agile. Infrastructure-as-a-service aids this.

Therefore, the new era of variabilization can be expected to show the following advancements in the IT world:

Cost structures of companies will become more variable thereby making their business model more resilient

Risks, activities and assets will migrate to those firms that can optimize them best

Customers and suppliers will become more cohesive and integrated. Business models opening more to the outside world will become successful and moreover, firms will be orchestrators rather than being owners of their operations

Competitive advantage will swing from scale toward risk management, agility and coordination across the value chain

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