Siemens to cut budget by €800m

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Siemens to cut budget by €800m

Siemens will standardise business applications and consolidate computing infrastructure across its worldwide operations in a move to lower IT expenditure and increase efficiency.

The equipment manufacturer plans to cut its existing IT budget of around €3.7bn by €800m over the next three years, said Edmundo Ruiz, vice-president of corporate information and operations groups at Siemens.

Under the programme, developed in part by The Boston Consulting Group, Siemens will study which business applications and hardware devices have a level of "commonality" across the company and which still have a level of "uniqueness".

The aim is to achieve as high a level of commonality as possible to reduce the number of different software applications and hardware devices used in the company.

Wireless Lan (WLan) systems, for example, have a low level of uniqueness, Ruiz said, noting that these systems are standardised and available at commodity prices. Many business applications, on the other hand, have a high level of uniqueness, requiring ERP standardisation, which takes time and costs money.

"We aim to drive process standardisation, especially in the areas of CRM and SCM," Ruiz said. "At the same time, we intend to consolidate the number of enterprise applications."

SAP, a key supplier of enterprise software to Siemens, will be a target of this consolidation.

Outsourcing will also play an increasingly important role as Siemens moves to shift the distribution of its costs, according to Ruiz. "We want mostly variable costs, which give us greater flexibility, and fewer fixed costs," he said.

John Blau writes for IDG News Service


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