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Wealth Management

OPTIMISING IT SPEND IN A TURBULENT ECONOMIC CLIMATE

Jelle Wijndelts, Director of Business Consulting, EMEA, Snow Software

 

Since the beginning of 2020, work practices have shifted rapidly for a multitude of businesses. Due COVID-19, we find ourselves in a unique situation. This has tempted many organisations to relax procedures and approaches towards the adoption of new technologies in order to enable employees to remain productive at home. For many who found themselves scrambling to keep up with the surge of early requests, IT teams are beginning to sift through the initial chaos in order to properly manage resources and streamline technology spend.

Naturally, in the initial and sudden shift to remote working, cost optimisation may not have been a primary focus. Businesses were keen to get workers up and running as quickly as possible, and by any means possible. However, now that remote working is becoming a new norm for businesses across the globe, IT spend is a core focus in preparation for what is looking like an uncertain economic future.

For many IT leaders and their teams, identifying over-licensed and inactive software and hardware will be crucial to finding additional cost saving opportunities and delivering much-needed value to the business. Unlocking efficiencies within IT spend can have a positive impact on the bottom line and help organisations navigate these times of ongoing uncertainty, whilst ensuring business continuity.

So, how can businesses and IT decision makers determine which technologies they truly need and which they can afford to cut back on, especially in a new era of remote working, and be prepared to address IT cost management requests from their business?

The short answer is visibility.

 

Managing visibility across new IT environments

Having complete transparency and visibility of an organisations entire IT ecosystem is an essential first step to optimising costs. This includes having a full, holistic view across all solutions, whether they are on-premises or in the cloud.

The reality, however, is that many businesses have a fragmented view over the technology applications within their organisation, which makes identifying inefficiencies extremely difficult. Even before the shift to remote work, the evolution of department-led technology purchasing had caused many IT teams to lose visibility of their technology estate, including accounting for what’s being used, how much and what tools are left inactive but still paid for. According to research by Snow and IDG Connect, 67% of IT leaders confirmed at least of half of technology purchasing is now controlled by individual business units and departments.

To gain better visibility, organisations should begin by gathering a comprehensive inventory of the technology in use across all areas of the business. This raw data must then be normalised, categorised and augmented with additional information such as application type or end-of-life data.

 

Determining usage and spend

Once a clear view of all technology assets has been defined, IT teams can then start to assess the current usage and spend of the organisation. With many employees working from home, it is likely they will be using a variety of new tools to work effectively. Whilst it can be difficult to determine exactly what is being used and by who when many workers are remote, having this information is crucial to effectively reducing redundancies.

For instance, there might be a piece of software already in place within the organisation with spare licenses that employees may not be aware of, leading them to purchase an additional license or even another solution unnecessarily. By having this insight, businesses can identify overlapping technology and limit usage to one single solution to dramatically reduce overheads, whilst also improving data management and security. Managing existing licenses or negotiating an early renewal, can also help to free up crucial budget needed to support other areas of the business.

By continually monitoring and comparing both the entitlements and deployments of enterprise software licenses, organisations can use this knowledge to re-distribute licenses for maximum effect, whilst protecting themselves against significant unbudgeted costs.

 

Looking to the cloud

The cloud is another area that IT departments should be assessing now to manage spend. During times of market uncertainty, investment in cloud infrastructure can often surge as businesses need employees to access assets remotely. However, there are significant cost savings to be made when it comes to both hybrid and on-premise cloud models.

For on-premise environments, which are often developed over a longer period of time, going back and performing an audit can be extremely valuable as there may be legacy applications that are no longer required. By doing so, organisations can typically expect to reclaim 10% on resources and free up additional data centre budget.

For public cloud use on the other hand, when it comes to production, it’s best to start with agreements and focus on reserved instances or savings plans. The long-life and consistency of these workloads make it easier to analyse and to commit to ongoing spend for a discount.

 

Managing SaaS costs to unlock hidden savings

Last, but by no means least, Software as a Service (SaaS) should also be a key consideration for cost optimisation. Without the right guardrails around it, SaaS like other types of software, can rack up a whole wealth of inefficiencies and waste through over provisioning, redundant applications and duplicated accounts. That’s what makes SaaS a perfect target when it comes to unlocking hidden cost savings.

Here are three ways of doing so:

  • Reduce unused licenses:  unlike the traditional on-premises world, in a SaaS environment you can simply stop paying for a license if you are no longer using it. By gathering detailed usage data, you can manage contracts by buying and renewing only the subscriptions you need. 
  • Downgrade excessive entitlements: different license tiers of SaaS applications have vastly different costs. And often, you will have employees with advanced licenses who use just the basic features of an application. To be able to identify this and recoup the wasted spend, businesses need detailed understanding of both the license and its usage.

 

Optimise applications: most organisations have two, three or more application that serve the same or very similar functions. Regularly reviewing and consolidating to one application, making this available to the end users via an approved application list, will benefit organisations in multiple ways. This includes potential volume discounts – due to an increased in users, and lower support and security cost as there will be less applications to support and maintain.

 

Navigating market turbulence

No one knows the long-term effects of our current reality, but economies around the world have been feeling the impact. During a time like this, having full visibility of IT spend through effective asset management can be a tremendous resource for businesses planning for future sustainability and growth.

Another effect of the economic impact is the increase in vendor audits. The ‘mad’ scramble to home working and shift in IT approach means that lots of companies are now potentially exposed as the software use has changed, in turn affecting compliance. Again, step one is to ensure visibility: understanding what is out there, how is it used, who is using it, and when is it being used.

Regardless of what’s in store, complete visibility across your technology environment has never been more critical. Comprehensive insight into your organisation’s infrastructure, cloud usage and applications will keep businesses profitable and compliant as we ride out this storm.

 

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Wealth Management

UNDERSTANDING THE RISKS INVOLVED IN TRADING FOREX

The foreign exchange market attracts numerous traders every day because penetrating the market is easy. To venture into trading forex, you only need some capital, a computer, and a reliable internet connection. You will also need a basic understanding of the forex trading industry.

While trading with a forex MetaTrader trading platform is easy, it comes with various risks. As a foreign exchange trader, the risk is interpreted as a loss of money. Read on to understand these risks.

 

The Market Risk

Market risk or systematic risk affects the whole market, unlike the unsystematic risk that influences a certain market, asset, geographical region, or sector. While unsystematic risk can be reduced with the change, systematic risk cannot.

Market risk in the foreign trading market is affiliated with anything that can affect the financial value of your preferred currency pairs. Market risk is the most essential for a trader that is the type of risk that you want to be exposed to.

To make profits in the forex market you want prices to fluctuate so that you can leverage the price difference when selling or buying. This process is called market volatility.

Volatility is the element that allows traders to open profitable trades. It is a risk seeing that you might lose money should the markets go against your expectations. However, volatility can also help you open winning trades. Numerous systematic risks can influence prices. These include:

Growth, inflation, and employment figures, as they can affect Central Bank resolutions regarding monetary policy, such as interest rates.

  • Political events such as elections
  • Economic and financial announcements
  • Changes in legislation, regulations, and tax policy
  • Geopolitical conflicts, strikes, terrorist attacks, wars, and natural disasters

 

Liquidity risk

Liquidity means that a market opens and closes your trading positions fast and easily at your expected price. The reason for this is that there are numerous sellers and buyers in the market today. While the foreign exchange market is among the most liquid financial markets across the globe, there are some low liquidity periods.

Often, these occur outside the European and American trading sessions, or during the weekends or holidays. Every trader should understand the low liquidity risk, especially because it can increase the cost of trading.

·Consider the spreads

Low liquidity often causes an increase in the size of spreads. A spread is the difference between the buying price and the selling price. It is the commission a trader pays to the broker to enjoy his services.

An increase in trading costs is an occurrence that happens if a broker provides variable spreads that change based on the trading and market conditions. Some brokers may offer fixed spreads, especially if you understand the behavior of a particular currency pair.

You may also receive fixed spreads if you plan to use an active and hostile trading method like scalping amid news releases.

 

Counterparty risk

The counterparty in the foreign exchange market is the body with which a trader launches and closes trading positions. That is your broker. The risk you are likely to face here is a situation where the counterparty does not pay you due to:

  • Poor enforcement of regulations
  • Bankruptcy

Measuring the counterparty risk is a difficult task for an individual trader which is why they depend on regulatory entities. You can avoid this risk by choosing a reliable broker that is regulated by a reputable organization.

 

Leverage Risk

Leverage is among the biggest benefits of forex trading. However, it deepens the other forex trading risks as we shall see below:

  • Should you take huge market risk with no stop loss then any big losses triggered by sudden fluctuations will be leveraged upwards
  • To acquire unlimited leverage you may have to find a broker within a poorly controlled jurisdiction. However, doing so increase your counterparty risk.
  • If liquidity crush triggers ballooning of your trading costs you will experience high leverage because the spread is an action of your full position.

It is worth mentioning that even if leverage is readily available you do not have you use it.

 

Finally

While trading comes with various risks, you can counter them by adopting effective risk management strategies.

 

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Top 10

IS BITCOIN SET TO HAVE A 2017-STYLE MINI BOOM THIS YEAR?

Bitcoin’s price is set to “surge before the end of 2020” with investors keen not to “sleepwalk” through a 2017-style mini-boom, says the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The prediction from Nigel Green, the deVere Group CEO and founder, which has $12bn under advisement, comes as Bitcoin – already one of the best-performing assets this year – appears to be on the brink of a bullish breakout.

In recent days, Square, which is owned by the billionaire founders of Twitter, has allocated 1% of its cash reserves to the cryptocurrency, whilst a former Goldman Sachs hedge fund chief says the price of Bitcoin will jump to $1m in five years.

Mr Green comments: “There’s been something of an avalanche of interest in Bitcoin in recent weeks from household-name investors.

“Investor activity is picking up considerably with various on-chain metrics and ongoing – and heightening – global political, economic and social turbulence suggesting that there will be a price surge before the end of the year.

“Like gold, Bitcoin can be expected to retain its value or even grow in value when other assets fall, therefore enabling investors to reduce their exposure to losses.
“Investors will increase exposure to decentralised, non-sovereign, secure digital currencies, such as Bitcoin, to help shield them from the potential issues in traditional markets”.

He continues: “There’s a growing sense that we’re set to experience a mini-boom similar to that at the end of 2017.

“Prices are yet to catch-up with investor interest – but this is only a matter of time as investors will not want to sleepwalk towards perhaps year-high prices in the run-up to the end of 2020.”

The late 2017 bull run saw the Bitcoin price reach its all-time high of $20,089.

The deVere CEO concludes: “There’s been a notable ramping-up of interest in Bitcoin amongst investors since the end of summer. Indeed, it has been the best performing week for one of the year’s best-performing assets since July.

“I can see no reason why this upward trajectory will not continue between now and the end of the year.”

 

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