A major student loan servicer had recently experienced declining revenue as a result of government student loan actions and impacts to the student loan market.
To align costs with reduced revenues, cloud migration was evaluated as an option to reduce overall costs. The loan servicer was looking for options to reduce costs in a short-term period.
Further Advisory performed analysis across the full tech organization budget, with the main focus being on two budget items – personnel costs and tech expenses. The full portfolio of enterprise applications was evaluated regarding right-sizing based on reduced processing volumes, and costs reduction recommendations were made, focusing on cloud contract structure, sharing or moving costs to the parent agency, and determining appropriate solutions based on changing government regulations and reduced operations processing volumes.
- Tech Expense Reduction Strategy: By shifting from an on-prem solution to cloud operations, reconfiguring cost basis of contracts, eliminating and consolidating redundant or stand-alone applications, tech expenses were projected to be reduced by 61%.
- Decreased IT Budget: With additional savings gained from adjusting personnel numbers and increasing executive/management staff leverage ratios, total IT budget reduction was estimated to be 53%.
- Roadmap to Achieve Cloud Cost Savings:. A 3-year roadmap was delivered that recommended cloud migration actions and associated cost savings be done over 3 phases: 1) Eliminate all mainframe application hosting, 2) Reconfigure and migrate all non-mainframe applications, and 3) reduce personnel volumes based on new skills and reduced staffing requirements.
- Cloud Cost Model with Scenarios: As part of the project, a tech budget model was delivered with variables and projections, allowing the tech and finance organizations to both track savings over time, and create scenarios to understand the impact of various actions on the overall IT budget.