Stand And Deliver
Posted by
Paul Travis
February 21, 2005
The old 80-20 rule: It usually refers to an unequal division of wealth or workload. In IT, it refers to something else--a problem most tech managers don't want to talk about.
Most IT departments spend as much as 80% of their budgets on routine maintenance and day-to-day operations, while only 20% is spent on new technology or business-process enhancements, according to surveys by Gartner and other research firms. That makes it hard to argue that technology is adding value to the business--and that IT departments deserve bigger budgets--when most of the money goes to just keeping the computer lights blinking.
Still, some companies have taken on the challenge of reducing the amount of the IT budget devoted to maintenance and operations, in order to free up funds for new development and business-process improvements. Often, what they've done is employ a hodgepodge of practices and tactics, using a variety of technologies and techniques, to attack specific points of pain. Only a few can claim to have dealt with the problem on a systemwide basis. And none says its accomplishments were easy. But most business-technology managers can learn to get a better handle on expenditures and thereby better service their companies' business goals.
Making the right kind of changes can produce big returns for IT departments. "There are millions of ideas for cutting costs, but they're different for each company," says Martin Reynolds, a research fellow at Gartner. "One of the mistakes I see is just taking what you're already doing and automating it. The biggest opportunity for cost savings is figuring out where to change the process."
It can start with just knowing what technology you have. A lot of companies haven't done an inventory of their technology assets or assessed the costs of maintaining those assets, says Suzzette Jaskowiak, director of support services at Forsythe Technology, a consulting firm that helps companies cut IT infrastructure costs. One company Jaskowiak worked with had hundreds of servers, "and they couldn't tell me what each one did or what it was used for." The fully redundant system could handle up to 100,000 transactions per hour. "The IT folks were so proud that they were fully redundant," she says.
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