Can IT spending shift from reactive to proactive?

Can IT spending shift from reactive to proactive?

Summary: Pity the poor IT department.Seriously. I feel for the IT departments out there, especially in this economic climate.

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TOPICS: CXO
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Pity the poor IT department.

Seriously. I feel for the IT departments out there, especially in this economic climate. It's hard to think of another department within a company that's been dealt more changes over the years than IT. It's no longer just a Windows PC and an e-mail account for every employee. Today, IT is supporting Macs and PCs, Blackberrys and iPhones, Salesforce and Oracle, VPN networks and overloaded and overheated servers. It's no wonder that IT budgets are among the largest within a company, a distinction that also makes them among the first to be identified for potential cutbacks.

I recently talked about the woes of IT with a company called Apptio, which bills itself as a provider of IT Cost Transparency solutions. Basically, that means that Apptio comes into your company and starts micro-analyzing the IT budget, staff and operations for the purpose of painting a true picture of IT costs. It gets into the granular data - the support tickets, the cost of licensing and maintenance, the workflow - and looks for trends to start identifying places where companies can improve their effiiciency. Apptio says that 73 percent of IT budgets today are spent "keeping the lights on," just meeting the daily demands of the network changes, hardware replacements, software patches and demanding people.

Apptio

I often wondered if companies might actually save in the long run if they made solid investments instead of forcing one of its biggest-budget departments to support outdated equipment, sofware and even procedures. Maybe that's an unfair assessment but how would anyone know if it were right or wrong unless someone analyzed the data.

I realize that a lot of companies are using the big guys - the IBMs and HPs and such - to manage all of this for them. But for those who are trying to manage internally or determine where to best spend their investment dollars, taking a more detailed look at the big picture might be a good investment of time and money.

It makes sense to me - but I defer to our IT readers who live in this world day-after-day. I've never worked in IT, so I don't have first-hand experience there. But I know how my demands have changed over the years and can only imagine having to deal with 10,000 of me.

If you're working in IT, I want to hear from you. Would something like Apptio's offering would be helpful or just another expense? Do the execs really have a good understanding of what's driving the IT budget? Do you have ideas that you'd like to implement or pursue but are pushed back because of lack of time or money? I'd be interested in hearing your tales in the talkbacks.

Topic: CXO

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12 comments
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  • Reactive to Proactive

    Well it is like this:

    I have been in the IT field for roughly 25 years and most companies treat the IT Infrastructure worse than the mailroom.

    As an experienced IT Professional, the IT is one of or the very last to have the equipment or software to do the latest or greatest or keep your company a safe haven from the outside world.

    Lot of managers may have the education but lack the experience with the latest trends of what is out there.
    ?Leadership is only as good as the experience at hand?

    CIO?s are part of the companies pyramid of promoting and a lot of those who I have met could barley type a letter in any Office package let alone EXPLAIN to the CFO and CEO or President about the expenses needed to be PROACTIVE.
    They fail to understand the complexity let alone the correct language (layman?s) to use for requesting IT needs.

    The IT budgets are the first to be axed for failure of the complexity of the needs via the wrong people explaining the needs.
    algzdnet
  • Short answer: no.

    The "information is an asset" fad of the 1990's was about the only time C-level executives were thinking of proactive IT strategies. But for most of the era, IT is considered as a foundation and overhead cost, just like real estate, lighting, and air conditioning. You have to have it, but unless it is a direct component of your business model, you try to minimize costs while delivering a nominal (not optimum) solution.

    Finally, IT is a victim as well as a beneficiary of Moore's Law. The hardware aspect of Moore's Law taught executives to expect cost reductions, not increases as technology got better. But software operates more or less inversely to Moore's Law; it gets more expensive to create and maintain every year. Using 3rd-world resources at slave wages has reset the curve somewhat, but it still runs inexorably upward, something that is easy to see as costs are escalating in Bangalore and the outsourcers are now moving to Indonesia, Africa, and Central America as alternatives to India.

    So, as long as executives cling to the idea that IT should get better/cheaper/faster and not be subject to inflation, wear-and-tear, and obsolescence, the current conundrum will remain: IT departments will still be told to do more with less, without regard to impact on the wider enterprise.
    terry flores
  • Done it twice

    Each time the consultants take was "wow...Gartner says you need four more staff to manage an installation that size". Needles to say, no changes were made, no staff was hired, and we continued on business as usual.
    fonegirl
  • Small company v.s Large Corporation

    At my previous employer (Small company) that was acquired by another company (Large corporation), they brought in consultants to inform them that they could not comprehend how we could keep the company afloat with 6 IT staff for a $600 mil. company and we needed more staff to do it "right".
    They basically sank the company with that mentality across all platforms of the business.
    small business typically does not need consultants to tell them how to save in IT for they are typically understaffed and over-worked.
    Large corporations need them for the large corporations typically create a "union" mentality to which one guy will not tread in another area (Ex: Windows guys don't work on Exchange stuff).
    In the small business world, we work on anything that plugs into an electrical socket. (even paper shredders)
    joverly@...
  • Usefulness is questionable...

    While Apptio's offering may be nice and offer lots of good ideas and suggestions, how many of those would be put into place and how well the organiztion handles change is someting that doesn't get mentioned often.

    If a company chooses to use a new business user operating system where there are changes in the user interface this may be shocking and somewhat challenging initially for the user, e.g. look at the difference between XP and Vista or the Windows clients before XP to XP to see this big shift that happens every so often.

    IT is usually the backbone of a company, IMO. They are what the business needs and while there is some administration going on to "keep the lights on" there also has to be some work to improving processes which doesn't seem to get any attention at times. Who is supposed to be looking for new ways to give the company an advantage when you also have to keep things running with the glitch here or there and patches every few days for something whether it be from Microsoft or Oracle or some small company that you decided to use as your CRM or ERP provider.

    The scope of what IT does can be immense and rather challenging for just one executive to hold I think. Much like in some big companies there is a Chief Financial Officer and a Chief Investment Officer that oversee a company's financial records, there should also be a pair for Technology, one for current administration and one for what the company can put in to make things better for the employees to do their job of peddling the widgets the company sells.
    JB King
  • RE: Can IT spending shift from reactive to proactive?

    This is an initiative that comes up near the start of every recession. For the most part it's a huge waste of time as the only people interested in the data are the IT people. The executives only look at the numbers and are going to cut IT regardless of any data you present to them. What people forget is that it's a question of affordability rather than of necessity. The necessity of a function of the IT department is looked at through the lens of expenses. When you cut expenses you go for the biggest expenses first. The problem is that most executives even in this day and age don't really understand what it takes just to keep the lights on. We can tell them, we can show them graphs, we can show the projected slow down in ticket resolution times. It doesn't make much of a difference because the executives that are doing the cutting can't or won't listen to this line of reasoning. All they see is the millions spent on IT and want to cut deeply. So what happens is the IT management makes their pitch and it's ignored then IT gets a budget cut and usually a head count cut then gets blamed when ticket resolution slows down, new projects get canceled or rescheduled and on going projects get their completion dates pushed back. And ultimately, these same shops start inching up IT budgets again and inching up head counts back to where they were originally and beyond because replacing people always costs more than the people you had in the first place. And life is back to normal assuming the company survives first it's cut in IT and second the recession. Then when the next recession comes different executives take a look at the IT budget numbers and sharpen their cutting knives and the process starts over.
    maldain
  • Justification

    The problem is justifying the 'proactive' costs, and convincing the purchasers to make a large purchase to prevent higher future costs - this isn't a natural thing for them to do.

    Reactive costs are always less (in part, not in sum), so if you can loosen the purse strings, let us know how.
    coffeeshark
  • RE: Can IT spending shift from reactive to proactive?

    I work in IT Security which has a constantly shifting threatscape.

    Recently we've tried to get management to accept a charter that would allow a proactive approach - audits, security representation at the start of a project, growing firewall black lists, use of honey pots, etc....

    But unfortunately the response was do what you can, if you have time, but focus on keeping the lights on.

    And the justification was "we haven't had a major outbreak", so why should we?

    And the it's not a matter of "if", it's a matter of "when", is not convincing at management levels. Even predictive cost modeling showing Annual Loss Expectancies vs. cost to implement are not compelling enough to elicit proactive chagne because "we havent' had a major outbreak."

    At least in IT security, I will say that most spending and effort is reactive.
    david.swift@...
    • Two of our most troubling security issues

      Sometimes the problems caused by virus and security breaks are so nuanced that the root cause never gets flagged to the management. "So and so had desktop problems, were fixed by support" is how the trouble ticket might read, not "Virus infestation caused by out-of-date AV software".

      Also, there are many managers who just can't believe that someone would actively target their networks and systems. "Why would anyone try to hack our systems? We don't have any valuable info like credit card databases they would want!" The concept of botnets and resource-stealing is just beyond their understanding.
      terry flores
  • RE: Can IT spending shift from reactive to proactive?

    73% seems a little low.

    But, then again, I would expect 25% of the budget every year be spent on some variation of something someone read about in a trade magazine or management magazine and they would try a transition from one messed up situation to another.

    And, sadly, I would also include this type of survey to be part of that 25%.

    I've worked at both HP and IBM and can state without reservation that the situation is probably worse there. They pass the costs of all those items on to the customer and show no real desire to cut costs. They try periodically for more efficiency internally, but any cost savings is not passed on to the customer. Usually there is such a huge gap between the interlock specified in the contract and the amount of work actually needed as to make any gains in efficiency pointless.

    I have worked places where they have invested a lot into becoming "more efficient". But, I have yet to see a more efficient ticketing system. Just different. Change management and the ability to track what is being done on systems is an area where there could be great gains in efficiency, but it is also the area where things slip first. If you are fighting fires, this gets dropped first. You'll update the docs "later".

    Quite often potential gains in efficiency are lost due to inexperience. A shop that runs Tivoli software is unlikely to have someone experienced in every nuance. They could have Tivoli on every box, then still push all patches by hand, for instance.

    Quite often the answer is "a better tool" and all that is provided is "a different tool".

    Of course, it would also help if "improve efficiency" and "cut costs" was not managementspeak for "layoffs". Everyone would like to make their work easier and more efficient, but it seems the trend is to implement a different toolset, then fire a bunch if employees and expect the remainder to go on with additional tasks while learning a new environment.

    I have seen hundreds of projects proposed at the IT level that were proactive and would benefit the company. I have even seen a couple implemented. But, IT spending comes out of the IT budget and the next time that coming in under budget meant that money would be freed up for projects, it will be the first time. Proactive money comes from corporate buy-in.
    rijrunner
  • RE: Can IT spending shift from reactive to proactive?

    IT is in a tough position. As long as the financial people see us as a black hole sucking up money and generating nothing, we will keep getting our budgets cut. But how do we quantify the advantages of upgrading our network so that users don't have to wait for responses? How do we justify spending dollars just to replace that old server that has been causing problems for the last year? What value can we put on having the right figures available to the sales staff when they need them?

    All of these are vague and "fuzzy" numbers. And they really don't fit well on a spreadsheet. But then what we do really doesn't fit well on a spreadsheet. We make stuff work. And we generally do it well. But that's because we ARE IT!
    dmhunter@...
  • RE: Can IT spending shift from reactive to proactive?

    Why should IT spending be proactive? Isn't that an invitation to toy-lust and empire building?

    I have dealt with enough non-IT decision makers to know that this is a common perception of the IT department. Some have understandably decided to keep IT hungry in hopes of preventing runaway IT spending.
    billy@...