Careful with your next cut, it may be to the bone
Each year as companies go through their budget planning, there is a stir of disappointment and pressure with the IT folks as more of the operating budget is consumed by IT. In most organizations executives are still asking… “What is the value they bring?” “Does it really need to cost that much?” “How do we go to the Cloud?”
There are several reasons for this but primarily enterprise-level systems have become a complex mix of unrelated but “working” systems. This complexity was built over the last few generations of tech cycles leading to a large amount of single threaded SMEs for all of the “one-off” systems, and drives a 24/7 working environment of scrambling from one reactive emergency to another… simply to keep the lights on.
So, taking on the yearly budget discussion creates high-anxiety among IT management and a dysfunctional conversation with finance and the rest of the business. Too often the conclusion is a budget cut in the form of a “flat tax” directive that is applied across the board. Without the proper understanding of each component of IT and its burden on the operations this exercise is futile and further hurts the organization. The cycle continues creating higher stress, low morale, and poor systems performance thus deepening the Business/IT divide. Stop! Stop the cycle before these budget cuts take IT to the bone.
IT leadership needs to demonstrate the transparent business view of their systems: 1) what they cost, 2) the value they bring, and 3) how they rate among their peers. This can be accomplished in short form through the right firm that can appropriately assess via a business / IT methodology that maps directly to similar firms and their correlating IT costs.
However, this is particularly important for the run-the-business functions in IT Infrastructure. IT Infrastructure has a set of distinctly different functions that are most often put into the same bucket. IT Infrastructure = Server, Storage, Network, Security, Telephony, Support, Disaster Recovery with 5 of the 10 IT dollars represented here. Therefore, knowing the cost of each function is critically important to making the right business decision to optimize IT and comply with the financial constraints. For example, knowing that one wayward function is causing the entire IT ship to sink is important to addressing the issue. A budget cut across all functions at the same level is not well-informed and is dangerous for the company as a whole.