IT spending to fall: what should you spend on?

There’s a presumption that growth should always be occurring.

Vendors count on it; most managers do, too.

What if that’s not true? For enterprise IT, that’s in the immediate future. (Take a good hard look at how this year’s “growth” numbers were put together: you can see the shape of the future emerging already.)

Later this year earnings will be under immense pressure. The global economy is slowing.

IT budgets will feel the pinch. With that, so will IT vendors.

As an IT leader, what should you be focusing on?

Lowering the Total Cost to Own and Operate (TCOO)

Now is the time to make the investments necessary to lower your total cost to own and operate. Every platform you operate on should be evaluated to see where it fits.

Changes made here pay off for years.

When looking at changes, you need to also look at your local labour markets. If you switched your servers, say from the Microsoft stack to a Linux stack, can you find sufficient people readily in your local market when needed? (Total cost takes factors like this into account, and does not merely look at vendors as abstractions.)

You need to look at lifespans and projected environmental costs, to make a clear choice between buying platforms-as-a-service or moving into an outsourcing facility, both of which give you a monthly charge, as opposed to owning and operating your own kit. (If you are replacing items — hardware or software — as fast as the depreciation is rolling off, your financial profile is different than if you can “milk” the configurations for years after they are depreciated.)

Most of all, how easy is it to change in the future? It’s worth removing roadblocks to future changes now.

Get the mods out

On the application side of the portfolio, the single biggest order of business is making the portfolio flexible. That starts with removing modifications to the code.

Convert them to side-along applications, components or other entities, but make the base as free as possible (preferably unmodified).

This allows you to look at software-as-a-service or business process outsourcing without side issues — and allows you, if you’re staying in house (and there are reasons to choose that that come from TCOO just as there are for the out-of-house options), to benefit from the vendor’s attempts to drive new business through features.

You should expect that your vendors will close the maintenance periods for old releases, in an attempt to force you to upgrade. Be prepared for that strategy.

Fight the fights that matter

Now is the time to implement better governance — the Governance Board would be ideal — and to get the business firmly engaged around the table.

Hard decisions about priorities, about stopping projects that are going nowhere fast, etc. lie ahead. Investing in the managerial infrastructure to make those things happen is worth your time and money.

On the other hand, trying to wrestle the “bring your own device” movement to the floor is likely to fail anyway. You need to battle security issues properly and not simply use it to simplify what you support.

The next few years will see budgets ratcheted down in mid-year, a lot of turmoil and no easy return to growth. It is a time that will test us all, and make heroes out of some.

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About passionateobserver

I am a passionate observer of our society, the economy, and politics. Mostly I don't like much of what I see, so I write as a concerned citizen. To the fray, I bring a background in the philosophy of history, a lifetime's reading, a work history in information technology management, consulting and education.
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