Reducing Budget and still be able to continue to innovate and deliver new business applications
According to Forrester Research about 63% of IT budgets are spent on keeping the business going. Many CIO’s that the figure should be far higher! I would say this means that 63% of IT budgets are spent on nothing more than trying to sustaining the business.
So hopefully the other 37% are spent on innovating, delivering new applications and helping the business to grow, succeed, be more competitive and so on.
So, what happens when the economy falls into recession? Well, according to recent research from CIO magazine 58% of CIO’s surveyed stated that their budgets have been reduced. The research also showed that CIO’s were cutting back spending on “new” business initiatives.
This is unfortunate, but a regrettably true statement about the health of IT today – surely it is new initiatives that should win, and not maintaining the hairball of IT we’ve ended up in.
Indeed, this should be a massive concern for every CIO and CEO since it is affecting the long term viability and competitiveness of their business – particularly worrying given the recession will end at some point and those who are investing now will thrive.
Lowering the budget to invest in new business strategies
So, have can we reduce the budget and ensure we continue to innovate and deliver new business applications?
- One critical way is through automating all the interfaces between applications that are a manual nightmare to maintain as you upgrade and change infrastructure and application components.
- A second way is to retire and decommission all those applications that are no longer used.
Let’s look at these two areas in more detail:
(1) Lowering the budget to invest in new business strategies: Consider how many applications you have, and how many interfaces exist between those applications. Consider then how often you change things and the impact on the infrastructure.
Think about your IT environment and consider how many applications you have – I bet it’s close to 1,000! If we base it on the 1,000, let’s do the maths: 1,000 applications each with 10 links that each have 5 interfaces. That’s 50,000 interfaces. Let’s assume 100 builds a year, and let’s assume that only half of the interfaces need to be tested. Ok, so that’s about 2,500 interfaces that need to be tested. At 5 hours an interface, that equates to 12,500 hours of testing. Suddenly we are talking over $1million in annual manpower costs just managing these interfaces.
The alternative is automation! By automating these interfaces you remove the manual component of changing, testing and deploying. You also understand the downstream implications without suddenly finding issues in other applications that you’d forgotten were linked downstream.
A data integration platform removes the risk and significantly lowers the cost of maintaining the interfaces. This then allows you to redeploy budget and headcount into new business initiatives to help the business acquire and retain customers.
(2) Retiring Applications: Have you ever considered how many applications remain operational “just in case they’re needed”?
Why are the applications kept available? One reason is that the business may need to get at the data. Yet they cost real money to maintain (storage costs, database licenses, servers, manpower to name but a few). Data archiving – as a part of the data integration lifecycle – gives you a great way of removing all these costs by archiving the data into a secure accessible repository. Suddenly another part of the budget has gone. This can then be utilized elsewhere to help the business attract and retain customers!
Unfortunately, according to the Forrester Research, the CIOs put “attract and retain customers” as 8th in their prioritization. Unfortunately, business leaders put this as 1st on their list!
Mis-alignment? I think so!
Data Integration helps align business and IT by freeing up their business budget to invest in new business imperatives.
June 3rd, 2009
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