Are Your IT Dollars Just Going Down The Drain?

January 7, 2010

In the business technology trade, we use a jargon term called keeping the lights onWater Down a Drain

In the English language, what this term means is the percentage of your IT spending that does nothing but maintain and keep running those IT assets (software, servers, etc) that you budgeted the CAPEX cost for years ago.

That percentage is then compared to the percentage of your IT budget that is left over after you have spent the “keeping the lights on” money for you to invest in improving your IT assets or infrastructure or investing in new capabilities

In most cases – that left over money is not very much.

One statistic states that in 2007, 71 % of IT spending was on sustaining initiatives **

‘Sustaining’ being synonymous with that ‘keeping the lights on’ term

The Big Company vs. the SMB

Larger organizations usually make the headlines in these type of costs, simply because 71% of a 100 Million IT budget is a boatload of cash.

We Are Not Immune

Those of us in SME businesses are not immune from this. This post titled; In SMB IT, Complexity Kills I outlined a smaller business that had enough conflicting technologies to make a large business proud.

Looking at each investment individually, perhaps the cost does not seem that high, but the manpower to maintain those individual pieces, even simple things like ensuring you can back up data in multiple different platforms and databases. Lets not even think of the time and skills required to ensure security patching and the like.

The SMB Takeaway

Your capital spending on software or servers today is your operating costs next year

**Weill & Ross IT Savvy Harvard Business Press

Photo Credit David Blackwell via flickr

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