Tuesday, 01 September 2015 15:47

IT budgeting need not be a zero-sum game

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We often hear that IT needs to reduce ongoing costs to free up funds for new initiatives. That assumes IT budgets really are fixed, but is that true?

Your writer wishes he had a dollar for every time he has heard a vendor or analyst say that IT budgets are static, and so the only way to fund new projects is to reduce expenditure on 'keeping the lights on'.

So it was interesting to hear CA Technologies vice president of solutions strategy and business development Burt Klein - who previously worked in IT at Bank of America - say it is possible to get more money for the IT function if you can show that spending more will yield a bigger return or make previously marginal business projects financially viable.

Putting it simply, if you can show that spending an extra dollar on IT generates at least as much return as putting it into any other part of the business, why would the organisation insist on merely maintaining or even reducing IT expenditure?

At the same CA-run seminar, Accenture APAC DevOps and Agile lead Mirco Hering (pictured) expressed a similar sentiment, saying "I've never seen people spend less money - they always do more work."

But it is important to talk about revenue generation - not just cost savings - when justifying IT investments. For example, if the business project includes an expectation of $1 million per day, then an IT investment that allows the project to be completed 30 days earlier means another $30 million revenue.

That said, when looking at costs be sure to include all of them, he advised. When developing or deploying software, that includes the cost of each defect that reaches production, such as lost sales and even lost customers.

Again, if spending more on development, testing and deployment tools - such as CA's Continuous Application Insight and Release Automation products - provides a net reduction in total costs, especially in the current year, such a proposal should receive a positive hearing.

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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