IT budget management and quantifying costs ain’t like it used to be – it’s a whole new ballgame for the CIO and the IT department.
My good friend Peter Gross, VP of Bloom Energy’s Mission Critical Practice and a member of the RampRate board, talked about the old days of IT using one word: simple.
Gross said, “It used to be that quantifying IT costs was simple. When you set up applications and business requirements, you bought new hardware or built another 10,000 square feet in your data centers. It was simple, life was easy, and no one was questioning the costs associated with those spends.”
A New Era for IT
Then, as we all know, the world experienced an economic downturn and technology boost – and everything was different. The IT world saw their unlimited budgets and huge internal IT teams disappear. Subsequently, newer trends such as cloud and IaaS took over and software began defining everything from new infrastructures to software-defined data centers.
Because of that dramatic transformation, the entire IT landscape has changed and now, for you the CIO, quantifying the IT budget Management has become a whole new ballgame and keeping score is much more complicated.
In the words of Gross, “Most enterprises – I would dare to say all enterprises – cannot quantify their costs.” I second that.
The Complexity Advantage
As a result of IT transforming into a more service-oriented function, quantifying costs for intangibles – like a cloud implementation or migration – is challenged by everyone within the organization (especially those who cannot understand the business benefits or are looking for immediate results). The task of building metrics to correlate with cost, performance, and consumption, and comparing it to other business metrics can be highly complex.
For instance, how do you evaluate if you’re better off using a public cloud, colocation, managed services, or outsourcing the whole shebang? These questions demonstrate the complexity of making an informed IT decision and how to quantify for validation and acceptance.
Without help and working to streamline and manage that process, you may never hit that home run and have everyone cheer in excitement about your anticipated IT spend. Heck, it might even be difficult to get past first base in terms of acceptance and buy-in.
As you the CIO become more of a broker of services, the financial pressure will continue to build. As your IT organization is consumed as a service and the driver continues to be cost, you and your team will have to figure out how to effectively quantify costs and figure out how to get a few big hits in the new IT budget Management ballgame.
How are you playing the cost management game? Do you have the right players? A solid framework and methodology? The right tools?
Most importantly, are you able to demonstrate both value and cost efficiencies to your fellow executives? Let me know. I am here to help you hit the ball out of the park.