"All you can eat" buffets are costed out predicated on averages of what most folks can eat. It's always more expensive than a la carte. If all you want is a peanut butter sandwich for lunch, you'd be foolish to shell out $14.95 for the all-you-care-to-shove-down-your-throat buffet. And if family finances were a bit rocky, paying for more than you need might be the furthest thing from your mind. The same holds true with your organization's IT spending: cash-strapped organizations are real
"All you can eat" buffets are costed out predicated on averages of what most folks can eat. It's always more expensive than a la carte. If all you want is a peanut butter sandwich for lunch, you'd be foolish to shell out $14.95 for the all-you-care-to-shove-down-your-throat buffet. And if family finances were a bit rocky, paying for more than you need might be the furthest thing from your mind. The same holds true with your organization's IT spending: cash-strapped organizations are realizing that buffet-style IT budgeting may not be an idea that should continue.Problem is, as we we pointed out in our recent Morphing Budget cover story, many IT organizations haven't gotten their arms around a simple accounting best practice called activity based costing (ABC). And, many IT shops are still mired in the practices of basing their costs on technology implementations instead of connecting expenses to the service catalog. Being able to cost out IT based on your service catalog will create transparency and also make business leaders pause just a bit more before doing a budget cut -- after all, it will be a service cut. And if you run IT right, there are no IT projects, just valuable business technology projects.
Is the new IT transparency a reaction to cloud computing services? Well, to some extent, sure it is. But it's not just about cloud. It's about business leaders being more savvy and not wanting to pay for the buffet if all they want is a peanut butter sandwich. And, while cloud providers do their best to create easy-to-implement offering, IT staffing at some capacity will always be necessary. I've always maintained that effective IT is more about human capital than it is about the technology-du-jour. So, human capital also needs to be part of the transparency equation. (Cloudies, I want to offer me HaaS? Already got it with outsourcing 1.0, thanks, buh-bye.)
We're in the early stages of the new transparency, and we need to help one another out. "IT Transparency" vendors (basically a re-spin of Business Process Management software) would have you believe that all you need to do is buy their software and consulting and then you'll be good. Do you buy that? Or, are you successfully mapping your service catalog to your budget today? Are you using data center automation to carve up your utilization and allocate it to business units? Did Santa give you some private cloud software that magically accounts for switches, firewalls, and other supporting infrastructure? How's that working for you?
It's an interesting time, and I think that this year will be the year that trail blazers will be showing others how to do it. If you've got ideas or best practices about the above, I'd love to hear about them. We'll credit you and share your ideas in upcoming InformationWeek content.
Help your peers ditch the buffet line in 2011 before business unit leaders force the issue.
Jonathan Feldman has written, taught and consulted extensively on IT innovation topics and is an award-winning IT executive and analyst. Write to him at firstname.lastname@example.org.
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