Eliminating Waste in Your Run Budget
The number one issue for most CIOs today is how to move out of the keep-the-lights-on-trap in which as much as 80% of their IT budget is being spent on run-the-business capital and expense costs, and move that money into their Grow and Transform budgets. In many businesses the only budgeting being done for Innovation is in some Business Units. Moreover, CIOs will privately tell you that they know at least 10% of the money in their Run budgets is waste. They know the waste is there, but they are flying blind because they lack the data to clearly identify where that waste is and how to eliminate it. Following the Gartner “Run, Grow, Transform” model, CIOs need to free up money in their existing Run budgets and move that money first to their Grow budgets and then to their Transform budgets.
As Gartner has pointed out, along with a number of other authors and analysts in the IT space, there are three kinds of IT spenders out there. There are the Late Adopters who are primarily focused on running the business with minimal risk, the Mainstream Adopters who wait until a technology or innovation is proven and the Early Adopters who are continually innovating, want to be leading-edge and are looking for Transformations that will lead to significant competitive advantage. According to a March 2012 article in the Journal of Accountancy by Dorothy Shimamoto entitled, “A Strategic Approach to IT Budgeting, “ – https://www.journalofaccountancy.com/Issues/2012/Mar/20114439.htm – spending for these three types of organizations typically breaks out like this:
|Late Technology Adopters||80%||20%||0%|
As the Journal of Accountancy article points out, the key difference between the Mainstream Adopters and the Early Adopters is that the Early Adopters are spending twice as much on IT Transformation initiatives as the Mainstream Adopters.
Based on our experience, Lakeside Software estimates that at least 50% of an IT organization’s Run budget is spent in End User Computing. So let’s take a look at the End User Compute environment to understand how a CIO can shift her IT spending and free up money in the Run budget so it can first be allocated to the Grow budget and eventually to the Transform budget.
Using Lakeside Software’s SysTrack, the process of freeing up Run money budget and making it available for your Grow and Transform budgets is very straight-forward:
- Assess the existing End User Environment to fully capture the health and inventory of the End User Environment – users, their locations, the devices they are running, the state of those devices (MIPs, Memory, IOPs, storage etc.), application inventory and usage, application license information, print and network environment.
- Run the various out-of-the-box reports provided by SysTrack to determine waste, such as resource-consuming service desk issues, infrastructure sprawl, unused or redundant applications, anomalies in the environment, and opportunities to improve end user productivity and the quality of IT services delivered
- Identify the areas of waste and potential savings
- Prioritize the list based on the amount of waste based on savings and the ease by which the waste can be eliminated
- Develop a plan to eliminate the waste
- Execute the plan
- Move the savings to your Grow and Transform budgets
The goal is to move IT from being a drag on the business (which is often the perception) to delivering business value, from flying blind and being analytically impaired to providing a competitive advantage. Lakeside’s goal is to empower you with insightful data so you can solve previously unsolvable problems. We think escaping the Run budget trap is a great way to get started.
Check out our new white paper and learn how a CIO can escape the “80/20 trap” by freeing up funding heretofore locked within the run budget and use the freed up funding to not only innovate within his/her own organization but also foster innovation across the enterprise.