IT Spending: Ain't No Rest For The Wicked...

When it comes to IT spending everyone has an opinion on who, what, where, why and how.  When it comes to IT Spending, I liken to the montra of the IT guy that is best laid out by the lyrics from the band, “Cage the Elephant’s” song,  Ain’t No Rest for the Wicked…

“There ain't no rest for the wicked, money don't grow on trees, I got bills to pay, I got mouths to feed, there ain't nothing in this world for free.

I know I can't slow down, I can't hold back though you know I wish I could, oh no there ain't no rest for the wicked, until we close our eyes for good…”

Picture source: http://ragegenerator.com/

By nature, of who we are, we know exactly how IT money should be spent, as evidenced by our humorous little graphic above, but unfortunately, we don’t have the purse strings.  So in an attempt to bring you something useful in this subject, we thought it would be more useful to you to see how it was spent rather than hear the meanderings of some propeller-head.  So here goes…

IT Spending, How Low Can You Go!

Historically IT spending was a function of necessity, an evil one at that.  From 2009 this perspective has changed significantly, but IT still has to address global impacts, especially when acts of God are concerned. 

Specifically, when looking to see what typically was done in the recent past, we stumbled on Gartner's U.S. dollar growth forecast for global IT spending in 2012.  As you can see, it has been revised downward from 4.6% in the previous quarter to 3.7%. This may be attributed to faltering global economic growth, the European in my coffee crisis and the impact of Thailand’s and Japan floods on hard-disc drive and other technology production.

IT Spending as a % of Revenue

This trend sparked our interest, so we decided to peel the onion further and see how this spending shall be executed.  Now we understand there is a whole mess of data out there, but we tried to feature only the things that would be useful to your decision making process.

The first point of order is to determine what the IT share of the pie with respect to the total revenue.  This way you can see if your company is on par with the rest of the country.

Now understandably some organizations will have a higher emphasis on technology than others, or so you would think, but they seem to be all over the place.  The useful thing about this is that it does shed light on IT priority in respective industries.  Specifically, I would venture a guess that the growth industries are the ones with the higher IT spending.

IT FTE as A % of Total Employees

Now no data metric would be complete without looking at the long term position.  We feature this by showing the Gartner chart that depicts the total Full Time Equivalents (FTEs) that are working in the respective companies, for we feel that budgets come and go, but the amount of people you dedicate to the cause is the real bell weather on your position of Technology importance to your bottom line.

Not a surprise, they are pretty much in lock-step with the exception of Insurance, which suggest to us one of three things:

1)      They are pretty much tech’d up and they are in cruise control

2)      They are delusional and that they believe, “If it ain’t broke don’t fix it...”

3)      They are constantly firefighting and need the small army just to keep the wheels from coming completely off.

RUN, GROW, or TRANSFORM?

Ok now that we know that what they spend and who they are that spend it, how about how they spend it.  We looked at the figures and found a chart that shows the philosophy behind the money.  As suspected, this economy is in “Circle the wagons” mode, with 67% in Run the company mode.  There is an admirable 19% of Growth being invested with a slightly lower interest in shaking the box.

Capital dollars vs. Operational

To take this perspective one step further, we thought it would be prudent to show you how they approach the spending with regards to supporting these endeavors.  In this case, Capital dollars vs. Operational.  Here we see the lion share being operational with ¼ being for Capital.  Once again “Circle the Wagons”.

IN-HOUSE vs. CONTRACTOR

So that brings up the next obvious question, “How many of those IT FTEs are Contractors?” Survey says, “Around 19%.  Which although small with respect to the overall picture, but significant to show that expertise for hire is definitely alive and well…?

Hardware/Software and Services

And now the moment you have all been waiting for, the midpoint of our show, just kidding.  This is what everyone asks when talking about budgets and spending, what are you spending it on?  Hardware, software, people, or services.  Well, we found a chart for that as well. So without further adieu, “The Distribution on spending”.

Yes folks, big surprise, the majority of the money are in personnel with the balance nearly split in a three way share between hardware/software and services.  What does that mean?  Well, to risk sounding redundant, “Circle the wagons” is the theme here.  However, did you notice the decline in the Hardware corner?  You can thank the cloud and Virtualization for that…

So “Once more unto the breach, dear friends, once more;”

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About Rick Ricker

An IT professional with over 20 years experience in Information Security, wireless broadband, network and Infrastructure design, development, and support.

For more information, contact Rick at (800) 333-8394 x 689