There’s a weird disconnect between how IT sees the budgetary landscape—in a word, bleak—and the reality we found in our InformationWeek Analytics IT Budget Survey. In that poll, 45% of 422 respondents say they’ll see increases in fiscal year 2011, compared with 24% expecting decreases. The reality is, buying compute resources as services shifts expenditures from capital to operating. What does that mean for CIOs and their financial clout? Can it finally break us out of the 80/20 rut? In this report, we’ll discuss strategies to manage this morphing budget.
December 2010 $99 Analytics.InformationWeek.com A n a l y t i c s R e p o r t The New Transparenc y: Tra n s fo r m i n g t h e I T B u d g e t Factors including a shift from capital to operational spending, consumerization and tech-savvy management are forever changing how IT budgets. What does this mean for CIOs and their financial clout? What can you do if politics get in the way of strategies like chargebacks? In this report, we’ll discuss ways to manage this morphing budget, get your piece of the pie and serve your customers appropriately. By Jonathan Feldman Report ID: R1901210 The Morphing Budget A n a l y t i c s . I n f o r m a t i o n We e k . c o m A n a l y t i c s R e p o r t CO NTENT S 5 6 Author’s Bio Executive Summary 7 Research Synopsis 8 The Great Divide 9 Don’t Blame the Cloud 11 Time to Re-examine 15 Words to Live By 16 From Lone Wolf to Team Player 22 Not So Granular 26 The Long View 30 IT Meets Transparency 35 Appendix 39 Related Reports F O E L B A T 2 December 2010 © 2010 InformationWeek, Reproduction Prohibited The Morphing Budget A n a l y t i c s . I n f o r m a t i o n We e k . c o m A n a l y t i c s R e p o r t CO NTENT S 8 12 Figure 1: IT Budget: FY 2010 vs. 2011 Figure 2: Operation Budget Planning Methodology 13 Figure 3: Percentage of Outsourced IT Operations 14 Figure 4: IT Budget Timeframe 16 Figure 5: Cost Reduction Targets 17 Figure 6: Frequency of IT Budget Benchmarking 18 Figure 7: Percent of Total Operating Budget Allocated to IT Expenditures 19 Figure 8: Percent of IT Services Budgeted in Central IT 20 Figure 9: Primary Reason for Using or Evaluating Cloud Computing 21 Figure 10: Means of Budgeting for Per-Transaction or Discrete Service Costs 22 Figure 11: IT Budget Organization 23 Figure 12: IT Governance Board Influence on IT Budget 24 Figure 13: Factors Influencing Project Expenditure Approach 25 Figure 14: IT Operating Expense vs. Capital Expense F 26 Figure 15: Requirements for Business Technology Elasticity O 27 Figure 16: Likelihood to Sign Long-Term Agreements 28 Figure 17: Premium for Short-Term Contract or Early-Termination E Clause 29 Figure 18: Extra Capacity Built Into New Systems L 30 Figure 19: Charge Back to Business Units for IT Services B 31 Figure 20: Percent of IT Budget Charged Back to Business Units A 32 Figure 21: Likelihood for Business Units to Use IT Services With Charge Backs T 3 December 2010 © 2010 InformationWeek, Reproduction Prohibited The Morphing Budget A n a l y t i c s . I n f o r m a t i o n We e k . c o m A n a l y t i c s R e p o r t CO NTENT S 33 33 Figure 22: Satisfaction With IT Budgeting Process Figure 23: Satisfaction With Service From IT Organization 35 Figure 24: Company Revenue 36 Figure 25: Company Size 37 Figure 26: Job Title 38 Figure 27: Industry F O E L B A T 4 December 2010 © 2010 InformationWeek, Reproduction Prohibited The Morphing Budget A n a l y t i c s . I n f o r m a t i o n We e k . c o m A n a l y t i c s R e p o r t Jonathan Feldman serves as director of information technology services for a city in North Carolina. The city has won several Jonathan technology innovation awards during his tenure, including the Feldman InformationWeek International Economic Development Council New Media Award. Analytics He has also directed professional services in the private sector, providing security and network infrastructure services to the military, healthcare, financial services and law enforcement markets. Jonathan has worked for 20 years in the fields of IT security, reliability and human resources management, and has written, taught and consulted extensively on these topics, notably as co-author of Maximum Security and author of Teach Yourself Network Troubleshooting. His writing, which readers call “funny and easy to read,” has been translated into many different lan- guages. As an award-winning Network Computing and InformationWeek con- tributing editor, he has worked with dozens of public- and private-sector organizations to document real business benefits, risks and appropriate governance of new technologies and surrounding practices and procedures. A speaker at regional and national venues, including Interop, PC Expo, CNet Radio, The Institute of Internal Auditors and for the United States Army, Jonathan has been active in the community with organizations such as Infragard and GMIS International. He holds an MS degree from Georgia Tech. Write to him at firstname.lastname@example.org. 5 December 2010 © 2010 InformationWeek, Reproduction Prohibited The Morphing Budget A n a l y t i c s . I n f o r m a t i o n We e k . c o m A n a l y t i c s R e p o r t Executive Summary
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