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Is IT Department Spending Too Much.... RRS feed

  • Question

  • I've recently been told, by the powers at the top, that the IT department is spending too much money. I've read through the old discussions regarding IT spending, but I need a different input.

    I've come up with a budget for updating the company's infrastructure and hardware which I think is reasonable considering every sector needs its own web server (virtualisation) and all users need licenses upgrades and so fort. However they think compare to other company's our size, we are spending too much.

    The original infrastructure was setup for 50 employees with 5 different sectors within the one company. We now have 150 employees and 10 different sectors, but the infrastructure and hardware have not been updated for the past 5 years not for the lack of trying from the IT department I might add.

    Now they are ready for the upgrade, but as with everything IT, I am trying to balance the cost with the best possible solution available. Are there any IT managers out there who have a similar size company that have been through an upgrade who can share their IT Budget / Cost?
    Monday, February 8, 2010 5:32 PM

Answers

  • I've recently gone through a similar problem.  The old IT manager left and I had to pick up the pieces.  We started 7 years ago with 70 users and 2 servers at a single office.  We now have 200 users over three main offices and another 150 at random building over the UK.  We were having problems with our main office where the server were 7 year old and at 99% capacity.  We were constantly fire fighting, archiving emails, archiving files, etc.  The old IT manager would constantly put forward proposals for a new exchange server or new file server but they always got knocked back due to cost.  The four IT staff (including myself) were constantly fixing the same problems over and over again.

    I sat with my FD and thrashed out where we thought we were going wrong.  We came up with a proposal to centralise our entire infrastructure and virtualise the lot.  It took 12 months of planning, 6 months of deployment and almost 500k but we got their in the end.  Our goals were to improve security (because it was difficult to manage data at some many sites), disaster recovery (because it was difficult to manage so many sites and equipment), Business Continuity (because it was so complex to plan for a disaster at each site), dynamic IT (because users could only work from their 'mother' site) and provide a platform for value add IT (because before we only fixed things).

    Since the project we now have much more visability over our data.  Our Disaster Recovery and Business Continuity processes have enabled us to achieve a british standard in business continuity (BS25999).  Users can work from anywhere without us losing control of our data.  And we now have value added IT in Sharepoint, MS Project Server, Business Intelligence & CRM.

    What I'm trying to get at is you need to take a step back from IT and see what the business needs.  If they are happy to have the existing setup then there's no point in replacing it with another one until it breaks down; as long as they are happy to live with the risk.  If you can show that your department is completely reactive they might happy to live with that or they might (and should) want to get more out of you and at the very least sanction a proposal for a new it strategy which is aligned with the business.

    If you write a report saying the hardware is 5 year old and needs replacing they won't replace it until it blows up.  If you write a report saying you have a problem with security, DR, wasted money, etc but you propose a long term solution with many more additional benefits to the business you might have a chance.

    • Marked as answer by Kevin Remde Thursday, March 18, 2010 11:41 PM
    Thursday, March 18, 2010 9:01 PM
  • Effba:  I can understand your problem.  It's a never ending comprimise between what the company needs and what is affordable.  I would look at what your proposing to purchase and then look out over the next 3-5 years and see if any of your "upgrades" can be put off for a little while.  If not then I would start looking at what it's costing the company in "un-productive" time, and relate that to how much more productive their employees are going to be if the powers that be allow you your improvments.  If you do it this way from a ROI, then your superior migh be a little bit more loss with the cash.  Also it sounds liek possiably your looking at getting new or upgrading software, and I would get together with a Microsoft Partner who's a MSA (Microsoft Software Advisor) and talk with them about current option, and financing.  You might be able to defer some cost through MS Financing, which in return will posiabally require less captial.  If would like more help please update your posting.

    • Marked as answer by Effba Thursday, March 4, 2010 10:02 AM
    Friday, February 26, 2010 9:17 PM
  • Effba,
    there are no rules. good economy allow more spending and today's environment is bad and require cuts.
    management's job is to cut costs and bring better profits. your hob is to build a plan that would save as much money and get better value for teh money you do spend
    is your problem with the client side (PCs) or the server\networking side?
    for clients, it is recommended to upgrade on a 3yr cycle to avoid a situation where you're forced to replace many PCs at once. if you have statistics on how much money an average user waste with slow PC related tasks. that can be easy to sell.
    on the server side, virtualization is the way to go if you want to save money. show them the numbers and if you can prove long term saving by spending some money now, there is a good chance you'll get what you want.
    and at the end of the day remember that the company is there to make money and spending is not a favorite topic...
    http://ITDualism.wordpress.com
    • Marked as answer by Effba Thursday, March 4, 2010 10:06 AM
    Wednesday, March 3, 2010 1:33 PM

All replies

  • Effba:  I can understand your problem.  It's a never ending comprimise between what the company needs and what is affordable.  I would look at what your proposing to purchase and then look out over the next 3-5 years and see if any of your "upgrades" can be put off for a little while.  If not then I would start looking at what it's costing the company in "un-productive" time, and relate that to how much more productive their employees are going to be if the powers that be allow you your improvments.  If you do it this way from a ROI, then your superior migh be a little bit more loss with the cash.  Also it sounds liek possiably your looking at getting new or upgrading software, and I would get together with a Microsoft Partner who's a MSA (Microsoft Software Advisor) and talk with them about current option, and financing.  You might be able to defer some cost through MS Financing, which in return will posiabally require less captial.  If would like more help please update your posting.

    • Marked as answer by Effba Thursday, March 4, 2010 10:02 AM
    Friday, February 26, 2010 9:17 PM
  • Effba,
    there are no rules. good economy allow more spending and today's environment is bad and require cuts.
    management's job is to cut costs and bring better profits. your hob is to build a plan that would save as much money and get better value for teh money you do spend
    is your problem with the client side (PCs) or the server\networking side?
    for clients, it is recommended to upgrade on a 3yr cycle to avoid a situation where you're forced to replace many PCs at once. if you have statistics on how much money an average user waste with slow PC related tasks. that can be easy to sell.
    on the server side, virtualization is the way to go if you want to save money. show them the numbers and if you can prove long term saving by spending some money now, there is a good chance you'll get what you want.
    and at the end of the day remember that the company is there to make money and spending is not a favorite topic...
    http://ITDualism.wordpress.com
    • Marked as answer by Effba Thursday, March 4, 2010 10:06 AM
    Wednesday, March 3, 2010 1:33 PM
  • I've been talking to a couple of MSAs and they have been helpful and have suggested a financing option I can use for the microsoft softwares. As FC has quiet a varied business environment, it makes it more difficult to calculate if we are spending too much in trying to accommodate all the different individual sectors.

    I guess what management wants to know is, how the company’s IT spending is compared to other businesses our size (150 employees)? My problem at the moment is finding other companies to compare with.

    Thursday, March 4, 2010 10:02 AM
  • Unhfortunately Rofi, my problem is off the Server/ Networking side. Apart from domain controllers, File and Exchange server, we are pretty much looking at upgrading everything (CRM, Web Servers, Adobe illustrator, Contribute and Acrobat, Microsoft Office, SQL, CAL Licenses, Windows Server Licenses, Terminal Services, etc). Everything was originally (5-7 years ago) setup for 50 employees, and has not been improved since.

    Thursday, March 4, 2010 10:05 AM
  • I've recently gone through a similar problem.  The old IT manager left and I had to pick up the pieces.  We started 7 years ago with 70 users and 2 servers at a single office.  We now have 200 users over three main offices and another 150 at random building over the UK.  We were having problems with our main office where the server were 7 year old and at 99% capacity.  We were constantly fire fighting, archiving emails, archiving files, etc.  The old IT manager would constantly put forward proposals for a new exchange server or new file server but they always got knocked back due to cost.  The four IT staff (including myself) were constantly fixing the same problems over and over again.

    I sat with my FD and thrashed out where we thought we were going wrong.  We came up with a proposal to centralise our entire infrastructure and virtualise the lot.  It took 12 months of planning, 6 months of deployment and almost 500k but we got their in the end.  Our goals were to improve security (because it was difficult to manage data at some many sites), disaster recovery (because it was difficult to manage so many sites and equipment), Business Continuity (because it was so complex to plan for a disaster at each site), dynamic IT (because users could only work from their 'mother' site) and provide a platform for value add IT (because before we only fixed things).

    Since the project we now have much more visability over our data.  Our Disaster Recovery and Business Continuity processes have enabled us to achieve a british standard in business continuity (BS25999).  Users can work from anywhere without us losing control of our data.  And we now have value added IT in Sharepoint, MS Project Server, Business Intelligence & CRM.

    What I'm trying to get at is you need to take a step back from IT and see what the business needs.  If they are happy to have the existing setup then there's no point in replacing it with another one until it breaks down; as long as they are happy to live with the risk.  If you can show that your department is completely reactive they might happy to live with that or they might (and should) want to get more out of you and at the very least sanction a proposal for a new it strategy which is aligned with the business.

    If you write a report saying the hardware is 5 year old and needs replacing they won't replace it until it blows up.  If you write a report saying you have a problem with security, DR, wasted money, etc but you propose a long term solution with many more additional benefits to the business you might have a chance.

    • Marked as answer by Kevin Remde Thursday, March 18, 2010 11:41 PM
    Thursday, March 18, 2010 9:01 PM
  • Thank you Walops, you have given me hope that it is possible.
    Friday, March 19, 2010 11:44 AM
  • I know this discussion is 2 years old but I'll post anyway.

    The IT department in most companies is cost center. It swallows cash like a black hole and most CFOs and CEOs don't have a clue as to what the IT department is buying. The majority of the individuals that work in IT are not business people. They tell you what they need, or most of the time, what they want.

    That being said, I am an IT Director for 2 hospitals. I started out as a sales rep for a computer reseller and after several years decided it was time for me to start my own company. While building my company, I couldn't afford an expensive Exchange guy, or SQL guy, etc. etc. So I did it myself. It was hard and time consuming but I got it done. Through this process I became aware of how IT works and operates.

    I have to say that the IT department in any company is foreign to almost everyone. No one knows what they do. Even after they explain what they do, most people are still as confused as ever.

    That all being said, that is why I have started a new company. I am now a consultant. I understand the needs of a growing company and the cash shortages that are always going to happen. I'm not trying to sell anything here nor do. I was just jumping around the internet and landed on this site.

    Sunday, March 11, 2012 12:54 PM