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IT
Spending
In
our August DARTS (Demand Assessment Requirements Tracking Survey)
we asked, “How old are your currently installed servers?”
SURF members responded that sixty-seven (67%) percent of their servers
are three years or older. In July we asked this same group what
is their standard write-off period for servers. Seventy-five (75%)
said that the write-off period is four years or less. This would
indicate that the market for replacement servers should be ripe
and capital spending should increase over the next few months.
Also in the June DARTS survey we asked, “Do you add the cost
of downtime to the purchase price when selecting types of servers?”
Only twenty-two (22%) percent said “yes” yet downtime
for many applications can be a major cost item. By understanding
three components, downtime costs can be easily added to the overall
cost of a server. First, what is the cost of a lost or delayed transaction?
Second, what is the transaction rate during peak and none peak times?
Third, what is the average downtime during peak and none peak periods?
With the answers to these simple questions, cost of downtime can
be calculated. You can also add other costs such as lost clients,
prestige, and labor to handle manual processes. Therefore, based
on survey statistics, 75% say their servers are either end of life
or are fully depreciated and yet there is no funding for server
upgrades. So the question of why there is an increase in downtime
is self-evident.
In our June DARTS we asked, “Which one of the following items
is easiest to justify and obtain funding for?” Security was
first with 47%, Disaster Recovery was second with 31% and third
was Servers, with only 14%. So this indicates IT management might
have a harder time getting money for new servers. From our spring
FocusIT Groups we learned that budgets are generally flat. Therefore
wholesale replacement of servers may not be happening in the near
future and companies will try to make due with their installed base.
On the other hand, are we entering into a new stage of IT maturity?
More and more emphasis is on true “Return on Investment”
strategies. Gone are the days of time to market. While software
vendors are up to their old tricks of artificially producing new
releases that offer less and less value, just to keep up their revenue,
users are rebelling and the backlash to this common practice is
the rush to Open Source Solutions. In that vein, along comes Scott
McNeally at the SunNetwork Conference, claiming that desktops cost
ten times more than they should and that his Open Source product
(Star Office) will save the day. Users are hailing Microsoft’s
XP because it does not crash as much as previous versions and has
almost the same functionality and reliability of a Mac. Why did
it take them a decade to provide a product that still is less reliable
than a free OS? Are we all crazy or is it just easier to reboot?
Conversely, IBM’s “Capacity on Demand” program is
just an artifact of poor IT Investment Planning. Outsourcing is
just companies giving up and saying they can not control their IT
spending, when in fact for years they have been making bad IT investments.
In the next three years, companies throughout the world will need
to truly assess the value of IT and get their arms around a sound
investment program. So the answer as to whether we are entering
into a new stage of IT maturity is “let’s hope so!”
In our September DARTS we ask a lot of questions about IT spending.
Look to your DARTS section of the service next week for more on
IT Investment Planning.
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