Dialog
Paul Strassmann receives comments about his writings and lectures that can be found on www.strassmann.com. Some of these exchanges may be of interest to readers. Selected "dialogs" are published here without attribution to protect the privacy of individual commentators. To start a Dialog please e-mail your observations to paul@strassmann.com.
Monday, July 18, 2005
What is the right amount to spend on an IT infrastructure?
From Vice President Technology, Insurance Company:
I wanted to express my appreciation for your May 2005 article in Baseline Magazine entitled "Taking a Bite Out of Overhead". I found the article informative and fact based. I am an executive responsible for infrastructure in a Fortune 1000 insurance company and have inherited a disproportional infrastructure to total IT budget when I accepted the post. I have been faithfully shrinking the infrastructure as a percent of the whole IT spend, but lack any good targets from peer companies for percent spend on infrastructure to total IT spend. Do you have any information you could share regarding this key metric for corporations other than 51% is "extraordinarily large" ? Thank you again for your excellent articles and bringing visibility to this important topic.
Response from PAS:
Your infrastructure costs should not exceed 1/3 of your
IT spending if you outsource much of your fixed
costs and substitute an infrastructure based on variable cost datacenter
capacity and transaction-based communications.
The trick is how to migrate from what you have
to where you need to be. That requires careful
transition planning. With your revenues at present close to
$1B and over 2000 employees that should
be doable in 2-3 years.
I wanted to express my appreciation for your May 2005 article in Baseline Magazine entitled "Taking a Bite Out of Overhead". I found the article informative and fact based. I am an executive responsible for infrastructure in a Fortune 1000 insurance company and have inherited a disproportional infrastructure to total IT budget when I accepted the post. I have been faithfully shrinking the infrastructure as a percent of the whole IT spend, but lack any good targets from peer companies for percent spend on infrastructure to total IT spend. Do you have any information you could share regarding this key metric for corporations other than 51% is "extraordinarily large" ? Thank you again for your excellent articles and bringing visibility to this important topic.
Response from PAS:
Your infrastructure costs should not exceed 1/3 of your
IT spending if you outsource much of your fixed
costs and substitute an infrastructure based on variable cost datacenter
capacity and transaction-based communications.
The trick is how to migrate from what you have
to where you need to be. That requires careful
transition planning. With your revenues at present close to
$1B and over 2000 employees that should
be doable in 2-3 years.