IBM Wants to Reallocate Your IT Budget

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Analytics and the Path to Value

When it comes to business, information is clearly power.

IBM knows that 70 percent of existing IT budgets go towards maintaining what most customers already have installed. That's problematic from IBM or any other vendor's perspective because it means that there is less money available to buy new products and technologies.

IBM also knows that a huge amount of the products and technologies that most customers have is wasted. So during these tough economic times, IBM is bringing its considerable analytics portfolio to bear on the IT department in a way that, depending on your perspective, could save, or eliminate, up to 40 percent of the existing IT budget.

The Global Technology Services group within IBM has released a series of analytics applications for IT that include:

  • Alternate Cash Flow Analysis to determine which alternatives in data center or IT infrastructure operations can cost-effectively meet a client's business goals. This tool includes a "do-nothing strategy" model that shows what would happen if IT was left in its current state, which also provides a baseline for other financial comparisons.
  • Physical Threshold Capacity Analysis forecasts data center capacity requirements.
  • IBM's Resiliency Rationalization Analysis gauges resiliency within their data center infrastructure in a way that includes the value of the application to the business.

According to Steve Sams, vice president of data center architecture services, IBM wants to change how $1.5 trillion in global annual IT spending is allocated. Of course, that comes with a certain amount of risk. For instance, the analysis more than likely will show that IT organizations have been wasting money for years on inefficient systems. That analysis will also highlight ways to reduce the existing IT budget, and any reduction in the number of systems that need to be managed could easily result in a significant reduction in IT staff and some major changes to the way the industry as a whole operates.

Of course, Sams says that IBM is hoping that customers will simply reallocate that spending to drive additional IT projects, which would result in new projects for the existing IT staff to manage. Sams, however, concedes that scenario could play out differently across different customers, especially when you consider how much duplicate data there is in the enterprise today.

Nevertheless, it's only a matter of time before business executives discover that there are now tools to perform this kind of analysis, which leaves IT leaders in an uncomfortable position. They can either be the ones to discover the problem and present a solution, or they can wait for someone else to discover that they are part of the problem.


Sams says the cost reductions enabled by the same core analytics engines that IBM uses in its business intelligence applications are too compelling to ignore. That challenge from an IT perspective is going to be lining up all those new projects that can now be funded using the existing IT budget before the chief finance officer decides to gut that budget all together.