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An Appropriate S, G & A For "IT As A Business"?
By Charles Betz
Expert Author
Article Date: 2007-01-29
Your CMDB budget depends on it...
Last of tonight's triple play (I must be feeling inspired).
Let's consider the "Run IT as a Business" concept. Let's say your IT budget is $250 million for a $25 billion corporation.
The accountants probably consider that amount part of your corporation's SG&A (selling, general, and administrative expense). You're a paltry 1 percent of that overall revenue base.
But what if you were your own $250 million firm, managing an IT value chain for your (now separate) client? What if you had your own P & L?
Well, you would have overhead: salaries, rent, heat, lights, and (just like your parent company) you would have IT. What would your IT look like?
It would be all the stuff you use to run the ITSM processes:- Help Desk
- Management Framework
- Portfolio Management
- CMDB
- CASE & architecture tools
- Provisioning system
and the like. (See A simplified ERP for IT architecture )
You would be entitled to your own budget for these tools. I think 1% is a bit paltry - why not say 3%? That would be a healthy budget of $7.5 million per year for your internal IT tooling. Not enough to purchase all of it at once, but certainly enough to implement a sound infrastructure and keep it supported over time.
Are you spending 3% of your organization's overall IT budget on your internal tools? More? Less?
At least it's a baseline thought experiment that may prove useful to some of you if the business is questioning why you need to spend money on a CMDB.
Thoughts?
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About the Author:
Charles Betz is a Senior Enterprise Architect, and chief architect for IT
Service Management strategy for a US-based Fortune 50 enterprise. He is author of the forthcoming Architecture and Patterns for IT Service
Management, Resource Planning, and Governance: Making Shoes for the Cobbler's Children (Morgan Kaufman/Elsevier, 2006, ISBN 0123705932). He is the sole author of the popular www.erp4it.com weblog.
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