So what's new?
The problems associated with managing IT finance are as old as IT, and many aspects are generic to finance, not IT. Nevertheless, we have concluded from our research that the IT-business landscape has changed in ways that affect fundamentally the management of IT finance. For most IT managers, this is the first time they have, as managers, faced the challenges associated with the current economic climate. Since the early 90s, when the economy was last in such a state, many factors have changed that influence the way you need to think about IT finances. These include:
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The pervasiveness of IT - every worker has at least one PC.
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The growth of infrastructure, much of which used to be called applications.
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The diversity and granularity of IT expenditure, spread across many managers' budgets.
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Scepticism, in the wake of ERP, Y2K and e-commerce.
Two buckets used to be enough
There was a time when most IT spending could be classified very easily as either 'Applications' or 'Infrastructure'. Applications solved specific business problems so their value to the business was very tangible, if not always easy to quantify. Infrastructure was all the difficult-to-justify stuff that was nonetheless essential if the Applications were to run successfully. Today, many IT budgets are still organised in this way, but the business-IT landscape has changed. In particular, it is no longer safe to assume that applications will be easier to justify than infrastructure.
Users now perceive consumer technology as intrinsically valuable, while seeing many an application as a necessary evil
There has been a switch in what is perceived as valuable to the enterprise. First, some applications have come to be regarded as part of the business infrastructure. They are taken for granted, rather than being viewed - as they once were - as having positive tangible value. The second part of the switch has as its primary cause the consumerisation of technology, that has led many to value the business benefits afforded by features of technology that were once considered esoteric. These include faster processing, higher bandwidth, smaller laptops, bigger memory, and prettier graphics.
You need more buckets now - and the contents are continually shifting
In the old days, the 'Applications' bucket would have been at the top right of the diagram, reflecting both business-specific functionality and perceived value. As noted above, many of these applications are now regarded as business infrastructure, and have thus evolved to the bottom right of the diagram. And, in many businesses, there has been a decline in the amount invested in new applications. The 'Infrastructure' bucket would have been at the bottom left, reflecting its generic technology nature and lack of immediate perceived value to the business. But today, much generic technology is valued by businesspeople, as pointed out above, so that there has been a growth at the top right of the diagram.