Why the recession will force us to think differently about IT spending

Is over-spending on IT analogous to the US housing crisis? One viewpoint says yes.

In the latest installment of InformationWeeks' Global CIO column, Vinnie Mirchandani draws some excellent analogies to the current US housing crisis and the way that we've been treating IT buying for the last few years.

The short take: just as we've over-borrowed and over-burdened ourselves with housing, we've done exactly the same thing with IT. We've spent too much, become too dependent on vendors who don't offer additional value for continued payments and overall have left ourselves to die on the vine if we don't take responsibility for our own financial situation.

We over-borrowed: Think borrowing 85% of house value was too risky? If you add in all vendor spend -- hardware, software, services and telecom -- the average CIO and internal staff make up less than 15% of IT budget. In many companies it's a lot easier to get a CFO to sign off on external contract staffing than it is to hire a new full-time employee. Even industries with highly sophisticated vendor management like aerospace and autos don't outsource anywhere that much -- but in IT, we have.

Vinnie Mirchandani Blogs:
http://www.dealarchitect.typepad.com/
http://www.florence20.typepad.com/

You can follow me on Twitter @daveofdoom.

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Software
About the author

Dave Rosenberg has more than 15 years of technology and marketing experience that spans from Bell Labs to startup IPOs to open-source and cloud software companies. He is CEO and founder of Nodeable, co-founder of MuleSoft, and managing director for Hardy Way. He is an adviser to DataStax, IT Database, and Puppet Labs.

 

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