How Can Companies That Rely on Technology Consistently Not Pay for It?

I was going ask you for your take on what will be this year’s marketing trend to boost sales. We have seen things like green computing and virtualization and the ever popular security (pick your favorite subtopic – USB data slurping, laptop encryption, firewalls etc), or whether Linux is for smart people but I was talking with a couple of friends, both technical and end user and ended up shaking my head.

The topic – how can companies, that rely on technology to make money, continue to fail to spend the money necessary to keep that technology not only functional, but recoverable. The first story came from a friend in logistics. She is an end user and sent me an email along the lines of they have been playing with the servers and just lost payroll. Now she is not savvy enough to explain what lost payroll means, but the upshot was the company was going to have to call the person who set it up and get him to fix it. This person, as I understand the story, no longer is employed by the company and lives several hundred miles away.

The second story comes from a friend who has his own small business taking care of other small business IT needs. He cannot find enough quality people to cover all of his needs and he occasionally calls me when he runs into Linux issues. He was telling me about a problem he was having at one of his customers and describing the infrastructure to me and he got about half way through the tale when I asked him why he had done it that way. The upshot of the story was that the company would not pay for a more robust solution, despite the fact that there were several single points of failure and certainly considerable risk points.

As someone who works in an enterprise environment as well as someone who has worked in small associations and small business, this is hardly a new trend, but as the economy begins to slough off jobs and spending becomes even more restrictive, companies will continue to cut essential services, further risking their IT infrastructure. This is not a new situation. IT is always the ugly duckling at the show. At best, when everything is working, no one sees us and the bean counters wonder why they are paying us. At worst, it is mass chaos and the bean counters wonder why they are paying us.

So what to do? One of the best things is to collect and keep current metrics that show dollars per cycle (feel free to define a cycle). For example, a common metric is the amount of money the company will lose if the database is down per minute, or production losses per minute of outage. Some of these numbers are pretty easy to obtain but others are not and require some creative accounting and a lot of schmoozing with the HR and financial folks that do not always like talking about things like gross salary or operating costs. Another, more subjective area is morale. When IT systems are running correctly, people do not see it and are focused on other things. When they are not running well, people are tense. For example, when I took over at a company several years ago, the network had a terrible reputation, crashing on a regular basis, almost like clockwork. This resulted in a lot of tension and excessive spending on supplemental equipment at the department level just to be able to get the job done. It took a while to beat the network into shape but once it was humming, people were more concerned about other things and actually smiled at the IT folks. Finally, there are several risk factors that can be documented. For example, every dollar that is cut in backup solutions results in a measurable time to restore in the event of failure. This is not always catastrophic failure. This could be as simple as the CEO’s assistant deleting a key memo to the shareholders (or the equity company more likely). If it cannot be retrieved, then the assistant’s time has been wasted. That has both a dollar value and a risk attached to it. You can discuss security issues. The case of the missing payroll is a big red flag to me on a number of levels, least of which is letting a former employee back into the systems, as benign as it might be.

Companies have a love/hate relationship with their IT organization. As IT people, we need to be more proactive in showing value, both to make sure we can afford to do the job expected of us, and to ensure we can properly describe the risks of cutting the costs in a language that those in charge of the purse strings will understand.

______________________

David Lane, KG4GIY is a member of Linux Journal's Editorial Advisory Panel and the Control Op for Linux Journal's Virtual Ham Shack

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wrong focus

quixote's picture

they can get away with all sorts of outages, failures and "buggy releases" without a large portion of their customer base leaving them

That is triple true in academe. The IT department at my school just suckered management into a complete wall-to-wall Windows "solution" to all their problems. Nobody asked the users (faculty and students). Nobody even asked the Computer Science Department! Now nothing works. But IT farmed all the "support" out to Microsoft, so it's working great for them.

Management at universities (deans, vice-presidents, president) come from non-technical backgrounds more often not. Whenever they have a problem, IT comes right over to show them how to turn their computers on, or whatever. So it works great for them.

Meanwhile, $500,000 is being sucked out of the budget every year for license fees that do nothing but get us a baroque, broken system. It's called progress. (Oh, and, no, nobody smiles at IT around here.)

This is not a new problem

Anonymous's picture

I started in the software business when the data center (today you call it the "IT Dept.") ran the company. It's not a good business model but we sure did get a lot done, and done right.

Ever since it became normal for every other MBA to think he's a CTO, and since corporations continue to hire idiots and H1B blue-plate specials to do their IT instead of people who know what they're doing, this has become a problem.

It just keeps getting worse and there's no end in sight. IT is a cost center, and the bean counters cut the allocations just like they cut everything else. If IT would be viewed as a core function of the business and qualified people could be found in cost accounting and technology, a lot of these problems would go away. But the goal now is cheap, and not good. At the day's end, they usually don't even accomplish "cheap."

Why should we spend money this year?

Carl Snyder's picture

"Why should we spend money this year? We just spent $XXX,XXX last year on updating the software and hardware and we need to cut money out of the budget somewhere. Let's lay off half the people in IT and support and not budget for software upgrades for this year. We'll probably get by for a couple of years, that way."

--top management

LOL! That's the exact

Anonymous's picture

LOL! That's the exact mentality were talking about! Now when your computer breaks you'll be the first one screaming because it's not getting fixed. All because you chopped the IT dept in half to save a few bucks. Someone has to make your network and systems run and when everything is running you need people to fix user problems. When IT is understaffed things are slowly going to hell in a hand basket! As someone else mentioned when people are concentrating on doing their job and not "why isn't my e-mail working" then that generally is a good sign.

Top IT.

Companies will pay for

Bit's picture

Companies will pay for technology and IT projects that they see value in. In most cases, the most cobbled-together of cheap solutions will still run for a long time, or forever... so until there's catastrophic failures visible to a wide portion of management: where's the 'value' in throwing more money into IT? And why would staff go out of their way to consider the long-term negative consequences of a half-baked solution: when terms of employment with any given company (or division within the same company) are growing shorter all the time?

Unless there's some regulatory requirement that demands a certain level of service, visibility, or accountability, most companies say "If IT cost me $X last year and I'm not aware of any big failures, then I'm going to try with $(X - 10%) next year". And they repeat this cycle over and over until something breaks. After all: most companies that rely on IT aren't launching spacecraft, making pacemakers, or reactor-control systems: they can get away with all sorts of outages, failures and "buggy releases" without a large portion of their customer base leaving them. Because in general, our expectations of technology are so low.

I'm not saying this is an ideal. But I'm not surprised when I see companies taking the cheap options in IT... since they're hoping it will be "good enough"... because most of the time they'll be right.

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