PRICE Systems

In an article in last weeks Harvard Business , IT Costs: Do You Speak Their Language), John Sviokla discusses the fact that as the information business continues to grow it is increasingly important for organizations to understand the impact of IT as it relates to their operating costs. This certainly rings True to us here at PRICE Systems who have recognized this reality. TruePlanning 2009 has been developed by PRICE specifically to help organizations get their heads around the true costs of Information Technology.

Application development projects can represent significant expense to an organization and tend to be the riskier items in the IT budgets. But it is important to recognize that they represent only a small part of most organizations IT budgets. According to Gartner’s "IT Spending and Staffing Report 2008",on average organizations spend about 20% of their IT budgets on application development. The rest of their budget is spent on hardware, software, networking, maintenance, as well as data center and help desk activities. The figure below indicates the typical distribution of IT costs based on this report:

From this last report we see that over the last 7 years the distribution of investment dollars between on-going operation and growth and innovation has remained steady with operational expenditures dominating. On average, organizations have spent 65% of their budgets to run the business, 21% to grow the business with a mere 14% of the budget left to transform the business.

With technologies such as SaaS and cloud computing, there is potential for organizations to make decisions to change this picture but they first need a way of identifying what in their IT organization is driving operational costs. TruePlanning for Information Technology makes it possible to model both your appliation development projects and the IT infrastructure (at a micro or macro leve) to help identify the best choices for optimizing Information Technology