The recently published State of ITSM report from BMC and Forbes Insights on the state of information technology service management (ITSM) revealed some interesting findings about how much of a typical IT budget is spent on ongoing maintenance and management versus how much is spent on new project development and new initiatives; how ongoing maintenance and management costs hurt organizational competitiveness; and what organizations can do about it. Here are the details behind these findings.
Forbes Insights surveyed 261 senior-level executives from around the world, representing organizations at various revenue levels from small (<$500 million) to large (> $5 billion). This provided a good cross-section of organizations from which to draw some interesting conclusions.
When IT maintains and manages too much
The survey produced an interesting finding on the share of IT budget and staff hours spent on ongoing maintenance and management versus the share of IT budget and staff hours spent on new project development and new initiatives.
Here’s the finding from the Forbes Insights survey describing a mismatch involving IT budget spending and staff hours used for maintenance and management issues:
“A total of 37% of executives report that the majority of their IT budgets go to ongoing maintenance and management—maintaining uptime and availability; applying upgrades, fixes and patches; and ensuring security (Fig. 5). Another 31% report the majority of their IT staff hours are spent in maintenance mode as well. These are people and funds not available for new project development or new initiatives, such as digital, virtualization or cloud (Fig. 6).”
It’s worth noting that in the Forbes Insights survey, the word majority means greater than 50% of the measured item, such as IT budgets or staff hours.
This finding revealed that approximately 3.7 in 10 organizations surveyed spend the majority of their IT budgets on “keeping the lights on” rather than on new project development or other initiatives that can increase their competitive advantage. And about 3.1 in 10 organizations surveyed said the majority of their staff time was spent “keeping the lights on” rather than in creating and updating new projects and initiatives. This is a fairly significant number of organizations spending the majority of their budgets and time performing non-production activities.
Maintenance and management: It’s alive and growing
Another surprise came when the survey looked at the growth in the surveyed organizations’ IT budget dedicated to ongoing maintenance and management activities, where it found the following:
- A majority – 56% – reported that the share of their IT budget dedicated to maintenance and management activities had increased over the past three years.
- Only 12% of the organizations surveyed reported that their share of the IT budget dedicated to maintenance & management activities had decreased over the past three years.
- A significant number of executives surveyed (30%) stated that they didn’t know or they were unsure whether their maintenance & management budget had increased or decreased over the last three years.
This finding suggests that maintenance and management costs are growing and likely to continue increasing year-to-year, they are difficult to bring down, and many organizations don’t know if these costs are increasing or decreasing.
The pain of ongoing maintenance and management
In another critical finding, the survey also found that:
“Three out of four executives agree that the amount of time, money and resources spent on ongoing maintenance and management—versus new project development or new initiatives—is affecting the overall competitiveness of their organization (Fig. 10).”
Six strategies to reduce ongoing management and maintenance costs
Due to 1) the high percentage of IT budgets dedicated only to ongoing maintenance and management; 2) the escalating yearly increases in maintenance and management costs; and 3) the negative competitive effects of those costs, the Forbes Insights ITSM survey was able to highlight a significant IT budgeting issue, which is:
Spending on ongoing maintenance and management costs affects an organization’s competitiveness
To address this issue, many organizations reported that they are responding to the challenges of IT budgets and resources going into maintenance and management, by using the following six strategies to decrease ongoing maintenance and management costs:
- Moving to cloud-based services
- Implementing a higher level of automation
- Shifting staffing to outside contractors and consultants
- Implementing DevOps and Agile practices
- Using microservices, containers, or virtualization
- Extending ITSM capabilities to more parts of the enterprise
The end game
The idea that excessive ongoing maintenance and management costs can affect competitive positioning is just one of the more interesting findings in the Forbes Insights survey. There are other findings dealing with the IT skills shortage; the role that an ITSM plays in helping organizations stay competitive and in developing key digital enterprise initiatives; and important business drivers for ITSM efforts. Today’s post is the first in a series examining the Forbes Insight survey findings. I’ll look at some of these other findings in later posts.
Forbes Insights. Delivering Value to Today’s Digital Enterprise: The State of IT Service Management. Jersey City, New Jersey, United States, 2017