Each year Alinean examines the delicate balance in IT budgets between on-going operations, migrations and upgrades, and innovative investments. From our research, in 2009 innovation and migrations / upgrades suffered as budgets fell victim to the changing economic climate:
IT Operations (keeping lights on) - 66%
Upgrades and Migrations - 23%
Innovative IT Projects - 11%
This reversed a promising trend throughout the past decade of increasing innovation spending and reduced on-going operational costs.
HP recently commissioned a great research study conducted in February and March 2010. The worldwide survey results were designed to analyze the challenges that organizations face with budget allocation, and a term they coined - innovation gridlock.
This term is defined as “a situation where the IT organization is blocked from driving new business innovation because the majority of funding is consumed in operating the current environment.”
The highlights from this study reinforce our own research, that most organizations struggle with innovation vs. operations, and would love to innovate more.
- 1 out of every 2 business executives felt that their organizations suffered from innovation gridlock.
- 40% of the budget is spent on mission critical systems, 30% on legacy systems, and 30% on new IT initiatives.
- Of the regions in the survey, LATAM as a percentage basis is innovating the most, North America and Asia Pac are innovating the least.
- In looking at the effect of innovation gridlock, almost 7 out of 10 business and IT executives indicated that this gridlock prevents them from investing in new technologies to meet the changing business needs. More than half of executives in both groups felt innovation gridlock also prevented their organizations from keeping up with the
- Furthermore, 73 percent of business executives indicated that it prevented them from
generating real flexibility in their operations
- When asked what was stopping them from investing more in IT innovation, 1 in 2 of
respondents indicated that too much budget is spent on operations.
As an IT solution provider, these CIOs, IT and business executives are looking for strategies to solve innovation gridlock. This is a problem they feel deeply, but don't know how to solve. Reducing keeping the lights on operations can free more budget to innovations. Consolidation, virtualization, cloud, automation are all options. If you can tie proposals to quantified reductions in operating costs and reallocation of budget to reduce the innovation gridlock you can help solve this struggle and be a gridlock busting hero.The full HP study can be viewed at: http://www.hp.com/hpinfo/newsroom/press_kits/2010/breakingthegridlock2010/BreaktheInnovationGridlock.pdf