How much for IT?

I’ve been pondering the question of how does one determine the proper investment level for IT in a company if you don’t start with the current spending levels.   In other words, how does the leadership of a company determine the right dollar amount to invest without referring to the run rate?

There are various benchmarks that can be used to see how an industry sector invests.  For example, we can find out the average for the insurance industry or the retail industry.   But I’ve not seen anybody provide 2nd order statistics for the industry groups that would help us understand the spread around the mean.   I’ve also found cases where the companies in the study for my industry group were not at all like my company.   The grouping itself can be flawed.

Even if one knows the average for an industry group, what does that tell us about whether we should spend more or less?  I don’t typically want to be average.  It might make sense to spend a lot more than the average based on the specifics of your company and its situation.  One company might get huge leverage on their IT spending and thus more spending is appropriate and warranted.

There are two key components of IT spending.  One is called the Run component and it consists of the spending required to keep the lights on.   Typically, one would want to minimize this spending while maintaining a proper service level.  It does no good to keep cutting the Run spending if the quality of service is going down along the way.   The second component is a Grow or Innovate component and this is used to characterize projects that can help the business grow or innovate.  This second component is where the real discussions should take place and where conversations with the business leadership can make all the difference.  IT should be there to enable the business to move forward.   IT has to spend minimally to keep it running but it also has to spend to help the business innovate.

I think the answer to my question is that there are two answers and they are answered differently.   If there is lots of waste and redundancy in the Run part, then more spending might be warranted to streamline and consolidate to enable the Run component to get smaller later.   If the Run component is already lean with single instances of everything, etc. then perhaps Run can be determined based on what is required to keep the same steady-state.

The Grow/Innovate component is a conversation and partnership with all involved.  This part is where you can spend more or less depending on the story and ideas involved.

Customer Service in Arenas

Have you noticed that at large sporting and concert venues, you frequently can not access your mobile network due to the large number of people who are all trying to access the network at the same time?    At one venue where I attend college football games mobile phone access on AT&T’s network is almost an impossibility due to the number of people all trying to call, text, look-up scores, etc.   The inability to access the network means that one has to make other arrangements to connect with others at the event like we used to do before anybody had a mobile phone.   Like ‘let’s meet after the 3rd quarter…’

So at these locations where people spend a lot of money on tickets to attend, why do you suppose that the stadium or arena doesn’t provide free wifi access?

At one location where I attend games they’ve built a new $260M football stadium and they do not provide free wifi.   I sent someone a note about it during last year’s season and they said they’d look into it.   Nothing happened so this year, I asked about it again and I was told it was extremely expensive they would not be providing wifi access.    Extremely expensive?   Hello?  We have a new stadium and we didn’t plan to install wifi and it is too expensive to put in now?     I have it at my home.   I think I can get access at McDonalds and we have it at my church.

If you consider that many at the games are trying to look up other scores or sending simple messages or uploading pictures, doesn’t it seem to make a lot of sense to put in a wifi network that would 1) delight those who could access it and 2) unload a lot of traffic from the mobile networks making it more usable to all?

It seems to me that these organizations need to think differently and consider the ticket paying patrons in the stands who want to connect with others easily.   Putting in wifi allowing parents to easily connect with their kids, allowing businesses to connect with their clients seems like a customer service issue, not a technical issue.  It certainly isn’t a cost issue.