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An appropriate S, G & A for “IT as a business”?

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Your CMDB budget depends on it…

Last of tonight’s triple play (I must be feeling inspired).

Let’s consider the “Run IT as a Business” concept. Let’s say your IT budget is $250 million for a $25 billion corporation.

The accountants probably consider that amount part of your corporation’s SG&A (selling, general, and administrative expense). You’re a paltry 1 percent of that overall revenue base.

But what if you were your own $250 million firm, managing an IT value chain for your (now separate) client? What if you had your own P & L?

Well, you would have overhead: salaries, rent, heat, lights, and (just like your parent company) you would have IT. What would your IT look like?

It would be all the stuff you use to run the ITSM processes:

  • Help Desk
  • Management Framework
  • Portfolio Management
  • CMDB
  • CASE & architecture tools
  • Provisioning system

and the like. (See A simplified ERP for IT architecture )

You would be entitled to your own budget for these tools. I think 1% is a bit paltry – why not say 3%? That would be a healthy budget of $7.5 million per year for your internal IT tooling. Not enough to purchase all of it at once, but certainly enough to implement a sound infrastructure and keep it supported over time.

Are you spending 3% of your organization’s overall IT budget on your internal tools? More? Less?

At least it’s a baseline thought experiment that may prove useful to some of you if the business is questioning why you need to spend money on a CMDB.

Thoughts?

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Charles Betz is a Senior Enterprise Architect, and chief architect for IT
Service Management strategy for a US-based Fortune 50 enterprise. He is author of the forthcoming Architecture and Patterns for IT Service
Management, Resource Planning, and Governance: Making Shoes for the Cobbler’s Children (Morgan Kaufman/Elsevier, 2006, ISBN 0123705932). He is the sole author of the popular www.erp4it.com weblog.

An appropriate S, G & A for “IT as a business”?
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About Charles Betz
Charles Betz is a Senior Enterprise Architect, and chief architect for IT Service Management strategy for a US-based Fortune 50 enterprise. He is author of the forthcoming Architecture and Patterns for IT Service Management, Resource Planning, and Governance: Making Shoes for the Cobbler's Children (Morgan Kaufman/Elsevier, 2006, ISBN 0123705932). He is the sole author of the popular www.erp4it.com weblog. WebProNews Writer
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