Latest / The DEX Show: A Show for IT Change Makers / Reality Bytes #24 – Cracking the Code of IT Budgeting

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Reality Bytes #24 – Cracking the Code of IT Budgeting · The DEX Show: A Show for IT Change Makers

• 0:01
  Welcome it change Makers to the Deck Show with Tim Flower and Tom McGraw.
• 0:07
  Let's get into it. Hello, and welcome to the Deck Shows show within
• 0:11
  the show reality bites. You know, if we had much slicker sound production,
• 0:17
  I might have a very famous Pink Floyd baseline to money creeping along in
• 0:22
  the background of this introduction, because that is what today's show is all about.
• 0:27
  And with the help of Sean, Meghan, Oriana, Dina and Tim,
• 0:31
  we're going to be breaking down it budgets, overviews, tips, tricks,
• 0:35
  anecdotes their relation to decks the lot, and we are doing it to
• 0:40
  mark the release of the excellent new newish Next Think ebook, the ultimately EUC
• 0:45
  Guide to Cost Efficiency in the Digital Workplace. It's going to be a fantastic
• 0:50
  show. So let's jump into it, and let's start with Sean. Sean
• 0:54
  has done the lion's share of research for today's episode and it was your idea,
• 1:00
  mate, so um, First of all, I wanted to ask you
• 1:02
  what, besides the new e book, which perhaps you can talk about a
• 1:06
  little bit, what what what inspired you to want to really drill down into
• 1:10
  the topic of budgets. Sure, thanks, Tom, so I think doing
• 1:14
  something I never do in my personal life or just set they intend to just
• 1:18
  hope things budget out. But yeah, yeah, I've been thinking about We're
• 1:22
  halfway through the year, so I'm sure a lot of it professionals are working
• 1:26
  through their budgets now, and before we know it falls right around the corner
• 1:30
  and they'll have to be setting a whole new budget for next year. And
• 1:34
  I was just curious. I was poking around the other day researching this and
• 1:38
  just looking into, you know, without going into dollars euro figures, but
• 1:44
  just trying to figure out the slices of the pie and what takes the most
• 1:47
  money for each budget item. So I looked at you know, most articles
• 1:52
  would reference things that you could all guess like hardware, software, staff,
• 1:59
  overhead, security, and then kind of like miscellaneous expenses. Now I'm sure
• 2:02
  there's plenty of other line items, but those are sort of the five main
• 2:07
  wedges that I found, And there's a lot to talk about it, and
• 2:10
  I'm sure a lot of I two professionals want to figure out ways to optimize
• 2:14
  their current budget and then save money as well for the next round with next
• 2:19
  year. So yeah, I brought up the topic because I'm curious as can
• 2:23
  be, because it's completely foreign to me, and I know I've come to
• 2:27
  the right spot. What indeed you have? What's when you were looking into
• 2:30
  it? What's what if anything surprised you in terms of those aspects which are
• 2:37
  absorbing the greatest amount of cost. So I guess for me it's more that
• 2:45
  software. It sounds like kind of a strange thing to say, but software
• 2:50
  is one of the more sizable portions. So between staff, hardware, and
• 2:53
  software, they're all roughly around a third. A little bit more though for
• 2:57
  software because once you include cloud expects, it also helps the price. And
• 3:02
  it's just it gets makes sense to me because we have so many software tools.
• 3:07
  But I guess I always just kind of think in linear terms, like
• 3:10
  all right, I can see the tangible computer in front of me, I
• 3:14
  can touch the botom, I can touch all these other things, and I
• 3:16
  know that there's a cost to it. But yeah, obviously software can get
• 3:20
  quite expensive when you are in a subscription model. So maybe that's something we
• 3:23
  could talk about today too, no doubt, no doubt. And also just
• 3:27
  give us an overview showing because I obviously something you looked at where by the
• 3:30
  rough correlation between company size and an IT budget a bird's eye view of that
• 3:37
  approximately. Yeah, so I was just looking into kind of like mid size
• 3:43
  enterprises, which could be you know, anywhere. Pretty much all of them
• 3:49
  said that depending on the revenue of the company, you can expect about four
• 3:53
  percent of that revenue would go to the IT department to set a budget,
• 3:55
  and then within that budget itself, again, it's kind of break down a
• 4:00
  third or third third with the top three and then other line items. But
• 4:05
  at any budget itself, I mean, it could be a couple million to
• 4:10
  several hundred million, but you can kind of expect a similar breakdown for any
• 4:15
  IT budget with those slices of the pie. That's interesting. So let's go
• 4:21
  to Orion and next. Hey and I welcome back to the show. Good
• 4:26
  to see hello. From what you've read on the topic, Ariana, I
• 4:31
  think you probably are the best read reality biter here, especially on visa via
• 4:38
  technological topics. What of the major challenges that stand out to you that IT
• 4:43
  budgets present to the teams trying to balance them? So I did read something
• 4:49
  that I thought was really interesting and pertinent to this, which was I was
• 4:55
  looking at some surveys, some of which we did, some of which were
• 4:58
  actually conducted by Gartner two IT leaders across many different industries. And one of
• 5:06
  the things that I thought was really interesting is when we were asking about or
• 5:12
  when they were asking about which areas increased in budget and which areas decreased in
• 5:18
  budget, personnel came up both times, and that also came up as one
• 5:25
  of the big challenges when it comes to meeting strategic IT goals. So I
• 5:30
  thought that was just this fascinating connecting peace between so many different places is personnel
• 5:40
  and also the challenges of hiring and retaining. And I think that potentially one
• 5:44
  of the challenges that people do run into is that hiring is expensive, and
• 5:49
  so if that's a place where you also have your budget occasionally contracting, it
• 5:54
  can be really challenging to sort of figure out, Okay, where am I
• 5:59
  lose money by not say, just retaining people versus where is this going to
• 6:04
  be more of a challenge down the line. And I think this is something
• 6:08
  that's near and dear to my heart as somebody who is also you know,
• 6:12
  friends with a lot of people in IT. We're very concerned with how the
• 6:15
  industry is responding to economic changes well fascinating. It's such an interesting thing to
• 6:20
  hone in on when we think about it. Budgets, it's probably somehow the
• 6:25
  last thing that comes to mind, just because we're in that exclusively technological realm,
• 6:28
  right Tim, it's probably the person here, mate, who has who
• 6:32
  has handled the biggest budgets. I'm going to guess in real irl irl,
• 6:38
  it's not just because it's not always being purely conceptual to you, mate,
• 6:42
  and talk to me first of all, if you would Tim about like the
• 6:46
  traditional approaches to cutting costs and are the degree to which they are remaining relevant
• 6:55
  or becoming less relevant in the present era. Yeah, there's so much to
• 7:00
  talk about there. Tom So a large enterprise that I am intimately familiar with.
• 7:05
  I won't go by name, but forty five at the time. Forty
• 7:09
  five it was a forty five at the time. Now we'll go with thirty
• 7:12
  thousand, when we were in a thirty thousand people environment. The IT budget
• 7:17
  all in this was business applications, application development, and all the infrastructure that
• 7:23
  Sean's laid out here was one point two billion dollars. WHOA, Yeah,
• 7:28
  so it was easy to look at that one point two billions spread across lots
• 7:32
  of different departments and say all right, everybody, give me back ten million.
• 7:35
  Yeah, And that was kind of the tactical way to say we're cutting.
• 7:43
  We're cutting the budget down and they would move things around. But a
• 7:46
  ten million dollars task then that department it was up to them on how to
• 7:49
  achieve the task. And the old school way is to get out your excellent
• 7:55
  spreadsheet or your people soft ledgers and start to delete line items, either based
• 8:01
  on data or hey, let's let's cut this down and see if there's an
• 8:07
  impact. And I look at that that budget cutting process of just deleting line
• 8:13
  items or reducing line items as the old school, and the reason it doesn't
• 8:18
  work anymore is that all of that hard work has largely been done over the
• 8:24
  years and decades. There's you cut anymore and you start cutting into bone,
• 8:28
  right, you're you're you can't cut your way to profitability. So the way
• 8:33
  we looked at it was we need to do things smarter and improve speed and
• 8:39
  quality so that we're not as expensive. It's it's kind of looking at things
• 8:45
  the reverse way. Don't look at costs, first, look at speed and
• 8:48
  quality. Improve those and when you're when you've got. When you're quicker to
• 8:52
  market, when you're quicker to delivery, when you've got better quality and things
• 8:56
  aren't breaking as much, your cost will come down. So it's a it's
• 9:01
  a bit counterintuitive to the way CIOs and CTOs have worked in the past,
• 9:05
  but for me, stabilization reliability is all part of cost cutting. You need
• 9:11
  to spend some to save some approximately, And I mean if you could give
• 9:16
  maybe like a specific example of that process today and just drill down on that
• 9:20
  a little bit, that'd be great. Wells, I just had this conversation
• 9:24
  at Gartner a couple of days ago out in San Diego, and it's the
• 9:26
  one that we know and love and that we always talk about. There's plenty
• 9:30
  of others that sewn of outline, but our accomplishment in focusing on speed and
• 9:35
  quality was a reduction of eighty percent of our inbound level one helped us tickets,
• 9:41
  and you can outsource the help desk and make that more efficient. You
• 9:43
  can outsource your data center operations and your dr data center and put things in
• 9:48
  a private cloud or a public cloud. All of that work, though,
• 9:50
  is a heavy lift. We stabilize the environment and cut tickets by eighty percent
• 9:58
  and save two and a half million dollars a year. So um, again
• 10:01
  it's for me. It's all about it being as stable and reliable as the
• 10:07
  electricity and your outlet it needs to be there or your or your telephone service.
• 10:13
  Um, stable and reliable is cheaper. And and it's twofold that two
• 10:18
  point five million was just at the help desk in the cost of taking the
• 10:20
  ticket. It had no calculation on the benefit to the business and the fact
• 10:26
  that they had eighty percent fewer tickets to call and fewer fewer issues of occurring,
• 10:31
  and they're more they're more productive and more profitable. So that's job number
• 10:35
  one is fixed the environment. And Shoan mentioned software. How is that whole
• 10:41
  space sam space? Is it sort of traditionally going by? How is that
• 10:48
  changing in the present age of kind of increasing amounts of SaaS applications and what
• 10:52
  have the tips for approaching that challenge or that opportunity? Software in the past
• 10:58
  has been a tough one to take advantage of because they were all perpetual,
• 11:03
  and they were they were owned by the business. You got you essentially bought
• 11:09
  five years worth of amortized value in software, and you paid for it all
• 11:13
  upfront, so you can't get that money back. It's glawn software as a
• 11:18
  service, and subscription software is a lower barrier to entry. You only have
• 11:20
  to pay for one year and then you decide if you want to re up.
• 11:24
  Your budgets become more stable because it's the same price every year as long
• 11:28
  as you're in contract. But over the long term, if you look at
• 11:31
  that five year subscription versus five year perpetual, the subscriptions more more costly because
• 11:37
  it's just is. It's the way that things are worked out. But there's
• 11:43
  a benefit to it that you can reduce your subscription threshold from ten thousand employees
• 11:50
  down to nine thousand if you if you're tracking it properly and you know who
• 11:54
  needs it, you can now make some decisions based on utilization and you're in
• 11:58
  a much better place than you were with perpetual because you can reduce your budget
• 12:01
  costs based on people that need it, and you can also look at whether
• 12:05
  or not they're using the software appropriately. The example I love was a real
• 12:09
  creative customer using our product to query all of the PDF header information on a
• 12:16
  local hard drive and extract the author of the PDF and if it didn't match
• 12:22
  the user of the device, then they're not creating PDFs and they don't need
• 12:26
  the Adobe Pro. They can get the reader. So you can get real
• 12:30
  creative with who uses what software and for what purpose and save more money now
• 12:33
  than you could have under a perpetual And you know the analogy of the analogous
• 12:41
  kind of use case for savings. It always stands out to me it's the
• 12:46
  hardware life cycle story. And I think, as you say, making decisions
• 12:48
  based a pun utilization that has a complete parallel in hardware, right, Maybe
• 12:54
  maybe explain how that's changing today. You'll say, yeah, so many of
• 12:58
  our customers are moving to health and utilization to drive refresh programs versus age.
• 13:05
  I can't I can't imagine how many machines have gone into landfills that have plenty
• 13:09
  of life left on them. And it's it's not just the landfill piece,
• 13:13
  but it's also extracting another year. If you can get another year out of
• 13:16
  your car without a car payment, why wouldn't you do that same thing with
• 13:20
  the devices. And it doesn't take a lot of devices ten percent in your
• 13:24
  environment to reap those rewards. And then on top of that, look at
• 13:28
  the secondary machines, the loaners, the spares, the labs, the training
• 13:33
  rooms. All of those devices have a utilization footprint and who's using them,
• 13:43
  who's not, and start pulling them back if they're not being used. So
• 13:46
  hardware and understanding not just the power that they need and what you need to
• 13:50
  give them, but understanding how it's being consumed and what life it has left
• 13:54
  on it. It's intelligent hardware refresh and it can save a ton. I
• 13:58
  love it. We're gonna we're gonna get to Megan and Deana momentarily to hear
• 14:01
  theirforts and recollections from talking to more customers. But I feel before we do,
• 14:07
  Tim, I thought we should give it, give Sean the opportunity to
• 14:09
  to quiz a billion dollar man over here on any questions he might have from
• 14:16
  his research and in the ambiguities. But bit furred up. But you didn't
• 14:18
  address there, Sean, You've got you've got any further questions for Tim on
• 14:20
  the budget? Um? Not really? I think maybe one is the miscellaneous
• 14:28
  topic to me kind of stood out because there was one that I just I
• 14:31
  never think of and what they what I saw in my research is that can
• 14:33
  be anything can go into that regarding like for example, telecommunications or maybe having
• 14:39
  to hire consultants or maintenance contingency funds. Um. I don't know if you
• 14:45
  have any experience in or stories personal stories in that regard, or any comment.
• 14:52
  The one thing that I felt might fall into that category that's not in
• 14:54
  the in any of the other four or even in listening to miscellanis is invest
• 15:03
  right, future technologies, future advancements, analysis of things. We would go
• 15:07
  into projects knowing that I don't know what the percentages fifty sixty seventy percent of
• 15:13
  the analysis work that we do would probably make you know, just hit the
• 15:18
  cutting room floor. But you've got to analyze and test and look at emerging
• 15:22
  technology to see what's going to make sense. So the four category five categories
• 15:26
  you have here are kind of the operational keep the lights on. You need
• 15:30
  some sort of invest for futures, and the more you spend on opts,
• 15:35
  the less you have on invest So there's got to be a category in there
• 15:37
  to set some dollars aside to look for future things. And then the other
• 15:41
  one is the great unknown, the variable things that are tough to budget for.
• 15:46
  The first is wide scale outages, or unanticipated outages. And the second
• 15:52
  is technology is moving so fast. Nobody budgeted for integrating AI into their operations
• 16:00
  six months ago or even three months ago, So we typically would budget cycles
• 16:04
  are twelve months long, and you've got to start six months before the next
• 16:07
  budget, so you're eighteen months out of trying to figure out what you're going
• 16:11
  to do, and it's it doesn't cut it anymore. You've got to be
• 16:15
  more nimble with budgeting and set some dollars aside for investment. Yeah, and
• 16:19
  well more for you ten before we do move on, which is um well
• 16:22
  Oriana raised around around kind of contracting budgets and its effect on parsonnel and the
• 16:29
  sort of changing landscape of it, skills and requirements there. What are your
• 16:34
  thoughts on that? You know, it's I see there's kind of pros and
• 16:40
  cons to it. The con or the impact, the pessimistic impact on employees
• 16:47
  or or causing them to become pessimistic. Is the not again, right,
• 16:51
  we're gonna we're gonna save ten million dollars every year, We're gonna how how
• 16:53
  how frequently they're gonna ask us to cut these budgets. But on the flip
• 16:57
  side, it opened up avenues to look at creativity and investing in things that
• 17:03
  will actually do greater good both for it and for the business, and a
• 17:10
  chance to show its creativity and value and look at cutting dollars as a way
• 17:15
  to get smarter. So I think there's you've got to have the right the
• 17:22
  right point of view. I love our chief marketing and strategy officer. You've
• 17:26
  seen his concept of the uberization of it, right. I don't need to
• 17:30
  own the hardware. I don't need to own the software. I don't need
• 17:33
  to own the infrastructure. But I need to connect my employees with the digital
• 17:38
  workplaces that drive up our business, and that connective tissue and service delivery and
• 17:45
  experience delivery is more important than owning a room full of sermers. Superb and
• 17:49
  um. Okay, so let's go to make an Indiana, both of which
• 17:55
  both of whom engage with customers in quite distinct contexts. Megan, let let's
• 18:00
  start with yourself. Any real world examples of businesses that you've spoken to who
• 18:07
  have been able in creative and significant ways to make real tangible savings. Yeah,
• 18:15
  yeah, definitely. And actually, something Tim just said really kind of
• 18:18
  I think connects nicely to this the idea of doing things smarter, right,
• 18:22
  Like, you can't cut your way of productivity. You have to be able
• 18:25
  to innovate and find new ways of doing things. And we had a customer
• 18:29
  get on stage in New York last year at E and tell just like the
• 18:33
  most beautiful story of how they were using our product and automation to really,
• 18:38
  I think, completely change the way they were thinking about end user computing in
• 18:42
  it. And I think that that presentation, I know it's made a lot
• 18:45
  of ripples here. I think it kind of opened the doors to all of
• 18:49
  us have like, oh, this is the art of what's possible, not
• 18:52
  in the future, but right now. So they took our product right next
• 18:55
  think a dex tool which focuses on the end point end user, and said,
• 18:59
  all right, let's automate bit issue identification. Right, So let's have
• 19:04
  this machine, this tool find issues as they come up, but not only
• 19:08
  find them, but let's put in the common fixes and the issues that we
• 19:14
  know of and the diagnostics so that it can also automatically remediate these. And
• 19:19
  so they kind of took that automation to the next level, sort of end
• 19:22
  to end automation. And by doing that, over the course of five years,
• 19:27
  they were able to see that for users submitted tickets, seventy five percent
• 19:33
  of them could be automatically remediated like that no work at all for the IT
• 19:37
  team. And for issues that maybe users weren't reporting, next thing could find
• 19:42
  them and then ninety five percent of those could be automatically remediated. So that's
• 19:48
  you basically have like an entire ID team doing all this work for you,
• 19:52
  except it's not an ID team. It's just automatically happening in the background and
• 19:56
  you're just checking on it. So I think that that speaks to the power
• 20:00
  of innovative thinking, of being willing to do things smarter, to make that
• 20:03
  investment to cut costs, because over the same five years that they ran this
• 20:07
  project, they were able to get their total costs down fifty four percent from
• 20:11
  sixty two to twenty eight million dollars as a massive number. Yeah, So
• 20:18
  I think that speaks to the power of that. The numbers that I was
• 20:22
  talking about too, is the IT budget. Their impact was on the business,
• 20:26
  and I did the on stage analysis of this customer. It was awesome
• 20:30
  there. They they didn't just calculate, they measured and an improvement in productivity
• 20:36
  in hours to the business of eight hundred thousand hours. It's an equivalent of
• 20:41
  four hundred people over the course of a full year doing nothing. That productivity
• 20:45
  loss that they gained backs four hundred people of Can you just imagine going to
• 20:52
  the market and hiring four hundred people and have them sit in a room all
• 20:55
  day, every day for a year and do nothing. It's huge savings to
• 20:57
  the business. Yeah, yeah, so that's that's the story that came to
• 21:02
  my mind when when Sean brought this tatic to us. It's just such a
• 21:04
  I think that it feels like an aspirational story, right, like it's so
• 21:08
  massive what they did, but I also think that it's very realistic and that
• 21:11
  businesses really could put something like this in motion. So yeah, that's the
• 21:15
  cool story from my side. And if you want to see that whole story,
• 21:18
  you can go to next think dot com slash Experience. You have to
• 21:22
  go down and find the button for the twenty two recap, but it's called
• 21:26
  the experience evolution, very very well plugged, and it's it's a great example
• 21:30
  as well for kind of a dynamic whereby you know, you you invest to
• 21:36
  save And similarly, it was kind of it was. It's kind of paralleled
• 21:40
  by the huge explosion that customer had in IT tickets to begin with, and
• 21:45
  then their massive contraction as everything was was automated and made that much more efficient
• 21:51
  as you've described, right, Dina, somebody who works with customers plentifully,
• 21:57
  and I was wondering if you could share or any of those, any of
• 22:00
  your anecdotes as well as around things off around savings. Yeah, to add
• 22:04
  some figures to the facts that Tim mentioned earlier about the software and the utilization.
• 22:11
  We have one of our multinational corporations in two thousand twenty one, they
• 22:15
  were able to save more than thirteen million dollars in value with next Thing driven
• 22:19
  initiatives, some of which for the Zoom license automation, Adobe Acrobat pro license
• 22:26
  reclamation. Like Tim was mentioning earlier, on different kinds of levels and scales,
• 22:32
  monitor and start applications that were crashing in the background causing employee experienced degradation
• 22:40
  and automating some remote actions some campaigns in the background where we are able to
• 22:45
  fix that without the involvement of the IT personnel having up to restart the devices
• 22:52
  so they are more efficient, more productive and everybody is attacking or killing the
• 22:57
  my device is slow most amus ticket. So having all of these and these
• 23:03
  sure just samples of use cases that we have delivered value to value, point
• 23:07
  to point with a few of our customers. Actually it gives you back the
• 23:12
  sense of mapping the facts to the figures. As in the applications that you
• 23:17
  have in the background or subscriptions that you have, they need to be fully
• 23:22
  utilized on every device assigned to every user, and you're fully utilizing what you
• 23:26
  have in the environment. Otherwise you reclaim the licenses, redistribute them, or
• 23:32
  give them away and save back the money from it to the organization. And
• 23:37
  at that point it would be becoming would become more of saving center instead of
• 23:45
  just a consuming cost center. Saving center. I hadn't heard that phrase before.
• 23:49
  Actually, okay, well that's a great, great discussion show. And
• 23:53
  you've got anything before before before everyone disappears again, if you've got any last
• 23:57
  remaining questions, you want to pick up point from anything anyone said. I
• 24:02
  think I've learned a lot. I still feel the same way about my own
• 24:04
  personal that you're going to do a budget now, the billion dollar Malvie household
• 24:11
  budget exactly. Yeah, Now, you haven't prompted me to go there,
• 24:15
  but I've learned a lot. Thank you fantastic. Okay, look, it
• 24:18
  was a great, great overview everybody, thanks so much for participating. And
• 24:22
  just a direct listeners to the ebook that I mentioned at the top of the
• 24:26
  show, which I should add now if you've listened to it, all is
• 24:30
  absolutely free and you can get out on the next link resources page and there
• 24:33
  will be links in the show notes. It's for Ultimate EUC Guide to Cost
• 24:37
  Efficiency in the Digital Workplace for industry proven tips to reduce it costs without reducing
• 24:44
  quality or speed. And you'll also be able to link to the Fantastic Experience
• 24:49
  Everywhere talk that was discussed by both Megan and Tim today. So with that
• 24:56
  just leaves me to thank everybody and say see you very very soon, goodbye,
• 25:02
  goodbye. To make sure that you never miss an episode, subscribe to
• 25:06
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• 25:14
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• 25:18
  like to learn more about how next Think can help you improve your digital employee
• 25:21
  experience, head over to nextthink dot com. Thank you so much for listening.
• 25:26
  Until next time.