produced for the February 2000 Microsoft Enterprise site
How much is enough?
on information technology reaches the stratosphere.
Veteran IT managers
with experience at Fortune 500 companies are entitled to gasp when they
see the IT investments being made by dot-com startup companies. Some of
them are spending two or three times annual revenues. Usually, off-the-charts
spending is the result of a special combination of circumstances--specific
industry sector, headquarters location and other factors. Imagine putting
half of your company's entire investment capital into systems, software
and staff. . . each year for the first several years. Because this is
To provide top executives with an idea of the level of IT investment planned
to operate a dot-com startup, the Enterprise polled vendors, users and
consultants. We then converted their observations into a series of questions.
Once you've answered these questions, you'll have some idea of the level
of IT budget spending that a dot-com executive team can expect.
Note that an enormous amount of money that is spent on IT never shows
up in an IT budget. End-user departments and individuals have been spending
off-budget money for software, PCs and other technology products for decades,
and no consulting firm or CIO even makes a pretense of knowing exactly
how much is spent on technology in general. As such, this Rule
of Thumb also does not include off-budget IT spending.
The Enterprise would like to offer special thanks to Kurt Potter, a senior
analyst in the Management Strategies & Directions service of the Gartner
Group, for his time and support. He was gracious enough to provide the
Enterprise with data that other research organizations do not appear to
have. The Gartner Group is a leader in providing data about IT operations.
Please see its Web site for
more information. We also would like to thank Christopher Smith, CIO at
HomeLife Inc., in Hoffman Estates, Ill., and Tom Jinneman, IS manager
of RightNow Technologies, in Bozeman, Mont., for their insights.