Maintaining and operating the organization, systems, and equipment (MOOSE) will remain more than two-thirds of tech budgets, Forrester Research finds
Business leaders often look at the IT organization’s budget and ask, “Why do we spend so much just to keep the technology lights on?” The idea that a firm can consistently spend half or more of its tech budget on creating new capabilities to improve business performance is certainly tempting. Spend half or less on the boring tech tasks of keeping lights on, popular rhetoric says. But new Forrester research debunks this popular myth, finding that CIOs spend – and should continue to spend – the majority of their budget on maintenance and operations.
Forrester tracked distribution of tech budgets for six years, with specific interest in the proportion of tech budgets that go toward new projects vs. tech MOOSE.
Here are three key trends that emerged:
- Tech MOOSE persistently represents 69% to 73% of the average tech budget (measured on a cash outlay basis)
- Today’s new project spending becomes tomorrow’s MOOSE spending
- Cloud will increase the MOOSE share of tech spending.
Even the most visionary CIO’s budget has likely been more than two-thirds allocated towards operations and maintenance. This is actually a reasonable distribution, according to Forrester.
Cloud will increase MOOSE spend
Shifting to cloud services will increase technology MOOSE spending. One of the advantages of utilizing the cloud for tech services is its lower upfront cost. Where licensing of new project software spend accounts for 60% of first-year costs, a SaaS approach spreads spending out over subsequent future years.
Cost moves from the implementation column into the maintenance and infrastructure column. As the cost of implementation spending shrinks under a SaaS model, the cost of maintenance and operations spending rises.
Forrester projects that a firm’s widespread use of cloud technologies will rise in the coming years, so it can be expected that tech MOOSE spending will also rise for those organizations. At the same time, implementation investments for computer equipment and licensing will decline with this shift, debunking once and for all the myth that at least half of tech budgets should be devoted to new projects. So, “keeping the technology lights on” is not as simple—or as boring—a budget proposition as it may seem.
You can find the full details behind Forrester Research’s findings in the report: Debunking Two Myths About Tech Budgets.
Apptio also recently hosted a webinar with Andrew Bartels, Forrester’s principal analyst who wrote this whitepaper. Download the on-demand webcast to hear Andrew discuss the drivers behind your tech budget and how to manage them for best results.
How is your tech budget distributed? Tell us in the comments below, or on Twitter.