A Brief History of IT Budget - Um artigo de Bill Inmon

Tenho a honra de publicar um artigo de Bill Inmon, o criador dos data warehouses. Aos que apreciam um bom artigo de uma lenda da área, segue abaixo:


By W H Inmon

One of the curiosities of the growth of computer technology is that while technology has been exploding the credibility of IT management has been fading rapidly. One would think that as computers became more pervasive and started to do more functions in the organization that the power and outreach of IT and IT management would have been growing, not shrinking.

There is no better explanation as to why IT management has lost mountains of credibility at the same time that IT influence has expanded than the story of IT management and the IT budget.

 Consider the history of the IT budget.

In the early 1960’s IT found its way into corporate America. There were many applications, most of which were replacements for manual systems. The return on investment was obvious – trading machine power for manpower. And the costs of computer technology were miniscule compared to the entire corporate budget. At this point the attitude was – if it looks promising, buy it. For all practical purposes there was no budgetary control in these early days.

But, like everything else in life, times changed and with it conditions changed as well. Soon larger machines with much more capabilities began to appear. The appetite for computing technology was voracious, to say the least. Disk storage, memory, processors, punched cards and the like were found everywhere. The budget for IT began to creep upwards. Soon it was around 2% of the corporate operating budget.

And then in the 1970’s or so, online transaction processing exploded. Airlines, banks, insurance companies, and manufacturers (and many others) began to find out the value in doing online transaction processing. The business value was immediate and apparent. It didn’t take a lot to sell management on the value and potential worth of instantaneous transaction processing. But OLTP was expensive. If you thought you were spending a lot before OLTP, when OLTP became the rage the budget shot up like never before. Now the corporation was doing upwards of 5% of the operating budget being spent on technology.

But the vendors came up with a saying that seemed to placate everyone – “don’t worry how much you are spending on technology because hardware is getting cheaper all the time”. Somehow this explained to management and the corporation why the budget was getting to be so large. But the budget was breaking the magical 5% barrier and now return on investment began to be a subject that was in vogue.

The 1980’s came and the lack of integration of systems became the hot issue. ERP technology began to take hold. Accelerating the push to ERP was the maintenance backlog that every company had. There were several reasons for the ever increasing maintenance backlog –

 -          changing business requirements,

-          the need for reporting data from operational applications that were designed to not give up their data willingly,

-          the ravages of time

-          new technological opportunities, and so forth.

All of these needs were shoveled into the pigeonhole called maintenance. Soon there was so much maintenance that there was no time or budget for anything else. The budget was ever increasing and ever dedicated to maintenance.

But now IT management had to start answering for the expenditures (really for the first time.) It caught IT management off guard that they had to suddenly account for money that they had always taken for granted. There began to be a strong push to tie any new technology expenditures to solid and recognizable business benefit. This was a novelty at first because for years IT management had been making expenditures for technology where there was little thought as to the business benefit. But management was hard pressed to push the budget beyond the 5% of corporate spending level.

 Throughout all of this pressure on IT management to produce concrete results in the face of a stagnant budget, a subtle but important shift in budgetary practices emerged. Soon it was the operating department – accounting, marketing, sales, engineering – that started to make technology purchases. The operating departments were so frustrated with IT management that they began to take matters in their own hands. The inability of management to meet departmental needs with OLTP processing led to a subtle shift in the technology spending habits of the corporation. At this point the budget began hard to track. What was spent by IT was fairly predictable and constant. But the technology purchases that were made by individual operating departments was hard to track because it was buried in the departments budget and from a budgetary standpoint might not look like a purchase of technology at all.

So the IT budget hovered around 6% while the hidden IT expenditures made the number go even higher, although measuring that number was difficult to do.

An even more subtle shift was the schism that occurred between IT and the operating departments. IT became the bastion of OLTP processing and the operating department became the owner of practically everything else.

In the 1990’s data warehousing and DSS (along with data marts, exploration warehouses, ODS, and the like) appeared. By now there was a well defined split between the IT department and the operating departments. But data warehousing presented a challenge. While culturally data warehousing belonged to the operating department, data warehousing was large enough to be classified in the IT camp. The volumes of data, the integration processing, and so forth all smacked of an IT expenditure.

 But IT management has never been comfortable with data warehousing. Several IT managers found themselves asking their board for lots of money without understanding what the money was to be used for – a precarious position at best. It is in this timeframe that the saw – “CIO stands for career is over” began to be popular.

But even darker clouds appeared on the horizon. There was year 2000. At last IT management saw the opportunity to once again thrust IT and their spending needs to the front of the corporation. Even clerks were made to understand the threat of year 2000. With this threat, IT once again got every dollar they wanted. But wait, Y2K was a big bust. Companies did not shut down. Market places did not wither and die. The threat so heralded by IT management simply did not materialize. And with it, IT management lost loads of credibility.

In almost a heartbeat, IT management came back with another threat – if you don’t buy into eBusiness and dot com commerce the company – a mere brick and mortars entity – is going down the tubes. Now that you – the board – are no longer giving me the dollars I need for Y2K, you need to give me dollars for eBusiness. And with signs in the airport, ads on television showing old brick and mortars men dying in the boardroom, falling over on their faces as the young smart eBusiness man walked off with all the business, with accounting firms advising the eBusiness is the wave of the future, with Wall Street valuing companies with no products, no customers, no revenues with $300 million valuations, who was to argue with the IT manager demanding money.

Then the balloon burst.

There was no gold at the end of the eBusiness rainbow, just as there had been no Hell at the end of the Y2k freakout. The IT manager had been selling smoke and the board had bought it. No wonder there was a tremendous dip in IT spending after the dot com bubble burst. No one believed the IT manager any more.

Enter 2004. The truth is that there are real opportunities for corporations. BI and data warehousing represent the key to expanded business opportunity. Exploring unstructured data is a major opportunity. Keeping those old creaking OLTP engines running is an ongoing challenge. So the technology budget is recovering. This time the recovery is being led by architecturally sound technology with firm business footing. The return on investment is real. And who is leading the charge? In some cases IT has caught on to the fact that there is a whole world beyond OLTP processing. These organizations are being led by the IT management. In other cases IT management still doesn’t believe that there is anything beyond OLTP. In this case operating organizations are leading the charge. In any case the technology budget is once again growing. But this time it is not growing with smoke and mirrors, it is growing with a sound architectural and business foundation.