There's a new favorite number among IT vendors and CIOs: the 70/30 split. See what it means and why everyone wants to break out of it.
If you've been to any IT conferences or trade shows in the past 18 months then you've probably heard a similar story repeated by IT leaders and tech vendors. The concept is that IT departments spend roughly 70% of their budgets on maintaining existing infrastructure and only about 30% on new innovation.
This has been a huge topic at EMC World 2010 in Boston, with nearly every speaker referencing it. EMC CEO Joe Tucci kicked off his Monday morning keynote by citing it as the top factor driving businesses to the cloud (see slide below).
On Tuesday morning, Hewlett-Packard sounded a similar note in launching a new program called Break IT Innovation Gridlock.
Thomas E. Hogan, executive vice president, Sales, Marketing and Strategy, HP Enterprise Business, said
"In this era of constant change, breaking the innovation gridlock can mean the difference between being a market maker or a follower. With HP, CIOs can capitalize on change by reclaiming funds locked in operations to drive new innovation projects."
To make matters worse, the estimate of 30% of IT budgets being spent on innovation is actually pretty inflated, as Tucci correctly pointed out in his presentation at EMC World. That's because of that 30%, a lot of that investment typically goes into new technologies to help deal with the burden of legacy code and old systems.
EMC, HP, and CIOs agree that this is a recipe for disaster. Enterprises with a heavy load of old technologies to maintain are on a collision course with IT overspending and inflexibility if they don't adjust. Why? As Tucci put it, "We're on the cusp of another information explosion."
Tucci quoted an EMC-sponsored report that predicts digital data is going to increase by 44x between 2009 and 2020, fueled by more and more systems converting their data to digital formats, as illustrated in Tucci's slides below.
The bottom line is that with all of this additional data on the way to manage, IT departments have to become more nimble and flexible or else they will get completely bogged down in maintaining existing systems. EMC and HP offer different ways to do it but they're both trying to attack the same problem - the 70/30 maintenance loop - before it gets worse.