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March 26, 2006
FedEx Calling Nick Carr
Nick ("Why IT doesn't matter") Carr will like this IT spending comment from FedEx:Gosh, a quasi-rational comment about measured IT spending from a poster-boy for most up-with-IT-buying sorts.How much does FedEx spend on IT in a year, and how do you decide how much you need to spend to stay ahead of the competition?
A. We spend more than $1 billion a year on technology. So the technology budget is significant. Part of the idea, though, has been to manage the expense-to-revenue number down to help the company grow faster than the IT expense. You can do a lot with $1 billion.
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Paul, a bit unfair.
I work with a number of CIOs and the thinking with many is we have to aim for 5% budget less each year in absolute dollars. I am trying to move them to 20% less each year on what I call "utility" spend - annual s/w maintenance contracts, outsourcing contracts baked over 18 months ago etc etc and move 10-15% of that in to new innovation spend...could be telemetry, could be predictive analytics. Rob and Fedex have always been inoovation pioneers - but he can also back into the 20% savings on the utility spend too...plenty of mainframes there...
Paul, minor typo that needs correcting. The article said "$1 billion a year on technology", not "$1 million".
It's clear what you meant, of course, but it's probably worth fixing.