The Buzz - 22

Spending

IT = dead money

Eight out of 10 dollars spent on IT is "dead money." That humbling statistic came courtesy of Gartner at its Gartner Symposium/ITxpo Oct. 8-13.

According to Gartner, most companies technology spending is devoted to just maintaining the status quo, or keeping the lights on, so to speak. About 20 percent of the budget is allocated toward changing the way a business operates. Innovation investment is minuscule.

Budget Time

Homestretch for IT spending

CIOs are getting more clarity on their IT budgets heading into the end of the year, and the optimism is tempered a bit.

According to a Merrill Lynch survey released Oct. 10, CIOs are projecting technology budget growth of 4.4 percent for 2006. The survey, conducted in September, revealed that growth was down from the 5.6 percent CIOs projected in Merrill Lynchs June survey.

If technology spending does come in at 4.4 percent for 2006, it will be flat with 2005s tally and down from the 6.3 percent growth in 2004. Among other tidbits in the Merrill Lynch survey:

• Of the 50 CIOs surveyed, 44 percent said they use offshore resources. Of that group, 56 percent said they preferred a multinational vendor.

• CIOs expect to decrease their spending on internal IT staff. They said 38 percent of budgets will have been allocated to current workers in 2006, down from 42 percent in 2005. Hardware and software spending will each account for 16 percent of 2006 budgets, with 11 percent going to networking. Outsourcing will account for 10 percent, with consulting and systems integration representing 9 percent.

BlogWatch

Mark Cubans YouTube go-round

Viewing Googles acquisit-ion of YouTube through the blog of Dallas Mavericks owner and entrepreneur Mark Cuban has been quite entertaining. A look at Cubans YouTube rants leading up to the Google purchase:

Sept. 17: In a www.blogmaverick.com post titled "The coming dramatic decline of YouTube," Cuban argues that the video-sharing site is in the same league as Napster when it comes to distributing illegal content. YouTube became a hit because it offered free bandwidth to host video and distributed copyrighted works. The prognosis: Copyright lawsuits will knock YouTube on its heels.

Sept. 29: After a barrage of comments, Cuban fires back with a post dubbed "Riddle me this copyright gurus." After a long discussion of copyright law, Cuban concludes that big media companies will always want to control content, and, ultimately, YouTube will have to change its business model.

Oct. 7: With Google and YouTube rumors swirling, Cuban chimes in. "Would Google be crazy to buy YouTube? No doubt about it. Moronic would be [the] understatement of a lifetime." Cuban said that the math could work for Google and YouTube initially, but, ultimately, Google buying YouTube is likely to mean a lot of copyright lawsuits.

Oct. 9: The Google-YouTube deal is officially announced. Cuban said he "still thinks Google is nuts" but gives kudos to YouTube. Cuban said "Google lawyers will be a busy, busy bunch." The risk: Google gets hit with a copyright lawsuit and then faces shareholder lawsuits for buying YouTube in the first place.

—Compiled by Larry Dignan

By the Numbers

Drive my car

$249,433

Amount Mercury Interactive paid for car service over the last three years for former Chief Financial Officer Doug Smith; Mercury was acquired by Hewlett-Packard for $4.5 billion

Source: Securities and Exchange Commission