80/20 Spending Rule – Get Better 1% at a Time


80/20.  What exactly are we talking about?  As humans, sometimes we make projects so huge that there’s no way to get them done.  “We must reduce our IT maintenance budget by 10% so we have more money to spend on innovation” isn’t that much different from the conversation I had with my young neighbor over the weekend.  “We desperately need new windows, but we just can’t afford them,” she said with a sigh.  “Well,” I asked, “Can you afford one window?”  “Well…. yes…” she said, confused.  “Then replace one window each month or every other month, and before you know it, they will all be done,” I suggested.  “Just make a plan and stick to it as best you can.”  Her face brightened considerably.  “We can do that.”

The 80/20 Spending Rule

The same thing happens in business, and especially in IT.  To break the 80/20 spending rule – typically 80% of IT budgets go to just “keeping the lights on” and 20% is available for now – let’s not create a 10% reduction target and create a giant project to make it happen.  Create a 1% reduction target.  That’s right, just 1%.  1% every month.  What tiny thing can we do to reduce our IT maintenance spend by 1% right now?  Get the team together and ask that question, and you’ll be amazed at the suggestions you’ll get.

Our Ideas

  • Stop paying third-party software licensing fees for services we can provide with the licensing we already own (typical for Microsoft shops with Enterprise Agreements in particular) – a couple of examples:
    • Are you paying anti-virus vendors instead of using Forefront?
    • Paying systems management vendors instead of using Systems Center
    • Paying for desktop security instead of upgrading to Windows 7 and using its features
  • Virtualize as much of the server farm as possible
  • Take inventory of our software usage and reduce our licensing fees where possible
  • Switch away from third-party conference call providers and use a software-based approach (Microsoft Office Communications Server, as an example)
  • Off-load non-proprietary services, like email, into the cloud
  • Put systems and/or processes in place to better manage projects
  • Add the phone systems to the IT group responsibilities much like IT took over copiers a few years back

Next Steps

These are just a few examples, and each can lead to a 1% reduction – or more – every month.  And, if we reduce our maintenance spend by 1% every month, at the end of the year we will have exceeded our 10% target.  One window at a time.

Recommended Reading

Racing Fans By Ken Blanchard.  Although the book is about wowing your customers with fantastic service, it applies to all areas of the business – and does a great job of explaining the 1% rule.  Enjoy!



About Oakwood

Since 1981, Oakwood has been helping companies of all sizes, across all industries, solve their business problems.  We bring world-class consultants to architect, design and deploy technology solutions to move your company forward.   Our proven approach guarantees better business outcomes.  With flexible engagement options, your project is delivered on-time and on budget.  11,000 satisfied clients can’t be wrong.  Let’s have a discussion to learn more about your business needs and goals.


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