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Wednesday, 11 May 2011 14:40

Good IT comes at a price not a cost


Information Technology is often denigrated as being an expensive cost. If so, something is wrong, both inside the IT camp and within the wider company. A new outlook on modern business is required.

"IT is a cost centre, not a profit centre" is something I hear often.

The not-too-subtle implication is that IT does not contribute to the company's revenue raising activities and consequently the IT team should not participate in bonus structures, should not complain about having to explain to a salesman how to insert section breaks for the umpteenth time and most certainly should acknowledge that if only the company didn't have to spend cash on computers and software it wouldn't.

Obviously, these claims are absurd and to answer each one would take needless oxygen. I typically dismiss it by noting the payroll department has the highest costs and absolutely zero revenue. Can we run the business without payroll?

To my mind, the view that IT is a burden shows a fundamental sickness within the business.

First, what is the IT department doing to counter these views? What real actions are employed to demonstrate the value and solutions possible? Secondly, and what is often not considered, what is wrong with the business mindset that allowed this view to take root?

Gone, I believe, are the days when running a lean and efficient IT infrastructure was the chief goal for IT leaders. The truth is technology is so intertwined in business processes that cost controls, efficiency and robustness now are part of any manager's role.

While the IT head must ultimately take control, line managers and executive members alike must be held accountable for excess and waste of any kind within their departments. Squeezing greater efficiency from internal IT operations ought properly to be a baseline expectation, and not just from the designated IT manager, but from the entire business.

No, where the CIO can thrive and demonstrate higher value is elsewhere. Modern businesses operate in a high change, high risk and highly competitive economy. In this environment CIO's can thrive by continually evolving the organisation's technology platform so it is aligned, and continues to be aligned, with the company's strategy.


This is why I've titled this piece 'Good IT comes at a price not a cost'. Now sure, technology is going to have a price tag attached to it. You can't give someone a laptop or smartphone - let alone deploy a brand new ERP system - without expenditure.

However, it should not be a cost to the business - in that, whether short- or long-term, the business must benefit from the technology. Perhaps the benefit is greater efficiency and productivity, perhaps it is reduced expenditure but this can only go so far. The greatest scope is in exploiting technology to enable the business to adapt rapidly and with agility to new opportunities that further revenue raising activities.

Part of the problem with IT's perception in the business is the mystique and vagueness which surrounds it. Everyone knows what the Engineering Manager does. Everyone knows what the Chief Financial Officer does. Yet, many are still stuck remembering the Chief Information Officer's job title, let alone grasping what he or she does.

Here, the IT leader must be an evangelist. First, IT can determine the value proposition it brings the business by aligning itself with the value proposition that a company has for its customers.

Secondly, the IT leader must educate the business what he or she does. Just as the CFO is the senior person responsible for devising a company's appropriate capital structure, so too the CIO is the senior person responsible for devising the company's appropriate infrastructure and platform.

The good IT leader walks between 'the suits' and 'the techies'. They run a portfolio of projects which convert business objectives and strategies into robust systems that meet these requirements.

Here is an exercise for the reader. What are the goals of your organisation? Not all companies have a formal business plan, but you may glean insights from conversations with senior management. As a CIO or future CIO you must know these business goals, and know them by heart.

The next step is to define a series of strategies to accomplish these goals but we will conclude here with that homework. Come back here to iTWire and see me in The Wired CIO when you've got the answer.


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David M Williams

David has been computing since 1984 where he instantly gravitated to the family Commodore 64. He completed a Bachelor of Computer Science degree from 1990 to 1992, commencing full-time employment as a systems analyst at the end of that year. David subsequently worked as a UNIX Systems Manager, Asia-Pacific technical specialist for an international software company, Business Analyst, IT Manager, and other roles. David has been the Chief Information Officer for national public companies since 2007, delivering IT knowledge and business acumen, seeking to transform the industries within which he works. David is also involved in the user group community, the Australian Computer Society technical advisory boards, and education.



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