CFOs are called on to shell out cash for IT, and the question foremost on their minds and that of their CEO is: What am I getting in return? Inana Nkanza, MD of iLAYO Software Solutions, says CIOs can simply and easily quantify results and justify IT spend.
IT spend in general may be on the rise, but CIOs remain under pressure to produce the goods. Communicating and demonstrating IT`s value to the business is therefore paramount.
That said, research by Meta Group reveals that up to 84% of business executives view IT as a cost centre that must be worked into a tight budget.
Following the global economic slowdown brought about by many, well publicised factors, as well as a more focused IT spend slowdown that is only now beginning to see signs of recovery, margins are tight. Consider too that corporate governance and regulatory compliance are overarching global business concerns which impact on IT. The ingredients create a cauldron of executive strain.
An IDC study on IT spend in Western Europe comes to the conclusion that vendors should consider 2004 a transition year. It states that companies in some vertical markets remain focused on cost cutting, and companies in other verticals are moving from a cost reduction focus to developing new strategic applications and solutions or to effective integration.
This suggests that the focus on IT spend and the results garnered are issues rapidly climbing the corporate ladder, which makes it doubly important for CIOs to get their foot in the boardroom door and get on good terms with the rest of the executive team. Feedback is the first, and possibly most important, step in ensuring executives understand the value that IT delivers.
There are six steps in total; the other five are:
* Administer IT projects and assets as investment portfolios;
* Track and manage physical, financial and contractual aspects of every IT asset;
* Design and employ sound processes;
* Ascertain the value of assets and processes combined; and
* Motivate IT staff.
Administering IT projects and assets as an investment portfolio with expected payback returns is another practice that can help the CIO bridge the divide between executives and IT staff. Transparent and holistic views of the organisation through these portfolios will help executives identify collaboration required between business and IT to balance and satisfy line-of-business requirements.
Tracking and managing physical, financial and contractual aspects of all IT assets enables CIOs to accurately show return on investments.
Sound processes enable tracking and managing, as well as IT needs in the business, and what the effect of new assets and shifted assets will be. They also enable good infrastructure management, problem management, change management and service level management.
All assets have an acquisition price, and maintenance and replacement cost, but with the correct processes in place, these base factors are transcended to produce value to the business, which allows the creation of investment portfolios.
The value of IT can also be displayed by having IT staff reflect it through a shared vision, mission and principles.
Once these practices have been introduced companies arrive at the situation British Airways now finds itself in.
According to a silicon.com survey titled "CIO Jury: Is it time to increase spending on IT again?", British Airways says its technology investment is increasing by 13% this year while the airline has a strategy to reduce IT operational costs, achieve higher IT operational quality and increase IT investment, which is "strongly supported by the CFO and the board".
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