IT Should Be About Bright Ideas, not Keeping Lights on

Ann All

According to a recent InformationWeek survey of 500 companies, they are spending a lower percentage of their revenues on IT. In fact, the average now stands at 3 percent, the lowest percentage in five years.


Yes, revenue is trending up, so that may not be as dismal as it sounds. But the survey also shows that nearly 60 percent of IT budgets is going toward ongoing maintenance rather than new projects.


This is worrisome, with both IT and business executives recognizing a need for IT to contribute to top-line revenue generation. This view is especially ingrained among CEOs, 83 percent of whom say that IT's dominant role should be one of revenue generation, says a research director from the Economist Intelligence Unit in a recent IT Business Edge interview.


Sixty-two percent of their IT peers agreed, which indicates that they may need to tweak their thinking a bit. Instead of worrying about "keeping the lights on," they may want to drive IT to turn on some lightbulbs -- i.e., the kind that signify a bright idea.


Of course, they can't do this without devoting some dollars to new initiatives. Some CIOs are driving down their operational spend with strategies such as virtualization, software-as-a-service and tighter vendor management. Those savings can then be applied to new projects.


It should also be easier to free the corporate purse strings if CIOs can stress the business benefits of new initiatives to CFOs and CEOs rather than just giving them a list of desired software and hardware, writes consultant Allen Bernard in a CIOUpdate article.


These execs will likely appreciate the opportunity to learn more. The EIU research director notes that both IT and business executives felt strongly that IT should help educate business execs about new technologies and their revenue-generating potential.


Other suggestions: Get line-of-business peers to join you to lobby for dollars, and use popular financial metrics like economic value added (EVA) to help make the case for IT investments.

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