IT in the driver's seat? Featured

7:48am EDT September 28, 2005
It’s budget season — time to review revenue, expenses, forecasts and actuals to plan for 2006. As you prepare next year’s budget, you may ask, why are information technology initiatives so costly? Why can’t I see a concrete benefit from this investment? Why should I invest more in IT, given other funding demands?

Mistakes of the past
Information technology departments everywhere are haunted by the past: was the Y2K threat real? How did the dot-com boom get out of hand? Too many projects were over promised and under delivered. Companies invested heavily in technology before truly understanding it, and before having a sensible, realistic forecast of the results and benefits it would provide. Technology investments were made to increase capacity and gain competitive advantage, but also to just to stay current. Technology drove decision-making.

The results were disastrous — the e-business bubble burst in 2000 and left companies with excess capacity, unproven technology, no discernable benefits and ongoing support costs. Decision-makers learned that, to win project approval, technology advocates would inflate projects’ expected benefits, minimize cost estimates and avoid discussions of risk. This led to a deep-seated skepticism of technology and to heightened scrutiny of technology investments. Now, in today’s economic climate, IT departments must be competitive, fiscally responsible and have the ability to show quantifiable results. IT has been kicked out of the driver’s seat.

How did we get here?
In IT’s defense, the results of technology investments can be difficult to measure. Rapid technological changes mean that the typical capital investment write-off period of three or more years is too long — that’s an eternity in technology-time. So proving IT benefits and the need for further investments to managers accustomed to thinking in 3 to 5 year spans is difficult.

In addition, while some IT benefits can be quantified, many cannot. However, these unquantifiable benefits are critically important, even though a clear understanding of their value may not be evident at first. So it’s important to take a broad view when evaluating IT benefits. For instance, the IT project’s ROI may seem terrible, but how did the project affect customer retention, brand reach or new alliances?

Second, it’s nearly impossible to clearly identify up-front all of the integration costs involved in an IT project. Often a technology project will affect more business entities in more ways than originally thought.

IT does play an important business role — it’s the backbone of business productivity. Imagine trying to communicate without voicemail, e-mail, or cell phones. Clearly, IT is critical.

The road ahead
How can IT and the rest of the business continue the journey, without leaving someone by the side of the road? Keep everyone’s focus on the business.

  • Decide the direction, goals and initiatives of the business first. Keep technology considerations focused on the business impact and goals.

  • Describe projects as business-change projects, not IT projects.

  • Ensure that the business-change project is led by the appropriate business unit, rather than IT.

Lessons learned
Y2K and the dot-com frenzy taught us that technology is not a business driver. IT changes too fast, the investments are too big and the effects are too pervasive for technology to determine which direction the business travels. Instead, include the IT department as a business partner, and use technology as a tool with which to drive toward business goals.

In other words, let information technology ride shotgun. IT can still have a front-seat view and help navigate the best path forward. Just don’t let technology get behind the wheel.

John Morrissey is area director of CIBER’s Philadelphia office, and can be reached at (610) 993-8100 or at jmorrissey@ciber.com. CIBER Inc. is a global IT consultancy that builds, integrates and supports critical business applications in custom and enterprise resource planning (ERP) environments. CIBER has a local office in Philadelphia, which is one of 60 U.S. offices, and one of 80 worldwide. Visit http://www.ciber.com