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 overpromised and underdelivered. 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 short, for many people, the power of technology was either misrepresented or misunderstood, sometimes both. For example, technology does not have the power to create new markets; however, when deployed properly it can provide quick, intelligent and broad access to new client prospects. On its own, IT doesn’t save money. But if used effectively, it can provide significant savings opportunities.
Today, these points seem very simple and obvious, however, in the late 1990s and early 2000s, technology professionals and business executives alike gave technology the wrong seat in the boardroom.
The road ahead
IT still plays a very important business role. Under the guidance of an IT department, technology should support the goals and objectives of business, not drive them.
When used properly, IT enables sales growth, accelerates the product development cycle time, increases manufacturing productivity, decreases cost and aids in quality enhancements. Imagine trying to communicate without voicemail, e-mail, wireless Internet and conference calls. Imagine trying to expand marketing reach today without using the Internet and Web-based technologies. Imagine providing responsive customer service without technology.
How should you optimize your IT budget and planned technology investments? The answer is to keep everyone focused on your business.
- Determine the direction, goals and initiatives of the business first, and then investigate how IT can help achieve those goals.
- Understand your organization’s appetite and capacity for change, prior to investing in a technology solution.
- Require every project team to articulate their anticipated business impact.
- Describe projects as business-change projects, not IT projects.
- Insist that a business unit lead the business change project, rather than the IT department.
Lessons learned
Y2K and the dot-com frenzy taught us that technology is not a business driver. Instead, the IT department is a business partner, and technology is a tool to help achieve business objectives.
In order to optimize the use of technology as part of your business plan, make sure you understand how it aligns with your most important business goals.
Bill Hazelton is vice president and regional director for CIBER in Michigan and Wisconsin. Reach him at (248) 352-8650 or [email protected]. CIBER Inc., founded in Detroit in 1974, is a global IT consulting firm that builds, integrates and supports critical business applications in custom and enterprise resource planning (ERP) environments. CIBER’s Detroit office is one of 60 offices in the U.S. and one of 80 worldwide. Visit http://www.ciber.com
