At the start of this century, much of the focus was on keeping IT budgets in check, or even reducing them. Fortunately, now in the middle of the decade, the pendulum has swung back toward investing in IT to support growth.
But given the renewed focus on using technology to increase revenues and realize opportunities, organizations also expect more from their CIOs in terms of the business of managing their IT departments.
Q: Whats important for IT leaders to understand?
A: We spend a lot of time talking about the philosophy of how IT departments actually exist. IT is by far the youngest profession if you evaluate other company divisions. Accounting has been around as long as business, and likewise for sales, marketing, and manufacturing, whereas if you look back as recently as 40 or 50 years ago, IT didnt really exist. Maybe it was there as a data processing group that was a subdivision of the accounting department.
IT fundamentally provides a better way of doing things than before. You substitute technology for capital expenditures or labor expenditures. Now people say IT has something to do with [productivity gains in the economy], but a lot of the gains are contingent on what IT does with the money. You cant just throw money at IT and productivity gains magically come out at the back end. Its how well you manage it.
IT you cant live with it and you cant live without it. You ignore it at your peril. Look at the stats anywhere from 2% to 10% of revenue is spent on IT, so you have to do it well because you spend so much on it. Its a young profession and yet it has gone to be close to or to be the top non-direct expense you are going to have in a company. You have got to manage this stuff very well.
If you look at what we think is important from the CIO standpoint as far as what topics are in the book budgeting, decision making, risk management, communication with the business, and so on these are all management, not technology topics.
Q: So, how are IT leaders doing as a whole in terms of management?
A: In general people have gotten better at it. When the money was flowing freely there was almost a mad scramble to figure out what to do with the corporate willingness to invest in IT. Then this was followed by a period of underinvestment that was pretty hard on people. They were suddenly required to do the same or more with less resources.
Now budgets have swung back to a happy medium. The lessons of the 2001-02 timeframe, where there wasnt enough coming into IT, have meant there is an evaluation, on the part of the CIO and the senior management team, that you should be making the investments but soberly considering how to get the most out of those. Thats probably just right.