Annual IT Spend - IPod or Blackberry; Linux , Mac or Windows?

A Process for Prioritising the rapidly escalating annual IT Spend

Failing to keep up with technology can be competitively fatal, but technology annual spend is just like all business decisions; it requires a process, the business case needs to support an informed decision that allows priorities to be set based on a justifiable ROI.

Andrew MacAfee, an associate professor at Harvard, noted that the US spend per employee on physical IT was $5,100 per employee per year in 2004, it had trebled in the period from 1987 – later figures are not yet available.

As the bottom line impact of the IT spend has become a significant expense item Andrew MacAfee recommend a process to help Executives determine priorities and support decision making in this rapidly expanding expense area.

He recommends a process where the IT purchases down into three distinct categories.
1. Function IT
- Supports execution of tasks i.e. spreadsheets, CAD
2. Network IT
- Supports collaboration and connections i.e. e-mail, wiki, blog.
3. Enterprise IT
- Specifies a Business Process i.e. defines tasks and sequences, mandates data formats, use is mandatory.

His HBR article also provides a list of questions that Senior Executives can ask their CIO’s to help clarify priorities and ROI, a couple of the questions are:
1. Functional IT
- Will any of these new software options allow our operations people to do their jobs more efficiently?
- Is any of our current IT out of date – what changed?
2. Network IT
- What technologies are our people collaborate?
- Do we know what they think on hot issues?
3. Enterprise IT
- Are there best practices that should be embedded in our Enterprise IT?
- Are there important business activities, events or trends that we
should monitor?

There is a word to the wise in Andrew MacAfee’s article in terms of the ROI, he notes that while business cases will inevitably present a can’t lose scenario, the reality is that IT deployments “are never a sure bet because they rely on a complex interplay between technologies, capabilities and compliments”.

Finding a structured way to work through all of the IT capability options, and ask bottom line focused questions of your CIO, is a solid governance approach.

We especially like the Enterprise dimension of his model with its focus on the automation of non-negotiable core business process.


REFERENCES:
The referred to “compliments” being the compliments of process: better skilled workers, higher levels of team work, re-designed process and new decision rights.

Andrew MacAfee’s Blog: http://blog.hbs.edu/faculty/amcafee/
HBR Article: http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?ml_action=get-article&articleID=R0611J&ml_page=1&ml_subscriber=true