Understanding the technology

Businesses must give IT the respect it deserves if they want to get the most out of it, writes Richard Barker

For many years the IT industry has bemoaned the lack of board-level understanding about the impact that technology can have on business performance. But times have changed and now many IT directors find themselves under increasing pressure to adopt the most up-to-date IT available.

But just how much technology is being implemented without either a clear requirement or verified return on investment (ROI) objective? Indeed, how many of these organisations have any idea of the true cost of ownership of these new technologies? Investing in technology on a ‘me too’ basis makes no commercial sense, but it is becoming increasingly common.

Just how many businesses can afford this level of unfocused investment or escalating business risk? Isn’t it time to regain control over IT to achieve real business value?

Technology underpins every facet of business: downtime or poor performance fundamentally compromising profit. Yet despite the apparent maturity of the industry, few companies have achieved any real understanding of how to exploit IT to deliver success.

Instead they lurch from one technology implementation to another, with decisions based on a number of spurious demands from the need to upgrade software to following a ‘market trend’ towards new technology. At no stage does anyone in the organisation – from the managing director down – take any real responsibility for ensuring the investment is either required or will deliver a tangible ROI.

Indeed, most investments are based on intangible benefits. Too often the board avoids the discussion, hoping that the finance director’s sign-off is based on an adequate evaluation. But is it? How many financial directors can truly account for annual IT spend? And how often does any tenuous ROI calculation actually address the true cost of ownership of the new technology over its lifetime?

IT has to change. Costs must be far more visible and every investment has to be based upon a viable, proven business case. And the IT supplier – whether an internal IT department or third-party outsourcer – must be measured and accountable. Furthermore, in a technology dependent economy, IT professionals must be prepared to undertake the role that combines technology innovation with business understanding.

Richard Barker is managing director of Sovereign Business Integration.