Do you cut costs in times of recession? Do you spend generously in times of prosperity? Both are the wrong approach. Adopt a ‘Smart Spending’ culture.
Smart spending is not an easy discipline to ingrain in the culture of the IT organization. It requires IT financial maturity to understand the impact of IT financial decisions on the business.
The return on IT investments is unclear
One third of IT organizations struggle or have no plans to achieve IT financial maturity. Without such maturity, it is difficult to convey the value of IT for the enterprise in an understandable and business-oriented manner. Everybody understands the value of IT from a conceptual perspective, within the current context of massive business transformations. However, that does not necessarily correlate with a clear comprehension of the return on IT investments. In fact, one third of executive business leaders do not clearly understand such return.
Link IT Finance to Business Value
Without a transparent link of IT finance to valued business services, neither cost cutting nor investment will make the business more efficient. Continued cost cutting by eliminating and rationalizing services or squeezing suppliers further to drive down unit costs will, in time, inevitably impact the service deliverables IT can provide. Likewise, generous spending, without taking into consideration the value it drives to the business, will hinder business growth.
Change your IT Finance culture
IT financial culture must be mature enough to link spending to the business services IT delivers. With this culture, informed decisions can be made, and the CIO and IT leaders will be more influential and listened to by those at the executive table. Creating such a culture consists of applying three sequential actions:
If you wish to know how to put in place each of those actions, see Gartner’s document “Create a Culture of IT Smart Spending”.
May wisdom and courage be with you.
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