Justifying IT spend

IT directors can justify their spending to their divisions with just a few simple performance indicators.

In a survey of 80 large organisations in the UK, IT research and consultancy company Organisation and Technology Research (ORT) found that it is "very difficult or impossible" to measure the precise value delivered by IT systems.

The report added that there is no correlation between how much organisations spend on IT and their business performance.

But, it said, managers can show that IT spending is delivering value by showing how information systems are helping to deliver specific criteria in four key areas:

  • Business processes, such as stock control.

  • Cost.

  • Service level agreements satisfied.

  • Crucial service factors to the business.

    Andrew Pooley, ORT's group commercial director, said UK IT managers do not seem able to justify the business benefits of IT projects to company directors. "IT managers don't have the ability to step back and take an analytical look at what they are spending and producing," he said. "They are too close to the project."

    Failure to justify the benefits of substantial IT spending could tempt company directors to outsource IT functions, Pooley warned.


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    This was first published in June 2000

     

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