CEOs Spending 3X More on Technology for Growth versus Operations

on April 27, 2015 Resilience - Growth & Strength and Tags: , , , , , with 0 comments
CEOs Spending 3X More on Technology
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Forrester has drawn a distinction between “business technology” and “information technology”.  Information technology (IT) represents the spending on technology goods and services made to run operations more efficiently and lower costs. Business technology (BT) is the technology spending to grow revenues by winning, serving, and retaining customers.  (Reference this report by Forester.)

CEOs are turning on the green light to increase spending on technologies that will help them grow revenues through customer focus. As a result, spending on BT will grow at 10% to 12% rates through 2017, while spending on IT will grow at 2% to 4% rates.Forester

 

Finally, the adoption is occurring! I’ve been a proponent for years that technology (both IT & BT) should be a profit center, not a cost center. Meaning: If a technology cannot be proven to add to the company’s bottom line, then it should not be purchased. If it’s currently in use, it should be replaced.

So many systems and applications in operation are there simply because “we use them”. Market-leading companies are not afraid of change. They embrace transparency. They hold IT management accountable and they invest heavily in what they believe the business needs to accomplish its goals.

So, let’s break the old model of IT budget and spend:

  • Don’t let the software companies dictate your purchases with upgrades.
  • Don’t let last year’s budget be a driver for this year’s business needs.
  • Don’t accept “we use that heavily” as a reason to keep relying on technologies that should be upgraded.

 

For every job that is obsoleted by technology, 2.3 are created (DaVinci Institute), so don’t be hesitant to upgrade/replace technology due to people losing jobs. Your company still needs those people – find something revenue generating for them to do!

To IT management, CIOs, and CTOs: invest the time to do a business case for what you know your company needs. Show the ROI; establish KPI’s. Be realistic with timelines and upfront expenses. Executive management is longing to truly know what goes on in your department and how they can more strongly leverage it as a competitive advantage.

The road to IT Operational Excellence is quite rewarding.

Remember: Technology should be a profit center, not a cost center.

~ Bill

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