The premise of the 2003 Nicholas Carr book “Does IT Matter?” was that you could no longer achieve competitive advantage from technology. Fast forward to 2010 and you can positively answer that execution, controlling costs, and throwing away archaic or whimsical thoughts are keys to successful business and competitive advantage.
Primarily due to lack of interest, management of far too many organizations don’t apply basic business concepts to Information Technology (IT). As a consequence, the #4 cost in business is either shunned or allowed to run out of control. In this economic reset, the time is now to pull the rip cord and keep costs below revenues going forward.
The top two technology costs are generally IT personnel and desktop computers. IT personnel are generally not provided any training or incentive to improve business or remain on staff. With taxes and benefits, managed services are conservatively 30% less than a full-time employee and offer better support. It is not cost-effective for small business (under 50 employees) to have IT staff and medium/large business should staff 20% – 30% of specific needs and outsource the rest.
Concerning the business of IT, management should have: a 5 year budget, a visual overview of current and future infrastructure, and quarterly goals. Most equipment is only warranted for three years and software license agreements are 1-3 year renewals. Yearly outlay including project/personnel cost should be known well in advance from a simple spreadsheet. Using quarterly goals, management can then understand outcome and timing of projects and initiatives. Throughout a 5 year plan the picture should change, as there should be a quarterly review to reduce costs out of the budget and validate strategy.
Lastly, there must be a mind shift to eliminate the extremes of status quo or always buying the latest gadget. For example, continuing to have your own e-mail server generally makes no sense with current cloud computing. Alternatively, buying an iPad for all employees is hip but doesn’t replace smartphones or notebooks.
Most technology products are commoditized over time with falling price. However, unlike electricity or railroads, frequent new innovation in technology products often command higher prices. For competitive advantage, a business approach to Information Technology does matter.