Strategic CIO // Executive Insights & Innovation
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1/6/2009
10:43 AM
Chris Murphy
Chris Murphy
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Will IT Spend On Itself In 2009?

In today's economy, does the IT department dare spend to improve its own operations? At many companies, that will go over like the old man getting himself a new bass boat for Christmas, while the kids get socks. But now might be the right time to spend to get IT operations in order.

In today's economy, does the IT department dare spend to improve its own operations? At many companies, that will go over like the old man getting himself a new bass boat for Christmas, while the kids get socks. But now might be the right time to spend to get IT operations in order.Here are three conversations I've had recently with IT leaders on this topic, while working on an upcoming article around an "IT vs. the Downturn" theme.

Kevin Hilberth leads the 5-person IT operation of Paradigm Properties, which owns and manages multifamily rental properties, many of them for students. Hilberth recently spent on a Kaseya IT management system, which it's using to help automate management of its 350 PCs and servers. There are hard savings from it, like cutting energy costs $30,000 through steps like managing the power settings on PCs, which it discovered were left on overnight 90% of the time. Yet even Hilberth's experience shows IT's reluctance to spend on itself. The biggest advantage is the hard-to-measure benefit of freeing support people up to do higher-value work. But since IT isn't a revenue-generating group, ROI on internal IT projects has been tough to show. "That's been one of the problems we've had," Hilberth acknowledges.

David Rudzinsky, CIO of medical device maker Hologic, decided to put some IT-centric spending on hold for now -- "nice to haves" is how he describes some IT asset management and automated testing tools it has been considering. Instead, Rudzinsky's accelerating spending on more revenue-oriented projects, including pushing Siebel CRM information to salespeople's BlackBerrys, and also improving CRM analytics. He's also making investments so IT can help the company integrate acquisitions more efficiently. Hologic's still spending on IT-driven capabilities -- accelerating projects like CRM enhancements -- just not much for IT's own operations.

When is IT for IT a nice-to-have versus a critical need? Jim Grant earns a living making this case, as senior VP of corporate strategy and development for BMC Software, which sells IT automation and management software. He contends business unit leaders see the opportunity more clearly than IT -- that BMC's research shows IT managers rank "cut cost" as the #1 IT priority, while business units give top rank to "support growth of the business."

His pitch, which I think is persuasive, is that many IT teams need to automate more of their operations not just to cut labor costs, but so they can more quickly meet business needs. "There's amazing impact of being able to say 'If you've got a great idea, we can make it happen,'" Grant says.

That sounds like a pretty solid test of whether IT needs to invest in process change and technology that improve IT operations. My colleague Bob Evans has been sounding the alarm for IT to get serious now about changing its cost structure to put more resources on innovative projects. For some IT organizations, that will take the unthinkable: Spending on itself during a downturn.

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