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IT's New Maths

CIOs are always faced with pressure to justify their IT expenditures. Now, new research can help correlate those IT dollars spent with business value accrued
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Reader ROI

  • How to change the argument that IT is a cost to be contained
  • How to find the right level of IT spending that's right for you
  • A new way to communicate IT's ROI to the business

For many CIOs, the go-go, profligate nineties were followed by the parsimonious naughties. Now IT budgets are beginning to grow again . . . but under an intense level of scrutiny by executive management that wants proof that all those IT dollars actually redound to the bottom line. The risk is that while CIOs struggle to provide the business with evidence of IT's value - as well as its fiscal responsibility - they may cut through any remaining fat in their budgets right into the bones that support their enterprise's enabling technologies.

This risk, and the fear that comes with it, brings back bad memories of the days when IT was regarded as a mere cost to contain and a part of operations, notes Howard Rubin, president of the consultancy Rubin Systems and a research associate at MIT's Centre for Information Systems Research. That cost focus changed in the 1980s when IT became part of business strategy and the fiscal discipline imposed on IT investments was somewhat reduced. "Then, in the 1990s, companies became technology day traders - profits were rising and it was very easy [to] buy stuff," Rubin says. "But when the bubble burst in 2000, companies said that those investments had done nothing for them, so they cleaned up their portfolios. Technology," Rubin suggests, "is once again viewed as a cost."

If true, that puts CIOs in a difficult position. "If IT is just a cost, you want to cut it," notes Rubin. But that thinking forces CIOs to slash costs while at the same time responding to another demand coming from the executive suites: to innovate and thereby grow the business.

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