IT Doesn't Cost; IT Pays

We need to radically rethink the role of Information Technology in our businesses. Technology is no longer a mere cost of doing business. Where in the past IT simply automated existing manual processes (hopefully adding efficiency), it now allows us to accomplish tasks which were formerly impossible. Technology is a tool to better provide your product or service to your customers. Use technology to differentiate your company from your competitors. Used well, IT dollars shouldn’t be an expense; They should be an investment.

Not all investments are created equal

Obviously there are good investments and bad investments. The real challenge is knowing the difference – in advance. Since we can’t know the future with certainty, we use models (approximations of reality) to make educated decisions. The more accurately the model approximates reality the better the decision.

The two most popular IT models are TCO (Total Cost of Ownership) and TEI (Total Economic Impact). TCO attempts to recognize all of the costs associated with a technology. TEI embraces the cost components of TCO and extends it by incorporating both benefits and flexibility while tempering them with concepts of risk. Where TCO measures efficiency, TEI measures effectiveness. Where TCO views IT as a cost center, TEI views IT as a value center.

A few common sense rules:

Never implement technology for technology’s sake. Just because you can do something doesn’t mean you should.

Do the math. Evaluate both the costs and the benefits – and be honest. There are several good models available. If you need help contact your accountant or IT consultant. Their objective assistance in making a wise decision (or avoiding a bad one) is well worth the cost.

Never implement technology that doesn’t add value to your business. Why would you want to? Don’t be fooled by fancy screens. Resist the temptation to play with numbers just to make it look good. See number 2.

Do implement those technologies that deliver a positive value to your business. Don’t avoid a solution just because it appears expensive. Remember that a cost-benefit analysis has both costs and benefits. If the benefits exceed the costs it should be implemented. See number 2.

Prioritize which technologies to implement based on the amount of positive value they deliver.

Know your business objectives and make technology decisions that support those objectives.

For more information on using models to make better decisions, please check our website at http://www.itnav.com.