Boardrooms blinded by bottom-line cost-cutting, say IT bosses
Boardrooms are failing to get full value out of their technology investments by pursuing a short-term cost-cutting approach to IT that focuses on the bottom-line impact, according to leading CIOs.
Three-quarters of silicon.com's 12-man CIO Jury user panel said organisations are guilty of viewing technology as a cost centre and focusing on the bottom-line impact of the IT department - at the expense of its potential to directly influence top-line revenue growth.
But CIOs admit that part of the problem lies with IT leaders who are unable to engage other boardroom executives in a language they understand. Stephen Hand, group IT director at Lloyds Register, said: "CIOs have yet to establish a language for IT's business value that is as meaningful to the CEO as cost savings."
A lack of boardroom representation for IT in many organisations adds to the view that it is merely a support function or even a "necessary evil", according to Kevin Fitzpatrick, CTO at Manpower.He said: "This leads to IT being seen only as a route to cost savings rather than a possible route to achieving all business goals."
Luke Mellors, IT director at the Dorchester Hotel, said the cost-based fixation with IT is a dangerous business proposition for the future.
He said: "Cost-based management of IT is the single biggest factor in IT failures. Value-based IT management has to be the way forward where IT becomes an inherent value driver to the business and of strategic importance."
Andy Harper, head of information systems at United Utilities North West, said CIOs need to be able to demonstrate to the board the true value IT-enabled processes can deliver for an organisation.
He said: "This will help to shift the perception of IT as a source of true value for the business, rather than as a cost base to be managed down."
Yawar Murad, CIO at GE Life, said it requires "visionary leadership" coupled with a deep knowledge of the organisation's market to engage the management team.
But Kevin Lloyd, CTO at Barclays, said the savings versus growth demands are "inextricably entwined" and that both are governed by the same cost/income targets and total shareholder return.
Steve Ritchie, CIO at Investcorp, added: "In any sensible organisation there will be a balance between top-line growth and bottom-line expense management. The split will vary depending on the type of business, its current state and its future plans. Successful organisations will implement IT solutions that deliver at both ends of the spectrum."
Today's CIO Jury was...
Paul Broome, IT director, 192.com
Alan Brown, director of IM&T, West London Mental Health Trust
Peter Dew, CIO, BOC
Kevin Fitzpatrick, CTO, Manpower
Stephen Hand, group IT director, Lloyds Register
Andy Harper, head of IS, United Utilities NW
Kevin Lloyd, CTO, Barclays
Luke Mellors, IT director, The Dorchester Hotel
Yawar Murad, CIO, GE Life
Steve Ritchie, CIO, Investcorp
Peter Ryder, head of ICT, Preston City Council
Bob Silverman, CIO, Spring Group
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