Archive for August, 2014

8th

It can be very challenging to manage a cost center where the CEO feels that the value provided is insufficient for the costs.  Yet that is the very situation many CIOs face every day.  How did such a difficult circumstance arise, and what can be done to overcome it?

If the CEO thinks IT doesn’t deliver enough value for the buck, that can’t be a good thing

Years ago I recall reading that the purpose of technology within a company is three-fold:  increase revenue, reduce costs, and enhance the differences that cause a Finding Valuecustomer to select our company over our competition.  But while we understood this in a theoretical sense, IT at most companies became primarily dedicated to cutting costs.  Many of the factors contributing to this were addressed in my post on Moving IT from Cost-Cutter to Difference-Maker.  As this post indicated, cost centers are typically managed by continually reducing their budget.  This results in an even larger percentage of the IT budget dedicated to keeping the lights on and fewer dollars available for technology projects to move the company forward.  It is important for IT to move away from being seen as a cost center toward being a business driver.

But even being seen as a cost center does not necessarily cause the CEO to believe that IT costs are too high for the value received.  After all, you don’t often hear that cost centers like Accounting or Procurement are too expensive.  And while the size of the technology expenditure quickly shines a spotlight on IT, that in itself doesn’t mean that the company is not receiving enough bang for its technology buck.

How is the CEO supposed to know the value IT brings?

Read the rest of this entry »

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