budgeting

Leverage – can it help to reframe the business problem?

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Leverage

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Measuring the value of ICT

For organisations that run an annual budget round, the senior managers tasked with reviewing the budget submissions eventually have to consider the ICT budget. Mobility, Big Data, Data storage and security. Data processing capability. Network spending. Help Desk support. Software licenses. System upgrades, projects and integration. Too high or too low. Is it even being spent on the right things?

Typically, the senior management mindset is that ICT spending should relate to modernisation, projects, innovation and embracing new technology systems to help the organisation remain effective and competitive.

The inclination is to underspend on ICT people (the implicit assumption; shouldn’t ICT be the one department where most of the spending is on the technology itself?) and to spend as little as possible to maintain existing systems (the implicit assumption; shouldn’t ICT be mostly about improvement?).

Of course, without skilled and motivated ICT staff, the ICT function won’t be fit for purpose and of course to be effective in their jobs, those ICT staff need to spend at least some of their time skilling up, experimenting with the capabilities of new technology, as well as monitoring the never-ending array of new technologies coming onstream.

Perhaps something can be learned from companies such as Google. They continue to invest heavily in a range of exciting new technologies (and technology company acquisitions), without necessarily knowing the long term value of those investments. Google know that investing too little will turn them into a ‘mature’ company, living off past products and services, while their best staff leave to join more visionary competitors. ICT spending doesn’t support their core competence. It creates and keeps redefining core competence.

For many organisations, when senior management consider non ICT department budget submissions, relatively little budget attention is devoted to challenging why last years staff and non staff budgets should continue. Then if the overall budget is added up and found to be too high, improvement projects become the first thing to be cut.

Perhaps, the ICT Budget questions for senior management should therefore be what staff and non staff spending elsewhere in the organisation can we taper down, as we upscale our ICT investment? And how can we get better value from our people resources by moving them to high value-adding activities?