IT Spend – cost reduction or profit growth?   1 comment


Through a recent research mini-thesis I began to understand the view of management toward IT within a business. That management had the choice of viewing IT as either a cost centre or a profit centre. As a necessary evil, or as profoundly important to the future of the business.

If IT is a cost centre, well – just focus on efficiencies. Just make sure that you get the best value for money. That each of those computing clock cycles is used optimally and that none is wasted.

IT from this perspective is just a back-office operation. Things just need to run smoothly, efficiently and cheaply.

However, if IT is a profit centre – then focus on growth, on opportunities, on exploiting new ways of doing things. The effort is investment for bigger payoff. Its about using IT to improve, even create, intellectual property. That each of those computing clock cycles goes toward multiplying the effect of the investment.

IT from this perspective is for front-of-house. Its aligned to who you are as a business.

How, may I ask, is IT viewed in your business?

For more, see Dellium Advisory, follow me on Twitter, see my organisational strategy blog Strategy, or connect with me on LinkedIn

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Posted May 28, 2014 by terop in ICT Strategy, Innovation, Leadership, Technologies

One response to “IT Spend – cost reduction or profit growth?

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  1. Ryan Raffaelli, of Harvard Business School, has examined examples of “re-emergent technologies” in detail. The most striking example is the Swiss mechanical-watch industry. In the 1970s it was almost washed away by a tide of cheaper and more accurate digital watches. Today the industry is more successful than ever, providing the country’s largest source of exports after pharmaceuticals and machinery, and the engine of its revival is the old-fashioned wind-up watch.
    There are plenty of other examples of re-emergent technologies. Sales of fountain pens collapsed in the 1950s with the arrival of cheap ballpoints; since the mid-1970s they have enjoyed a steady revival. Trams looked destined to become nothing more than tourist attractions in proudly quaint cities such as San Francisco and Paris. But hundreds of cities in the world have either installed new tram systems or have plans to do so. Sales of vinyl LPs in the world have increased from almost nothing in 1993 to more than some millions in 2013. The number of independent bookshops is rising for the first time in decades.
    If you are interested, I have posted an article about re-emergent technologies you can read here:
    http://worldofinnovations.net/2014/06/20/the-age-of-the-re-emergent-technologies/

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