Thinking of IT as a cost center costs you

Remember the old days and the old ways of doing business when only sales contributed to a company’s profitability? When progress meant minimizing costs on everything else required to support sales? And as for IT, once we became convinced we couldn’t function without at least some technology, we accepted living with the costs while keeping them as low as possible.

Wait a minute. That is just a memory, isn’t it?

Because if you’re stuck in managing IT from a cost center point of view, you’re missing the opportunity to benefit from what technology can contribute to your company’s profitability. If you only see technology as something to help other people do the real jobs of the company and not as integral to your business strategy, you’re leaving a competitive advantage on the table. I’m not minimizing the critical need to keep hardware up and running, and the time and effort required for maintenance and systems updates. But there is another side to technology that provides an edge on growth and greater profitability when it’s used to make what you want to do with your company real. Then it becomes a part of your vision—and cost centers aren’t visionary.

Following are two typical examples I’ve experienced when consulting with companies that had let IT languish as cost centers. In the first, the IT budget is squeezed with its lone goal to support users. Since investments are only made in terms of fixes, keeping up on technology advances is impossible. Things appear to run smoothly for a while until internal staff becomes challenged to work with external business partners using increasingly newer software versions. Before too long—chaos. Malfunctioning software, faulty hardware and outdated systems ultimately result in a huge, unplanned technology investment. Plus the fallout—lost revenue and employees who leave in disgust.

In the second, IT is content to stay under the radar with no ambitions regarding involvement in planning for the company’s future. As long as they keep users happy today, why worry about tomorrow? Because management doesn’t ask for more, things go merrily along until it’s obvious that a system needs to be replaced. A vendor is selected, the system installed and voilà—it doesn’t work. When the smoke clears and the finger pointing wears out, the solution needs to come from IT. And that requires an unexpected and likely hefty investment in terms of dollars, time and most important, finding the right people to make things work.

These are business emergencies that can be prevented when you make IT a profit center. Start by signing up technology to be a key player in your strategy, business plan and execution. Include IT in establishing goals and objectives, defining exactly what technology can contribute to enhance your business processes. Bring in an IT services consultant who can help you start managing both sides of technology—meet user needs while anticipating and planning for the future. Now IT isn’t just a cost, but a partner with a hand in making your company more profitable, more successful.

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