IT leaders must channel spending

IT leaders must address a growing range of issues ranging from information overload to outsourcing to deliver adequate returns on IT investment, according to a panel of top IT executives assembled in London in May.

"We consistently see the same themes emerging," said Andrew Morlet, a partner at Accenture, which co-hosted the debate alongside BusinessWeek and the European Technology Forum. "Firstly, managing spend on simply supporting business as usual, and then trying to measure the [effectiveness of] spending on innovation."

Humza Malik, technology chief at National Grid Transco, said his IT budget is split 45 percent on existing systems and 55 percent on new projects. But he added that the capacity to absorb change is often a greater limiting factor in new IT projects. "If you make a very major investment [in building a new system], the organisation will have changed by the time it arrives."

Public sector IT chief Ian Watmore said, "We don't know exactly what government spends on IT [but] we need to spend that money differently. Too much goes on maintaining legacies, and not enough on transformation."

Watmore also emphasised the need for organisations to take a broad view when outsourcing. "There is often neglect of the people left behind," he said. "You need internal people with the right skills to manage the relationship. Sometimes that has been forgotten."

Morlet agreed: "If you ask firms what is their most valuable asset, they will say their people. But what do they spend on developing people? One or two percent."

Chris Coupland, IT director at BAE Systems, said, "An outsourcer's revenue is your cost. Ask yourself, where is the alignment of business goals to cost?"

Convergence of objectives is vital, according to Brian Jones, chief information officer at drinks giant Allied Domecq. "It's not about the contract ? that only comes out when there are problems," he said. "But I've seen an outsourcer paid to deliver desktops, and also paid on the number of helpdesk calls."

Clearly, IT chiefs must ensure they do not build such conflicts of interest into their own plans.

Many IT leaders end up juggling a host of demands for new systems, but they should learn to say no, Jones said. "If you can constrain demands for new information, it helps," he added.

See also:

Bottom-line solutions can invigorate IT spend

Channel told to focus on the business outcome of IT sales  06 Jun 2005

Accenture hit by NHS losses

Supplier will not make a profit in its NHS National Programme deals until 2007  08 Apr 2005

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