IT still a cost centre to CEOs

More than 50 per cent of chief executive officers still view IT departments in terms of cost instead of a tool to gain a competitive advantage in the market.

Although IT budgets will grow by up to 10 per cent this year, CEOs still question the value of IT, according to Meta Group research.

Releasing the findings at its annual conference METAmorphosis 2001, in Sydney last week, the analyst's research shows nearly 70 per cent of IT departments are still thought of in terms of cost "providing little value beyond making what is known run faster or cheaper".

Meta warned that as IT becomes the single largest-budget item in many companies this value gap is leading many companies to ineffective technology investment patterns.

Hoyts Cinemas CIO Patrick Teh agreed with the research and said the CEO is not to blame.

"I think we are pretty much to blame; for far too long we have over promised and under delivered," he said.

"Traditional IT managers from a technology background do their job very well, but they are unable to sell themselves and the ideas of how IT fits into the business. Sometimes it is difficult for IT to be totally flexible to business needs."

Teh said globalisation means business has to be nimble to move with the changes and no one person in an IT project can know everything from start to finish.

"No one person can give the total picture, therefore, things can go wrong when the various teams get together," he said.

Teh pointed out that IT is still in its infancy and blamed the vendors as there is such a short cycle on programs.

"Put together, this makes CEOs very sceptical; the business minded CIOs will be able to turn things around but the majority are from a technology background," he added.

Technical director at The Age Newspaper, Linda Price agreed with the research but said the situation is different within the Fairfax group because technology is part of the core process.

"But I have worked in ERP (enterprise resource planning) environments where the IT value isn't as immediate and there is always cost pressure," she said.

A recent restructure of the IT department at The Age has led to the establishment of a solution delivery group.

"We are setting the IT department up as a business consulting model and this is how we will be able to add business value," Price said.

Delta Electricity CIO David Hogg believes there has been a real shift in identifying the value of IT departments and a growing awareness of the capabilities of technology.

"Some organisations are seeing real value in IT as an enabler to doing smarter business and increasing productivity; within our company we provide technology and leverage business opportunities," Hogg said.

"Sponsorship of our projects today is more attuned to business issues."

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