IT leaders continue to face a basic problem in IT management: business managers have little interest in participating in prioritization, alignment, and planning exercises for IT, according to Cutter Consortium. While the corporate CFO, and possibly the CEO, do worry about IT costs, individual business unit managers who consume IT services simply aren't interested. Senior Cutter Consortium consultants describe two approaches to overcoming apathy.

"For many managers, the fundamental dilemma is that IT costs represent only 2%-5% of the total company budget. In their minds, IT is a rounding error. Of course, we all know that IT matters -- but apparently not enough," assert Cutter Consortium Senior Consultants Bob Benson and Tom Bugnitz. They suggest two basic approaches to overcoming business management's lack of interest in spending time on IT decision-making like prioritization and planning:

1. Get the IT Cost Comparisons Right

The most dangerous metric IT uses is "IT as a percentage of revenue" or "IT as a percentage of total company expense". The real cost basis for comparison is not total cost but the people-based costs: the salesforce, the back-office organization, the logistics people, and so forth. These costs are the permanent costs of the company and represent the bases for using IT in the first place. What we really must compare is the total cost of IT to the total cost of the people in the organization. Now, instead of looking like 1%-2%, IT can be 20%-50% of the total cost. That is something that gets business management's attention.

2. Focus on Making IT Cost Decisions

When analyzing total IT costs by applications and infrastructure services focus on identifying 1) the highest-cost applications, 2) the highest-cost infrastructure services, and 3) the quality and strategic alignment of those applications and services. The analysis is based on total cost. It's the old 80/20 rule: 20% of the applications and services consumes 80% of the costs. Those costs are connected to the things important to the business manager: their performance and business goals. This will quickly lead to decision-making and planning -- the objective of gaining their engagement in the first place. The point is that by focusing on high (true) cost, and quality/alignment performance, management does become engaged.

More information

Contact Cutter Consortium to request a complete copy of the Business-IT Advisor, "Engaging Business Management".

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