IT In Business: What Should IT Cost?
Benefits from the Effective Use of IT Do Not End with Reducing Costs
In unit terms IT appears to be expensive. The cost of each computer multiplied by the number of users soon totals up, and then there is the need to add servers, software licensing, printers and other peripherals. However, the efficiency benefits returned by the use of IT should not only counter the outlay, but should return significant cost/benefit improvement.
First Decide what the Business Needs Are
Benefits accruing from the effective use of IT do not end with reducing cost, but extend to increased business and higher rates of business throughput.
Dealing with current business issues and coping with new business becomes very much easier with the use of computerisation. Functions ranging from the simple ability to review resource availability in order to adjust work schedules. Live cash, material and labour reserves can be quickly assessed delivering rapid decision making ability combined with lower risk factors.
Properly deployed IT delivers a real competitive edge, especially so in light of the fact that very few businesses actually do achieve effective IT use.
Decide on the Deliverables
Each business must first define if product sale is marketing driven or capacity driven. This one is relatively easy to answer. Is marketing aimed at producing an order book to fully utilise existing production capacity, or are production targets adjusted to fulfill sales book requirements?
Utilisation of IT to increase marketing is of little use if there is no capacity to deliver. Similarly, it is no good computerising production for increase if the order book is not full.
This applies equally to the small one-man business as the global corporate.
Look for the Bottlenecks
Where are the critical points in the process from marketing conception to product delivery and receipt of payment?
This is also relatively simple to analyse, the management team must identify the flow of resources and identify where any shortage has impact on other process elements.
For the purposes of defining the cost/benefit of IT, the initial analysis in this area does not have to be particularly deep. Honest analysis is however essential. It becomes too easy to imagine extensive reductions in costs as a result of computerisation and it must be remembered that every element of every process must have a degree of redundancy. If a task is slowed or stopped the impact on other elements of the process, or on the process as a whole, must not become critical.
It is crucial to allow for margins and buffer zones.
Define the IT Products
The two steps outlined will identify the particular business need and pin-point where issues are likely to arise. Once these are clear it becomes possible to commence an analysis of the market to determine what hardware and software products are available to satisfy the requirement. This will start to define the cost side of the cost/benefit equation, while identification of business need and work-flow analysis will deliver insight into the benefits the business may expect from the implementation of computerisation.
Flexibility in Solution Implementation
The business need and the process analyses form the basis of the reason for change implementation and, as such should only be adjusted in the light of fundamental business change.
However, once the analysis of IT product is underway, it will be necessary to maintain a flexible outlook to the way in which the change is effected. Computer products will almost certainly present themselves that alter the view of the change architects. The cost of each of these must be measured against the perceived benefits delivered.
Look out for the next article in this series - IT In Business: The Quality of IT
Effective IT
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