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Cost benefit analysis

09/09/2008

IT costs are generally reported to be increasing year on year, with greater demands and reliance on information systems.

 

At the same time, budgets granted to IT departments and staff are continually placed under pressure as financial decision makers seek to cut costs.

Businesses whose “computer system is down” face operational difficulties and have their interaction with customers severely hampered. Those customers will make judgements about suppliers based on the availability of services required. More often than not, those services have IT systems at their core.

Hence the dilemma – your key systems are in need of underlying investment but those staff and equipment providing them are seen as an operational overhead; presenting costs which should be justified continuously. Maintaining the status quo is often the only realistic goal of IT departments in such situations.

Too often, these staff and systems are swamped by reactive troubleshooting. The lack of previous investment and planning has lead to a declining network architecture with high ongoing administrative costs.

If this sounds familiar, the time has probably come for a cost / benefit analysis of the current IT systems and how they support or hamper key business processes. Some specific, controlled investment could enable resources (usually staff time) to be freed up for more value-added activities.

This investment does not come in the form of a “rip and replace” mentality, where existing systems are simply discarded and new equipment and software installed. Rather, a critical appraisal of the current IT infrastructure and methods of working should be conducted to enable sensible, affordable options to be presented with clear, quantifiable benefits attached. The resulting return on investment calculations then make for simple decision making - with specific objectives established ahead of expenditure.

A cost / benefit analysis in this context is not a straightforward one-off exercise, it is an ongoing approach to working with, and investing in, IT infrastructure to protect your business. To complete this, you need a partner who understands not just technology, but your organisation and how you use IT to drive your business forward. With this combined understanding, you can make best use of scarce resources – money and people.
 

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