Spending More on IT
The Case for companies spending more on IT.
Whilst it used to be the case that companies spent money on IT as a cost-saving measure and therefore IT prospered during a downturn, this is no longer the case.
Nowadays companies see cutting back on IT spend as a great way of saving money.
They do the same with their advertising spend during a downturn. They are two areas that it is easy to make cuts in.
Two-thirds of all IT spend is on existing systems and one-third on new systems. That means that, when a downturn commences, it is quite easy to save one third of company‘s IT spend by putting new projects on hold.
Nowadays IT is seen as a business enhancer rather than a cost-saving mechanism. If there is no prospect of extra business, so the logic goes, there is no point in creating new projects. There’s no point either in enhancing existing systems to better garner those business opportunities.
But is this logic correct?
No it‘s not. Not according to statistics published by Gartner on behalf of BT Ignite.
Spending more on IT is the best way you can spend money.
Companies that spend more than the average on IT make 36% more profit on average than those that spend less on IT than average. Gartner obtained this information from a study of over 1,000 European companies.
This study shows the strongest link yet between IT spend and profit. This is after all the Information Age. Access to information gives so much competitive advantage to those who have it.
Reading Our Article
As an example of this ITContractor paid just 40 pounds for software which would show us how many people were reading our articles and which ones. This is updated every two minutes. Since we obtained this information, our Article Reads have more than doubled in just a few months. That’s because we are able to sort the wheat from the chaff.
Before that we had no idea which articles people were reading and which they didn‘t. It was quite an eye opener when we got the information.
Greater Than Average Spend on IT
Companies that had a greater than average spend on IT had profits of 9.1% of turnover, on average, according to Gartner. Those that had a less than average IT spend had profits of 6.7% of turnover. That’s a huge difference of 36%.
The return in investment (ROI) when investing in IT is £4 for every £1 spent, as we pointed out in a recent article.
Any business that keeps the lid on its IT spend for too long is taking the risk that it will fall behind its competitors.
Spending more on IT is the best way you can spend a company’s money.
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