ROI STRATEGIES
IT budgeting and ROI predictions for 2005
Tom Pisello, Founder, CEO, President, Alinean
01.05.2005
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Leading companies will shift from reducing IT spending overall to increasing spending on innovative IT initiatives.
At large companies, 90% of the IT budget keeps the lights on -- covering existing infrastructures and their support personnel, or migrations and upgrades for existing applications and infrastructure. This leaves scarce room for innovative investments that deliver competitive advantage and bottom-line business value. Top performing companies will reduce these baseline costs to funnel funds to innovative purchases such as Web services, business intelligence, mobile computing and RFID.
2004 IT "taxes" will continue to consume growing IT budgets.
While IT budgets are expected to rise an estimated 5% to 8% for the second straight year, much of the increase will go toward three initiatives:
CIOs will implement new programs to avoid the budget battles of 2004.
Many CIOs had great difficulty with the budget process of 2004, and will look to
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not repeat the frustrating boardroom battles of 2004. Even though more funds were available, many CIOs struggled to justify the programs they felt were vital to 2005 success and struggled to get their teams to collaborate effectively with business units to determine and justify innovative programs. With more budget control and influence in the hands of business unit leaders, this collaboration and co-presenting the plans is vital to IT investment success. CIOs will seek to reorganize their teams around business unit liaisons, implement training programs to get their staff more adept at collaborating with business unit executives on business process improvements, and seek to implement collaborative benchmarking and ROI analysis programs to standardize the process.
Tom Pisello is the president and CEO of Orlando-based Alinean, the ROI consultancy helping CIOs, consultants and vendors assess and articulate the business value of IT investments. He can be reached at tpisello@alinean.com.
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