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Business and IT: Intersect or Merge?

One thing that I often find in enterprise IT departments is a general disdain for the 'suit' or business types. Often, IT is comprised of technical types that are not too business savvy, or by over-the-top geek types that will not relent on their 'views and principles' with regard to operating systems and software. The problem is that IT is only one department within an organization whose job it is to support the business objectives of the organization. If only more IT staff would realize this simple fact, it would be much easier for IT managers and CIOs to consistently meet or exceed the expectations of the CEO.

In most business schools, one of the core principles explained to students is the break even point. This is where total revenue received equals the total cost associated with the sale of the product. Graphically, this is point where the total revenue and total cost lines intersect. For most organizations, IT is a sunk cost and there is no break even point associated with the department. No one will dispute the critical role that IT plays within an organization, but to the financial types, IT never really has a point at which it 'generates a profit.' Financially, it is an ever increasing cost, something akin to the total revenue and total cost lines merging and becoming one so that cost simply increases with no added benefit.

With this in mind, how can an IT manager or CIO make a case for assigning value to their department? Taking a look at the break even analysis, one can immediately see that while IT may provides the tools to drive revenue, it can never actually create revenue in and of itself. This leaves total cost as the only factor to create value for the department. When a financial manager assesses the condition of the company at any given point, he or she will pit total assets against total liabilities and make an educated guess based on past and present trends for the business. This is often referred to as 'looking at the bottom line.' The easiest way for an IT manager or CIO to impact this bottom line is to reduce overall cost, or at the very least, manage it in such a way that it does not increase beyond a reasonable percentage.

Here is where a lot of IT staff to include managers and CIOs err. Although Free and Open Source Software (known as FOSS to the open source community) has no licensing costs up front, there is often additional cost incurred at some point for support or training to support the software. Additionally, there may be a 'cost' incurred at the user level with respect to usability. A steep learning curve or change in process can inhibit worker productivity. This is where an IT manager or CIO must be adept at recognizing and quantifying the financial and non-financial costs of any project so that an accurate decision can be made.

Although I am a supporter of FOSS and can often recommend a FOSS implementation above a proprietary (often with vendor lock in a la Microsoft) implementation, sometimes it is 'cheaper' to go with what employees are comfortable and proficient with. One of the biggest mistakes Microsoft made with Vista and Office 2007 is a radical user interface and work flow process change which has imparted yet another steep learning curve on the average user. This has caused a sever backlash from both enterprise and home consumers toward Microsoft and its products. It has now become easier for a consultant or IT manager to recommend a change to open source software since the user will be required to learn a new UI and work flow process any way.

All issues set equal, how will an IT manager or CIO minimize cost and increase work flow productivity? Here is where the decision to intersect or merge with the organizational business goals is truly made and where the IT manager or CIO will show true merit. I wish I could say that the right choice is made most of the time, but then again, that's what IT consultants are for, right?

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