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Is Information Technology a transformation or a cost center?

By May 5, 2016 No Comments

Answer this question: Does your company considers IT department as a transformation center or a cost center?
Answer to this question, determines where your company is headed to. The reason is increasingly, growth of a company is becoming technology-dependent. If IT is strategically aligned to your company’s goals and technology is seen as an asset, it can pave the way towards higher growth for your company. This approach demands that CIO of the company orients IT towards a service-oriented approach rather than a technology-oriented approach. Technology should be able to service the business demands adequately and efficiently. It should also be able to provide a appropriate and quick response to on-demand requests by employees and vendors. Implementing a technology-framework that allows businesses make transformative decisions shaping the course of the company for next decade(s), is enabling many companies achieve very high levels of growth.

On the contrary, if IT in the company is seen as a cost center, many such IT departments are directly under the control of CFO. So, when the demand for higher growth is put upon by stake holders on executives, cost cutting measures are implemented. Included, as part of cost cutting measures include cutting IT department budget. Cutting IT budgets will provide immediate cost benefits to the company. However, it should be remembered that it’s competitors investing more in technology driving higher efficiency and better customer service, will only be able to penetrate more into the market segment. This becomes a self-fulfilling prophecy for companies lagging behind in technology and looking to grow solely by cost-cutting. They go through these cost-cutting cycles until eventually they completely go out of business.

One thing to note is that, implementation of technology to drive growth of your company is important. However, proper technology being implemented is even more important. That being said, a effective leader as CIO along with due-diligence to¬†ensure that IT aligns well with business goals. Understanding business goals, ensuring the technology in place or through the door aligns well with business goals and properly implementing such technology – allows companies to use technology as a driver to drive it’s high growth.