New Hat Donned by the IT

Budget allocation to IT departments has witnessed a massive paradigm shift over the last few years. Initially, the IT depatment was perceived as a cost cutting department. But gradually with the introduction of mobile applications and new age digital innovations, it has transformed more into a source of revenue generation for the organization.

As such, CEOs have become more benevolent in dispatching more funds than ever before to the IT department. This has been clearly solidified from the survey conducted by MIS Quarterly where data compiled from more than 400 companies in the period between 1998 and 2003 established that investing in IT can result in increased profitability of an organization and astoundingly, in some cases, even more as compared to advertising. Although it does depend on the economics from company to company where some CEOs have been more successful in eking out profits in contrast to others.
What was intriguing was the fact that revenue raising projects were more efficacious in spawning profit when set against projects that focused more on cost cutting. Researchers of the survey stated that an increase of $1 per employee in IT spending was associated with an increase in sales of $12 per employee for growth-oriented projects.

This has definitely made a radical change as to how we used to envisage IT and the neoteric role CIOs have assumed upon the dawn of a technologically driven era. And this is just the beginning…