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A Friday Thought..

One of the biggest problems with corporate IT is assessing the value of corporate IT; the IT department is still in many cases the department everyone loves to hate and is often resented as a cost. But the moment; the IT systems go down, people start to witter on about the cost of downtime.

Cost of downtime covers many things, from having staffing sitting there idle to lost revenue due to core systems being down. Now it is the latter point which should be of interest; perhaps next time that there is an outage and you find yourself in a situation where people are quoting ‘lost revenue of £N’ at you; take note of it because perhaps you can turn that round at some point.

If your systems being down cost you £N per hour in revenue; well having them up generates £N * 8760 per year in revenue. So perhaps these systems are not cost but really a revenue generator.

Now I know this is a really simplistic view and in many cases the systems in themselves are not the revenue generator; they just enable revenue to be generated but they aren’t simply a cost.


  1. Martin

    I think rather than being a direct revenue generator, IT certainly acts to provide competitive advantage. So for example, deploying SSDs in place of HDDs in a trading system may enable a faster response and so make more money trading earlier. I think the trick is determining what advantages translate into revenue increases and by how much. Spending £1m to increase turnover by £100,000 wouldn’t be winning you any complements from the CEO!

    IT is essential in almost every business. Good IT goes un-noticed (and should be seamless) and just does what it needs to. Great IT is innovative and delivers that extra to push the business further.


  2. Martin Glassborow says:

    Great IT can only happen when everyone involved understand the contribution that it can make. Imagine the situation where the CIO presents a case to double his IT budget but it only increases the profitability of a business by say 10%? Very few CIOs would have the balls in the current climate to present such a thing even if that 10% far outweighed the actual cost of doubling the IT budget.

    You and I both know that a lot of IT shops are still in the cost containment mode as opposed to the strategic investment mode. I suspect much of the problem is that it still appears to be incredibly hard to show benefit from IT; there is still much opacity from all.

  3. What bugs me most is that virtually all buying decisions seem to be made based on ROI. You would think with all the ITIL and (insert your favorite incident management / problem management methodology here) guys out there, somebody would actually say something like “We lose XXX k$ per hour if the SAN fails, maybe we should not rely on legacy machines from 1Gbps FC times running on ancient firmware.” and hopefully this isn’t the case for most of the SANs out there. But as a support member I see the SANs where it is. From my point of view nobody seems to calculate like “We loose “A”$ if IT fails and is likely to fail “B” hours a year. Better IT would cost overall (with hw/sw/services/training/migration/concept/everything) “C”$ and is likely to fail only “D” hours a year. So if A*B > A*D + C then we should consider to buy it (beside of features, better RAS package, more speed, etc).” Let alone better redundant concepts, better DR, etc. Sounds a bit arrogant, I know. But would you not say something if you see that a bus full of orphans drives burning towards a cliff?

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