IT spending is just spending

In any large public or private sector organisation, it’s common to see “IT spending” given special status on financial balance sheets.

There are clear historical reasons for that being common practice, and if that’s what’s necessary to make things work smoothly in the organisation, there’s nothing wrong with it as an approach. It’s certainly better to know how much you spend on technology than not to.

But it does cause problems if your goal is digital transformation, because a transformed internet-era organisation cannot afford to give IT spending “special” status. It’s too deeply entwined with everything else.

If you treat IT spending as “special”, you create three new problems:

• That spending is seen as “special” by everyone else in the organisation, which means it ends up being judged on different criteria, perhaps by different people, than other spending is judged. It generates its own spending silo.
• IT is seen as a standalone thing, something to be treated and managed separately; a magic box of blinkenlights that will solve all the problems. (It won’t. But it can help.)
• IT spending decisions end up separated from the context of the problem to be solved or the benefit to be gained. They languish on balance sheets, or sink deeper into the swamp of sunk costs.

You wouldn’t invest in a new building without a property expert, or in any procurement without a procurement expert.

IT specialists should be on hand to help with decisions about IT spending, but they should do so as part of a wider, multidisciplinary team.

That’s because no new system, transformation programme or project will be successful if it focuses solely on purchasing technology. Internet-era organisations are too deeply intertwined for that. The real world is never that simple. We have customers to satisfy, user needs to meet, internal processes to improve, data to make better use of, and software to support. Everything’s connected.

A sensible internet-era CTO will always start with the desired outcome. Working with other leaders from across the organisation, they will try to work out what needs to change, and what teams need to exist to make that happen?

Only once that’s clear will they start thinking about technology investment (either operational or capital), if it’s needed.

Thinking about software and IT comes at the end of the process, not at the beginning. Any organisation starting with software is just going to end up tangling the spaghetti, and making things worse.