Turn to purchasers to justify spending, IT chiefs warned

19 September 2001
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20 September 2001 | Robin Parker

IT heads will increasingly have to turn to purchasers to help justify their spending, an industry analyst has warned.

Until now, IT departments have had carte blanche to buy equipment and software without relating them to a solid business case developed by or with procurement professionals, Ken Cole, head of the centre for procurement excellence at QSP Financial Information Systems, told SM.

"IT directors have escaped having to justify buying decisions because it became accepted that IT investment saves money," said Cole, who is also a member of the CIPS information systems committee. "This thinking was habit-forming, even though it wasn't necessarily true." This had been driven in part by the panic to make systems year 2000 compliant, as well as the fear that companies unable to generate more business electronically would be left behind by their competitors.

His comments follow a survey by consultancy NelsonHall of the IT spending plans of 112 UK organisations, which found that the slowdown in IT expenditure was caused by the growing reluctance of finance directors to approve projects without a demonstrable business case, not the recession.

John Wilmott, an analyst at NelsonHall, attributed the current rationing on IT spending to more business-orientated approvals processes. "Finance directors are increasingly seeing the logic in demanding examples of any figures quoted."

While the demand for IT initiatives had risen in 54 per cent of UK organisations in the second quarter of 2001, there was a backlog of 38 per cent of projects awaiting approval.

* A survey for Computer Weekly magazine found that 74 per cent of IT managers believe users are wrong to expect significant savings from outsourced IT contracts.


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