4 Signs that Your IT is Costing You Money

In most businesses the IT team report directly into finance and your investment in technology is likely to be among your biggest capital expenditure. There is no doubt that the right IT investments can help drive new business initiatives, reduce costs and win new customers. But how should CFOs be assessing return on investment?

As a CFO, it is critical that you understand your IT spend and how it corresponds to your earnings. So what are the things to look out for as a CFO- here are Synetec’s four sure signs that your IT may be costing instead of making you money:

Every IT proposal is presented as a business necessity
A hard-nosed CFO who is only interested in the numbers will often be presented exactly what he asks for; subjective data to justify every IT investment as business critical. Any proposal can be written in such a way as to make expenditure appear essential. Do you have in place a clear decision making process that clearly sets out how you account for certain costs and benefits within the business?

You are spending money on things that aren’t making you money
If your capital expenditure doesn’t relate to improved or sustained efficiency or new revenue then it’s not making an impact on how your business makes money and it’s almost certainly a luxury, not a necessity.

Before embarking on any new IT project set out the top 5 revenue streams in your business and assess the impact your potential IT spend will make in enhancing these revenues. If the answer is negligible, then you’re probably best off investing your capital elsewhere.

Your existing IT systems are slowing you down
In order to understand what’s costing you money it’s important to know what’s impacting upon your existing efficiencies. In order to do that you need to benchmark your existing system performance against accepted standards and that means speaking to your end-users.

Make decisions with the business objective in mind. Quick-fix solutions might be circumventing a non-essential problem which can potentially be bypassed or eliminated all together if its not making your business more efficient.

Unless you stay tuned into how your IT impacts upon the day to day running of the business and keep abreast of wider industry news and developments then you’re likely to miss obvious signs. Pay particular attention to systems and processes that are taking too long.

You’re adopting the latest technology without seeing any long-term benefit
For a handful of businesses there may be real kudos in being seen as the first to implement the latest innovation, but being an early adopter of new technology is risky and could prove a costly experiment for your company. Remember the earlier you adopt new technology the more expensive it’s going to be, the less proven it is in the marketplace and the less likely you will receive suitable support. At the same time as new technology is going for premium prices, the cost of perfectly suitable current versions will be driven lower, so look out for reputable bargains.

Every IT professional wants to work with the latest technology and leading edge projects but ensure that every business decision has a sound financial reasoning rather than simply fluffing the CV of IT-team members. Ask yourself, what are the benefits of the system you’re considering investing in and assess these versus your main revenue streams.

George Toursoulopoulos is a financial technology specialist and Director at Synetec, one of the UK’s leading providers of bespoke financial services software solutions. George started his career with US-software giant EDS, becoming the youngest manager in the company’s history and has since gone on to lead Synetec where he has continued to deliver world-class solutions for a number of the UK’s most prestigious Hedge Funds and Family Offices. George is a regular conference speaker on the implementation of technology within the financial services industry with a particular focus on delivering ROI and improving key business drivers. George has lectured on Microsoft development and has served as a director on numerous company boards.