IT - not just a cost

Many mistakenly consider the entire IT budget as a cost.

This is by no means the case! A very large proportion of IT spending should be viewed as investments, even if it for taxation purposes is considered as expenses.

The cost base could be subject to cuttings and optimization initiatives. Investments should be subject to prioritization based partly on value contribution and partly on risk assessment. These are two very different ways of looking at the spending and the underlying activities.

Operations, support and error corrections are costs. One can discuss whether it applies to all kinds of errors. The correction of minor errors that do not have practical importance for the functionality is hardly a cost but can be an investment in usability and hence in employee or customer satisfaction.

Preventive maintenance, development of new systems and new infrastructure, by contrast are investments. These kinds of tasks are also characterized by having project nature.

The total IT budget must contain an appropriate balance between costs and investments. This balance should match the overall business strategy, and should be determined by Management in consultation with the Board together with the risk appetite and requirements for return on investment.