Will IT in 2010 be seen as Cost or Investment?

Under the above title we started a discussion at the LinkedIn group that Gartner is hosting for attendees of the recent Gartner ITxpo’s in Orlando and Cannes. The discussion is getting quite lively, so thought it may be a good idea to invite a wider audience here.
To protect the innocent I won’t repeat all responses or the names of the senders here, but a particularly interesting response to “IT, cost or investment?” came in today and included the following observation:

“IT can help to optimize processes and therefore to reduce cost. So, you invest to reduce
the cost in any function, IT is not different to Finance, HR, Sales, etc. The question you should
ask is why does your C-Levels see IT as a cost at all. Do they see Marketing as a cost ?”
Being guilty of spending my days in a marketing role myself this reminded me of one my favorite marketing quotes (allegedly from the world’s largest advertisers):

“I’m positive we waste half the [marketing] money we spend, I just don’t know which half”.
What do you think: Is IT better or worse off than marketing? 50% sounds outrages, but how many IT organizations can link 50% of their total budget (not just their project budget) back to increased profit, growth, increased marketshare.

In marketing this is no problem, we just call the part we cannot allocate directly “awareness building” or even better “strategic spend” or “corporate imaging”. I believe we need a similar bucket in IT. I am not kidding, bear with me.

In every business there is always some cost that cannot be allocated directly to results (no direct ROI), but still everyone agrees they are needed. Examples are providing a (desk) phone to every employee, having a corporate wide area network (soon to be called Cloud), providing an email system (well that last one probably has a demonstrable negative ROI given the time it consumes of our employees). No departmental manager with a P&L responsibility will agree to fund such infrastructure projects.

Yet in IT we tend to make no difference in how we treat these. Sure we distinguish between “keeping the lights on” and “new projects”. But keeping the lights on includes cost we probably could attribute directly to results, and some new projects (like migrating to IP6 or Windows7) can not.

Guess I am asking for cost categories comparable to “Demand Generation” and “Awareness Building” for IT. In marketing the first is treated as a cost (50 dollars per lead) and can be directly be linked back to increased revenue. The latter (awareness) is treated as an investment and cannot be linked back directly.

Interested in your all comments and thoughts.

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