FDs say risk is everything in IT

The finance directors of medium-sized businesses are putting less emphasis on the cost savings or increased revenue potential of major IT projects, a new survey has revealed.

Instead they take a much more ‘risk-based’ approach to considering a new system and look at the possibility of business-critical failures, the ease of integrating the software and hardware and whether the system will enable greater planning and control of business processes.

The survey, undertaken by the ICAEW and sponsored by Microsoft, looked into the strategic IT habits of a cross├░section of 400 medium-sized businesses ├░ those with between 50 and 500 employees. Respondents were finance directors or equivalent.

Over half of respondents said that better relations with customers, improved product/service offerings or ease of integration with existing systems were major factors when considering an IT project.

Potential problems included system failure and staff training issues. Cost, or sales-related benefits, were not considered as primary factors of importance when embarking on an IT project.

Speaking at the launch of the research in central London, ICAEW president Paul Druckman said the long-term, informal and ‘mature’ approach of medium-sized businesses was surprising, but should be applauded. ‘They’re looking at broader benefits rather than being obsessed by cost savings or increased revenues,’ he said.

However, an informal approach to dealing with IT projects made it more difficult to measure the return on investment (ROI). Three-quarters of those using informal measurements, gauged the success of a project by ‘gut feeling’, while 20% benchmarked against other businesses in their sector.

Only 22% used formal performance indicators, while one in 10 claimed not to monitor ROI on IT investments at all.

Paul Booth, technical manager at the ICAEW IT faculty, said that while ‘soft benefits’ led to ‘soft measurements’, most eventually feed through to the bottom line.

Druckman said that only 13% of respondents would undertake a more formal approach to their IT projects next time.

The importance of mid-sized businesses as a key driver of the UK economy is something of a hobbyhorse for Druckman. His comments at the event were part of his personal ambition to ‘put the M into SME’, an attempt to raise the profile and importance of medium-sized businesses in the eyes of the government.

‘Medium-sized businesses tend to grow at double the rate of smaller businesses, and there’s not enough effort and guidance focused on the mid-market,’ he said.

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