TechnologyAccounting SoftwareROI not key to IT spending, says Intel

ROI not key to IT spending, says Intel

Return on investment should not be the key benchmark in deciding much of a company's IT spending, according to Intel's chief information officer Douglas Busch.

Link: Gartner sees IT spending recovery

IT infrastructure costs are simply part of the costs of doing business in an increasingly wired world, he said.

‘There’s a certain level of IT spending that isn’t concerned with ROI but with just being there as a public ally traded company,’ said Busch.

‘Regardless of the business climate IT spending will rise. If you’re growing you need IT facilities installed faster as people join – so growth is steeper than revenue growth. If revenues are flat IT spending rises to help improve margins, while in declining markets revenue spending rises to try and get reductions in fixed and variable costs.’

Mark Darvill, director of technology for IT services and integration company Logical UK, said the relationship between IT spending and business success is more complex: ‘That’s a little over simplistic – there are a variety of cost considerations for infrastructure spending.

‘For example, network speed is a ROI decision. If you use Intel’s argument you’d always choose the fastest options irrespective of cost. But do you really need gigabit links everywhere?’

In 2000, Federal Reserve economists found about two thirds of US productivity gains were linked to IT spending. In February, Federal Reserve chairman Alan Greenspan indicated that this seemed to be holding true throughout the first two years of the downturn.

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