Instructor: David Schuff, Section 003

Why IT Shouldn’t Be a Cost Center

To realize the benefits of an efficient and innovative IT department, organizations must not look at IT as a cost center. Cost center IT is holding IT back by limiting budgets, discouraging change, and keeping the focus on back-room operations. Organization leaders are not valuing IT departments as they should be: IT should be a profit center, IT should be strategic, IT should be moving the business forward. However, as long as organizations view their IT department as a cost center, IT will not be given the funds, attention, or power to be transformative, and the organization will not realize the true value of their IT department. An IT department that is seen as a cost center is not only of little value to the organization, but it is also demotivating to the people who work in it. IT Individuals in these types of environments are unlikely to feel empowered to be innovative, and will therefore be less likely to drive change to reduce costs or increase profits. IT departments are up for the challenge of supporting their organization’s strategic objectives actively, not by just passively following commands from higher ups. If organizations allow themselves to look at their IT departments as profit centers, they will surely find value and not just high costs.

What do you think about organizations viewing IT as a cost center? Do you agree that if they shifted their view from cost center to profit center, that there would be profit to be recognized? Does this only apply to certain industries/organizations?

Source: Stop Looking at Your IT Department as a Cost Center

One Response to Why IT Shouldn’t Be a Cost Center

  • Nicole, I absolutely agree that many organizations need to re-shape how they think about IT. However, I’m not convinced that turning IT departments across the board in to profit centers is the solution.In many organizations, it is impossible for IT to flip a profit for the company. Think about a hospital, for example. Revenue is driven directly by CMS reimbursements, collection on insurance, co-pays, etc. It is almost impossible for IT to directly generate revenue. This is the case in most organizations as well. The Apples, Ubers, and Facebooks of the world are massive players, but unique in their own ways of doing business. What works for them won’t work for every company in every industry. Perhaps another way of thinking about it is: how can the culture within IT departments be adjusted to cultivate motivation and innovation? Something I’ve noticed is the 9-5 “heads down” culture that seems to eminent in corporate IT. Most IT employees come in to work and put their heads down, typing away until they leave to go home at 5 PM. Tackling key cultural problems within IT might solve some of the problems you identified.

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