FT : IT Types Are Not Finance Types

Wednesday, October 3, 2007

Companies are spending billions of dollars on information technology every year but few boardrooms know the value of their hardware and software and the contribution they make to their businesses, a study published today has found.  The survey of 250 chief information officers and chief finance officers from companies in the US, UK, France, Germany and Italy found that fewer than half had tried to value their IT assets and 60% did not know the worth of their software.

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The study, commissioned by Micro Focus, a UK software developer, canvassed businesses with revenues from $100m to more than $1bn across all industries…..The Micro Focus research found that 30% of respondents did not know how much money their companies spent on software each year.  It also found a marked difference in approach between finance and IT directors. “Only 37% of CIOs have tried [to quantify their assets], compared to 60% of CFOs,” it said.  Soumitra Dutta, dean of external relations at Insead, the Paris-based business school, helped to write the questions for the survey.  He said the evidence suggested that the value of IT assets, especially software, was under-recognised compared with other corporate assets.  “We’re finding the tech people tend to focus on the ‘new’ – finding a business case for the ‘new’.  Very little thought goes into the benefit and almost none goes into the managing of the legacy assets,” he said…..The study found that 56% of respondents thought that the financial value of software was ignored or poorly evaluated compared with brand, property and intellectual property values.  “If organisations do not know the cost, size and value of IT assets, then they must be severely challenged to make the right IT investment decisions,” said Stephen Kelly, chief executive of Micro Focus.

Reference : http://www.ft.com/cms/s/0/bb4d227a-6fd0-11dc-b66c-0000779fd2ac.html

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