May 22, 2013
BITPIPE RESEARCH GUIDE :
Managing IT Overview
At the broadest level, managing
IT is the practice of overseeing and running a company's information technology (IT)
investments and systems. The highest level IT person in a company is usually the chief
information officer (CIO), who participates in
strategic planning with
senior managers to determine how IT can help the company achieve its business objectives.
These objectives might include getting to market faster with a new product or reducing
the amount of inventory it carries.
At companies of all sizes, IT
spending is one of the biggest line items in the budget. Large enterprises typically
spend between one percent and 10 percent of revenues on IT, depending on the industry.
A large company's major IT systems typically include:
- Enterprise resource
planning (ERP). Manufacturing companies use ERP to run the business, tracking and
entering orders, transferring them to the factory for production and then out through
the supply chain for distribution to the ultimate customer.
relationship management (CRM). This system collects data directly from the
customer (such as demographic data, product preferences and future buying intentions)
and uses this data to plan marketing campaigns, improve customer service, and
design better products.
The corporate local area network (LAN)
connects employees to databases and applications and lets them share data. The network may
be based on wired (traditional) or wireless
LAN technology. Corporate offices are connected via a
wide area network (WAN).
platform. In the age of the Internet, virtually all companies sell their goods and services
to their market (whether consumer or business) via Web sites. eCommerce platforms run the
gamut from high-profile retailers' Internet shopping sites to
sites that a company's customers and suppliers can use for self-service functions such
as order tracking.
In past years, millions of companies all over the world spent enormous sums of
money on technology without realizing a
investment (ROI). As a result, senior management demanded better oversight
of technology purchases with more emphasis on justifying the proposed project before
allocating the funds. An alternate form of justification,
cost of ownership (TCO) analysis, has gained popularity. This involves analyzing
not only the initial cost of the hardware and software to determine project costs
but also the cost to train employees as well as maintain and run the system over its
Outsourcing IT is an
outgrowth of the focus on achieving value for money spent on IT. The theory behind IT
outsourcing is that an expert third party can handle IT functions most efficiently
and less expensively than the company itself. Companies increasingly desire to stick
to their "core competencies," the functions that provide them competitive advantage
in the marketplace.
Though a related phenomenon,
outsourcing, has gained prominence recently, companies have off-loaded IT
functions including help
infrastructure, and data
warehouse to outside providers for decades. Another related approach is the
application service provider (ASP) model through which companies "rent" software
applications or equipment from the provider for a monthly fee. When companies
outsource IT functions to outsourcers or ASPs,
service level agreements
(SLAs) define every aspect of the arrangement between customer and provider,
outlining the level of service to be provided (such as 99.9 percent network availability)
and the consequences if that level is not met (such as a schedule of fee refunds).
For more information on choosing the right solution for your company, please
read our Managing
IT First Steps.
Go to Bitpipe Research
Guide: Managing IT.
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