I can?t tell you who said that. It was admitted in confidence over a pint one Friday evening by a few forthright, if foolhardy, individuals. And, after several drinks, it was admitted by almost everyone there.
Is there a conspiracy of silence? I ask this question bec-ause, in the boardroom, those same people insist: ?We?ve got to see a measured return, some improvement in the bottom line, before we spend any more money on IT.?
It sounds perfectly reasonable. So why is spending on IT fundamentally different to any other business investment? Firstly, IT doesn?t produce anything tangible, only information. And, unless you?re in the business of selling information, how can you put a value on it?
I remember my first attempt at justifying a heavy computer investment. I had counted heads in the order office, which comprised 27 diligent souls armed with price lists and ready reckoners.
I had thought that by replacing them with a computer and moving them into staff discount sales, where the company was short-staffed, would do the trick. ?But 27 multiplied by the average cost of a pricing clerk does not amount to the #2.5m for a new computer system,? said the chief executive.
Albert Gherkin came to my rescue. Have I mentioned Albert before? Albert is that person, present in everyone?s life and so obviously inferior in every way, who ends up taking your place, much to your disbelief. ?But Mr Grindley, sir? he said, addressing me but looking straight at the boss, ?you?ve forgotten your intangibles.?
The chief executive was delighted. ?Yes, yes,? he said. ?Computer systems mean better management information. I don?t suppose we can put a figure on it though, Albert?? ?Not strictly,? said Albert. ?It?s an Intangible Benefit.? Then I heard him murmur: ?But turnover-wise, it has to be worth one or two per cent,? ? and the whole thing was done and dusted.
This type of experience makes you think that, when it comes to computer investment, the board is looking for a reason to justify what it has already decided to do.
Spending on IT differs from most other corporate investments because it produces ?indirect? benefits. How can you measure how much a computer has helped you? This depressed me as a computer manager, until Albert uttered another Gherkinism. ?It is not the wings alone which make an aircraft fly,? he said, looking out of my office window. ?But without them, take-off is impossible.?
Immediately, I realised that he had opened the way for Benefit Contribution Analysis (BCA), a technique I then invented and which, I?m proud to say, completely baffled our chief accountant, thereby keeping me in a job for another two years.
Years after I?d been let go, and Albert had been promoted to IT Contribution Controller, I thought of a third difference. The IT spend is the only substantial corporate investment which is proposed by someone who is not also responsible for getting the benefits from it.
This came to me after I?d been describing to Albert a board meeting I had attended. We were at one of his IT department reunions. It?s the only chance he gets to talk IT these days. ?They sit there, Albert,? I said, ?discussing the ups and downs of business, something they?re all comfortable with. They don?t talk about anything of revolutionary importance such as IT. Then one of them says: ?We should open up a few more high-streets shops, Jack.? And Jack, the boss who knows that the competition is doing just that, nods. He knows exactly what it means to open up a high-street shop ? he?s been doing it all his life; it?s what he wants to do ? and he asks the accountant about costs. But nobody asks: ?What are the benefits that will pay for it???
?They don?t need to, Albert,? I continued. ?You see, they use the Business Risk and Survival Strategy words instead.? I paused, allowing him to digest the real reasons for corporate investment. ?It goes without paying? said Albert placidly. You?ve got to admire him. I can?t myself? but you?ve got to admire him.
Kit Grindley is Price Waterhouse professor of systems automation at the London School of Economics.
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