A reported trend in how much IT departments are planning to invest in improving their own processes provides an interesting test of how far it’s possible – and wise – to ‘run IT as a business’.A January 2008 report by AMR Research indicates that IT departments are planning to spend 9.3 percent more this year, compared with 2007, on technology to improve their own performance. Meanwhile, the same report concludes, companies are planning to increase overall IT spending by only 5 percent. The kneejerk conclusion one might draw from this is that IT departments believe they can deliver almost twice as much bang this year for each new IT buck compared with their colleagues in the wider business. Good. Companies have probably been investing less in redesigning the way their IT department operates compared to other areas, so there’s likely to be untapped benefits waiting to be realised.However, there’s a deeper challenge to consider arising from this news. It’s been something of a mantra in recent years that CIOs should ‘run IT as a business’. If that were literally true, then when they want to invest in improving the performance of their ‘business’ they should have the usual range of choices a business has for sourcing the investment funds they need: from current profits, financial reserves or external investors (e.g. shareholders and banks). Now, there are some real advantages to be had from people in the IT department thinking and acting in a businesslike way. But, beyond a point, they cannot really operate as a business because they are, in truth, simply an integral part of one. They don’t have a true Profit and Loss account, their own financial reserves or external investors, from which to fund performance improvements. They’ll be asking their ‘customers’ to fund the estimated 9.3 percent increase in spending – and those ‘customers’ might want to use that money to fund their own projects, or keep it in the bank. And if the IT department is looking to its ‘customers’ to act as investors, what’s the customers’ return on that investment? Reduced prices for the IT services they use, or a better service experience? And will either of these be of greater value to the customers than the returns they could deliver themselves, by investing the same money elsewhere. Or maybe there’s a natural limit to how much an IT department can really ‘run itself as a business’, and make sure it delivers the benefits of that idea while also making sure nobody takes it too literally. Otherwise it can all get rather messy. Related content opinion Android Security Hole of the Week: Researchers ID New, Severe DoS Attack A group of Italian security researchers have discovered a new Android Denial of Service (DoS) attack that can render Google smartphones and tablets useless in a matter of minutes, making it the most severe Android DoS attack ever identified. By Al Sacco Mar 27, 2012 3 mins Small and Medium Business Smartphones Mobile Security opinion Trip to Ethiopia Trip to Ethiopia to meet with couple of microfinance institutions By Jiten Patel Jul 24, 2010 2 mins IT Leadership opinion CGAP - Virtual Conference Recap: Hurdles to Surmount for Microfinance - Capacity Building & Technology Good 2 day conference on challenges faced by Microfinance Institutions (MFIs) on the critical subjects of capacity building and By Jiten Patel Jul 09, 2010 1 min IT Leadership opinion CGAP Virtual Conference - Day 2 Jul 8th: Getting past the technology hurdles faced by MFIs CGAP Forum - Getting past the technology hurdles faced by MFIs By Jiten Patel Jul 08, 2010 1 min IT Leadership Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe