User Costs Said To Be Better Predictor Of Tech Spending - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance

User Costs Said To Be Better Predictor Of Tech Spending

In the bestseller "Moneyball," Michael Lewis tells how Oakland A's general manager Billy Beane defies convention by judging a player's worth based on his on-base percentage rather than his batting average. Beane often signs players who are as productive on the base paths as the superstars at a fraction of the cost.

Scott Holland, director of IT research at the Hackett Group, sees a link between baseball and business when it comes to assessing value. Measurements such as IT spending per employee or as a percentage of sales don't always tell much about technology's true value to a company. Not all employees use technology. Companies hire consultants who are heavy technology users but don't show up in the per-employee value equation. "Theoretically, the number of users can be greater than the number of employees," Holland says. IT spending as a percentage of revenue can fluctuate year to year, and most companies don't want their IT spending to waver annually.

IT cost per user lets companies include business partners who do some computing on the host company's systems, and people at factory-floor workstations and automatic teller machines. Spending per user lets companies identify the efficiencies IT provides.

University of Michigan professor M.S. Krishnan says cost per user is a more accurate predictor of spending. Still, he says, it's one tool among many that provides information managers need to make smart decisions.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
News
Can Cloud Revolutionize Business and Software Architecture?
Joao-Pierre S. Ruth, Senior Writer,  1/15/2021
Slideshows
10 IT Trends to Watch for in 2021
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/22/2020
News
How CDOs Can Build Insight-Driven Organizations
Jessica Davis, Senior Editor, Enterprise Apps,  1/15/2021
Register for InformationWeek Newsletters
Video
Current Issue
2021 Top Enterprise IT Trends
We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll