Why Businesses Buy Technology

I talk about “The Three Wise Men” a lot in my workshops. They are the guiding principle why businesses make technology decisions – being:

1.       Increase Revenue

2.       Reduce Costs

3.       Mitigate (Decrease) Risk

So it was heartening to read the “connect” article in the September issue of CIO Magazine, which showcased the advice of CIO’s to their peers. In particular, the advice of Rick Roy – the SVP and CIO of CUNA Mutual Group. I quote his advice in full.

“We use three macro-level business metrics to prioritize IT investment decisions and set strategy: revenue growth, cost reduction and risk management and compliance. For line of business spending, it’s rare for someone to introduce a major initiative without a strong connection to one of those. But at the enterprise level it’s more challenging. How does that Windows 7 upgrade really help the business? Whoever presents that case has to make the connection.

Risk mitigation and compliance are the hardest to quantify. We must distinguish between the need-to-have and the nice-to-have. We can’t just say we need to invest in something because the risk is high. What does that mean? Will we lose money? How much? Will we lose customers? How many? We take advantage of our in-house actuarial and risk-modeling expertise to quantify risk.

We look at IT spending in business terms, reporting our costs as an expense ratio. It changes the conversation from “IT costs too much” to a conversation about priorities. It requires more rigor, but it benefits IT to have a clear focus on our top priorities”

Beautiful – well said Rick!! A lesson in there for every single Sales Engineer and every single sales representative.