Investing in IT

Over the past three years, my operating budget has been reduced by 20 percent. This is the type of thing that sends many CIOs into a tizzy: How am I supposed to do so much more with so much less? (For more on budgeting, read CIO Insight‘s IT Investment Trends Study.)

But, for us, this reduction was voluntary. At the United States Tennis Association (USTA), we have been able to find innovative ways to leverage what were, at the time, leading-edge approaches to lower our ongoing costs on the utility side of IT.

For example, we implemented a software as a service (SaaS) model for delivering email. This reduced the operating expenses involved in upgrading and managing email software, while lowering the ongoing capital investment required to build out an ever-larger store of email messages.

We were also an early adopter of the public cloud, moving many of our non-consumer-facing systems into the cloud. (We are Amazon clients, and we survived the spring 2011 outage, by the way.) Our move to the cloud lowered our hosting costs for these back-end systems by 70 percent.

These reductions in our ongoing operational costs allowed us to focus on what really mattered for the USTA. As operating costs decreased, we were able to reapportion funds into capital investments, which stoked the innovation engine. We were able to develop an enhanced suite of capabilities for our players, which have revolutionized their online tennis experience. It’s even allowed us to launch our first set of iPhone apps for engaging in our leagues and tournaments. We were also able to develop a new Web presence for parents of young children who want to get their kids involved in playing age- and equipment-appropriate tennis.

We have had a laser focus on understanding “what matters” for the USTA, thereby investing our limited financial and human resources into the things that will drive tangible business value for the organization. This has resulted in 100 percent of our business-focused technology projects being approved and funded.

Many CIOs complain that their budgets are operationally heavy. I’ve heard numbers as high as 80 percent for operations and 20 percent for new project innovation. Our mix is a much healthier 60/40, with a twist: For us, 60 percent of IT dollars are invested in innovative capital projects that are driving business value by accomplishing mission-based objectives for the organization. Our ongoing operational costs for the “utility” portion of IT (i.e., network, help desk, host-ing, etc.), take up a more modest 40 percent of the IT dollars spent in any given year.

Many organizations look at IT “spend” as opposed to IT “investment.” The real questions to ask are not how much you spend on IT, or whether your overall budget is going up or down. The real questions are: How are you investing these resources, and what impact are they having on helping your organization succeed?

Larry Bonfante is CIO at the United States Tennis Association and founder of CIO Bench Coach, LLC, an executive coaching practice for IT executives. He is also author of Lessons in IT Transformation, published by John Wiley & Sons. He can be reached at Larry@CIOBenchCoach.com.