IT must regain the initiative

Several years ago I wrote an article in which I quoted a merchant bank predicting that companies would soon insist on seeing something called "return on investment" (ROI) within a year of purchasing new IT kit.

At the time, the story was unusual because for so long IT directors had been encouraged to spend on innovative technology as if there was no tomorrow. In those heady days, almost any IT investment raised firms' share prices, so the thought of reining in this freedom to spend seemed insane.

Then came the dot-com bust. As IT was systematically stripped of its charmed status, the department was increasingly held to account for the lavish spending sprees that had been encouraged. It was hardly surprising that business leaders returned IT to its original role of automating business processes to save money. And by way of atonement, many sheepish IT chiefs have been only too willing to carry the corporate can. ROI has become the Sword of Damocles hanging over their heads, as they labour to deliver value to their organisations.

The past few years have seen chief financial officers exert more and more influence over IT spending, thanks to increasingly uncompromising risk management procedures. In this environment, the only large-scale IT projects have been those that are easily justified on the grounds of cost-cutting.

But as we move into 2004, the economic climate is improving and confidence is returning to the stock markets. The Nasdaq 100 index of technology shares has undergone one of the most sustained periods of growth since 2000.

In the same week that Time Warner removed the AOL part of its name - in an attempt to bury memories of that bizarre takeover deal - internet search firm Google made headlines with plans for a £9bn initial public offering in 2004.

The past few years have been tough but they have provided an invaluable learning curve. The economic downturn has forced IT teams to reconnect with business and ensure that all initiatives are designed to add value. However, there is a real danger that in some industries the prolonged downturn means IT departments are now thought of as cost-cutters and not as strategic leaders.

It seems that we have reached a crossroads and the route that IT departments take could determine the competitiveness of UK plc for many years to come.

In a very short time, IT has moved from precocious child to troubled adolescent. It is now perfectly placed to emerge as a mature contributor to business progress. However, the final part of this evolution depends on IT departments winning back a realistic sense of self-worth.

IT directors now need to spend a bit less time looking for ways to save money and a bit more on ways to make money. And to do this, they must be prepared to argue a strong case. They must persuade their companies that a less cautious approach to IT investment can result in significant competitive advantages.

IT has come a long way from being a department concerned with delivering cost reductions in areas no more inspiring than payroll automation.

Technologists should take courage in the renaissance and reclaim their role as business leaders rather than business janitors.