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Soft benefits, not cold hard cash

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Even accountants have learned that an IT project cannot be thought of purely in terms of its impact on the bottom line, according to research.

Instead, before the costs are even considered, 63 per cent of accountants prefer to weigh the risk to the business of a new system failing against the risk to the business of not upgrading at all.

Surprisingly, the financial controllers also said they were looking for soft benefits from IT projects, such as better integration, better communications and better planning of operations in the business. Cost savings are mostly a secondary if not tertiary consideration.

In partnership with the Institute of Chartered Accountants (of England and Wales), Microsoft asked 400 "finance professionals" in medium-sized companies about their company's IT strategy and purchasing decisions.

The survey also revealed that the vast majority of companies have no formal IT strategy, less than half have a formal approach to calculating return-on-investemnt, the rest rely on gut feel, and a scary 12 per cent carry out no evaluation of IT purchases at all.

The scary comes from Paul Druckman, president of the ICA.

"As companies are setting out with relatively soft goals in mind - that is, the want to improve the overall operation of the company, or improve internal communication, rather than save 20 per cent on the bottom line - it is consistent that the evaluation of the success of a project is also done in a fairly soft way," he said

"But it is hard to defend the 12 per cent who make no effort at all to measure things. That 12 per cent frightens me."

The research was commissioned because Microsoft thinks that the small businesses in the SME sector are getting an unfair proportion of all the attention.

The 85,000 or so medium-sized companies in the UK, those with between 50 and 500 people, account for 30 per cent of the UK's GDP, according to Microsoft's head of SME and Partners in the UK, Natalie Ayers. They also grow faster than smaller companies. But, Ayres concludes, there has been very little research into what it is exactly that makes them tick.

Other highlights of the research are that medium-sized companies spend between two and three per cent of turnover on ROI; the majority of those with a strategy are planning two years ahead; and 100 per cent of those surveyed had got (at the very least) access to the web, to email, and the company has a web site.

"There was a much more long term view [about ROI from IT spend] than we might have expected," said Druckman. "I think this is a positive thing, and we should encourage it." ®

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