Hidden costs cloud ROI for new technology
By Industrial Distribution Staff -- Industrial Distribution, 5/1/1999
New York--Many firms overlook hidden costs such as training and personnel when making information technology investments.According to Grant Thornton LLP, an international accounting and consulting firm, senior managers often fail to accurately calculate what is an acceptable return on investment. As technology investments become large capital outlays for businesses, managers need to receive better and more information about their actual IT spending.
"Items such as training and personnel frequently don't enter into the equation -- but they should," says Mark Oster, a management consulting partner at Grant Thornton's technology group. "A sound IT investment decision should be benefits-driven and address internal, external and competitive needs."
Among the most common mistakes Grant Thornton reports:
* Information technology investment is either inconsistent with or divorced from a company's strategic plan
* Companies do not measure how their spending patterns stack up against the competition
* Firms have no handle on the potential competitive edge from an IT investment
* Personnel expenses other than the MIS department are not considered IT-related.
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