Alignment of Revenue and Technology Expense

Technology and Business Alignment are key to building an organization that can handle both the ups and downs that will occur in the economy. When everything is going well it is much easier to overlook the alignment between your revenue and the technology that supports it. This leads to a less agile overall business and potentially cash flow issues when the economy starts to head the other way. 

There are two ways to avoid this situation:

First, make sure that your capital investments in technology are well-planned and don’t lock you into an amount of capacity you may not need. This is fundamentally what the “cloud” is, a shift from capital to operating expense for technology. Not that some level of capital investment isn’t needed…workstations and network gear being the two biggest. Keep those items on the budget as part of an ongoing life-cycle expense. 

Second, shift non-core technology operations to a utilization based delivery model.  This is a fancy way of saying don’t spend money on building an internal technology function for daily support and management. It’s very difficult to match the expense with the revenue it supports and at best you are either over or under spending. It will never be “just right”; ask Goldilocks about this!

The alignment between business revenue and technology expense is a key area to watch to keep your business agile and maximize profits, no matter which way the economy is headed!

Read more relevant articles at Cash is King and Strategy!