Information Technology Reference
In-Depth Information
think of themselves as support staff. They do not understand that even though they are
not in the frontlines actively seeking customers and contracts and making money, the work
they do affects everyone in the company. A good IT department keeps a company competi-
tive, and since almost everyone makes use of IT, it has become a necessity to drive your
organization.
IT is critical to business growth because it provides scalability and the ability to manage
increasing complexity in an organization as well as the business model and its processes.
But despite this, some professionals still struggle to grasp the importance of IT, think-
ing that it is a utility commodity such as electricity; it is important for everything to run
smoothly, but it has no real impact on the business and provides only minimal competitive
advantage. But studies show that companies can really benefit from intensive IT implemen-
tation and differentiate themselves from the competition. It would not be right to use exam-
ples like HP, Microsoft, and of course Google because they are actually IT companies. But
this effect can be seen in companies like FedEx and Amazon. They have set themselves
apart from the competition. FedEx uses IT for package tracking and customer satisfaction,
and Amazon started out as a simple e-commerce portal that became so engrossed with IT
that it is now a major IT service provider.
However, there is no systematic correlation between IT investment and the company's
performance. It is entirely possible to spend a lot of economic resources in IT but see no
significant improvements in operations or increase in operational capacity. That depends
upon how the company leverages its IT resources. As demand for a company's IT resources
increase, so does the demand for it to step up its game in terms of services and even contrib-
ute to operational optimization and the company's bottom line.
What exactly is a bottom line? If you are an executive concerned with the profit and
expenditures of a company, then you know exactly what it is, but if you are an IT profes-
sional or even a rank-and-file employee, chances are you think it has something to do with
profit margins.
Well, a bottom line is similar to a top line, and both describe the financial status of an
organization. They are so named simply because of their positions on the income statement
or profit/loss accounts. The top line is the total income/revenue or the total corporate sales
or gross income generated by the business for a certain period, while the bottom line is the
value after all the expenditures and liabilities have been subtracted from the top line. In
other words, the bottom line is the total takeaway of the company, which means a big bot-
tom line is good while a small one is bad. It's as simple as that.
When trying to increase the top line, a company needs to step up whatever activities it
has for income generation, and this differs depending on the type of business. But increas-
ing the bottom line would be similar for most companies. To increase the bottom line, an
organization must decrease expenditure anywhere it can. And for organizations with a
large IT department, especially one operating its own data center, one of the largest expen-
ditures is data center maintenance. The total cost of ownership (TCO) of a data center
often eats up a substantial chunk of a company's budget pie.
That is why most companies with an extensive IT budget have looked to their data cen-
ters for ways to cut costs and increase their bottom line. And the best way to do it without
sacrificing IT functionality would be to go lean, cut off unnecessary operations, or change
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