Course Overview
Course Overview 
Magnitude of the dollars spent on IT
If general managers are involved in IT, IT enables business initiatives such as:
If general managers are not involved in IT, a number of problems emerge:
On average, a company's annual IT operating budget represents 5% of revenues
On average, capital IT assets are worth about twice the IT operating budget
How much do organizations spend on IT?
What are the major IT cost drivers?
| IT Salary & Wages: | 45% |
| Hardware: | 25% |
| Software: | 20% |
| Administration: | 10% |
What industries have the largest and smallest % of IT budgets?
What are some possible explanations for these differences?
Percentage of Revenue Spent on IT by Industry
| INDUSTRY | % REVENUE SPENT ON I.T. |
|---|---|
| Aerospace | 4.76 |
| Airlines | 11.53 |
| Automotive | 3.6 |
| Banks | 4.18 |
| Beverages | 1.01 |
| Broadcasting | 4.54 |
| Chemicals | 4.18 |
| Financial Services | 3.60 |
| Hotels | 4.61 |
| Food Processing | 1.80 |
| Government Agencies | 9.01 |
| Manufacturing | 4.90 |
| Medical Institutions | 1.00 |
| Natural Resources | 1.87 |
| Nonprofit Organizations | 8.00 |
| Paper & Forest Products | 1.80 |
| Pharmaceuticals | 4.40 |
| Publishing | 4.54 |
| Railroads | 9.15 |
| Retail (non food) | 8.00 |
| Steel Producers | 3.39 |
| Transportation/Trucking | 9.01 |
| Universities | 7.93 |
| Utilities | 3.53 |
General Managers must manage IT to ensure value for money by developing the following IT competencies:
Business runs on information, information runs on IT
IT Can be Used to Create a Competitive Advantage:
Re-design Business Processes:
Purchase Order
Receipt Invoice
Global Expansion:
Information Technology is too important to leave to the technologists!