The number cruncher's guide to delivering IT value

It doesn't matter if you are a cost centre or a profit centre your costs are scrutinised mercilessly

I'm a qualified accountant. I even sometimes read the Accountants Journal - there, I've said it!

As an accountant and a CIO I am intrigued by the debate within the IT community about how businesses should account for IT. Should it be a cost centre? A profit centre? Or a stand alone, semi-independent business unit? From what I can tell, the argument is that how an organisation chooses to do its accounting determines, or is an indicator of, how IT is seen strategically in the organisation. The logic seems to be that if you want to be an IT team that is strategic and adds value, then you need to be a profit centre as a minimum, or better yet a semi-autonomous business.

If you find yourself as a cost centre, watch out, because this means that you are seen as a non-value addition and simply a cost of doing business. It gets worse. As a cost centre the only questions that are asked of you is how can you reduce IT costs even lower than they are now. You are never asked about how IS can contribute to the strategic value of the organisation by driving revenue growth or helping to open up new markets.

The recommendation is that you get out of this cost mentality by becoming a profit centre or independent business unit. Charge the business for your services, create a profit, control your own balance sheet and then the business will begin to see you as adding value. As a result, the focus will shift from how can we drive down IT costs to how can we maximise the IT profit and strategic value?

My experience is that this whole debate is spurious. If I use The Warehouse as an example, it doesn't matter if you are a cost centre or a profit centre your costs are scrutinised mercilessly. How the accounting works does not shield the profit centres at all. I admit that The Warehouse is particularly skilled at cost management. However, every organisation I have worked for or worked in for any length of time is the same. Costs are scrutinised in detail. I hear some of you saying that this cost focus is counter productive, as a company cannot cost cut its way to greatness. This is true enough, however no organisation ever became great by being lazy about its cost control.

To me this whole cost centre/profit centre discussion is a waste of time. In the complex world that we live in value is primarily about perception, not accounting numbers. If you are seen as a non-value addition cost of doing business, your focus should be on understanding why that is and putting in place an action plan to correct it. Most likely the issue will be in one of three areas, or a mix of all three:

-- The services you are delivering are not meeting the service level expectations of your business. This can be both under delivery of service and over delivery of service which embeds higher costs.

-- You are seen as slow and bureaucratic in working with your colleagues to plan and deliver changes. That is, you are not agile enough.

-- And finally, when you do deliver, the projects are late, over budget, cause disruption on going live and do not deliver the planned benefits (or some combination of these).

Delivering solutions to these three issues is core to a CIO's job. If you have these issues, or are perceived to have these issues, it means you are perceived by your colleagues as not doing your job properly. Mucking around and arguing about how the accounting works is not going to solve this problem. The only resolution to these issues is solid, customer-focused delivery day after day.

Owen McCall is CIO of The Warehouse. Reach him at and through his blog:

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags CIOsIT spendingaccountingIT costs

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Owen McCall

Owen McCall

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Bitdefender 2019

Bitdefender solutions stop attacks before they even begin! Get cybersecurity that 500 MILLION users already have and trust.

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?