Gartner: Strategic IT spending can boost midsize firms

IT staff at midsize companies can improve the profile and credibility of their departments by better aligning technology spending with business needs, Gartner said Wednesday.

Currently only one-third of IT spending at midsize companies directly improves business performance, while two-thirds is spent on more stealth infrastructure and utility application areas, such as networks, payroll, and security, Gartner said.

The problem for IT staff is that business executives often overlook the benefits of these investments, which could lead them to assign lower priorities and budgets to their IT departments, Gartner warned.

The researcher suggested that IT managers channel more funds toward meeting business needs, while at the same time improving their communication with executives about the importance and value of planning for infrastructure improvements.

"Quite often IT staff report to a CFO or COO who looks at IT as an expense item and that can be a challenge," said Raymond Laracuenta, managing vice president at Gartner.

The recent economic cycle and its focus on return on investment has somewhat tarnished the image of IT departments, Laracuenta said. Since investments are often targeted at maintenance and security areas, their value is not always realized, he added.

By becoming more engaged with the company's overall strategy decisions, IT staff can put themselves in a better position to align technology investments with business priorities, Laracuenta said.

He recommended that IT managers look at what other leading companies in their industries are planning in terms of IT and develop a list of best practices. That way, they are in a better position to drive the company's strategy, he said.

Gartner predicts that IT spending in the small and midsize business market will increase dramatically in the next few years.