IT spend: it's not how big it is, it's what you do with it

The amount of money spent on IT in the manufacturing sector is set to outstrip investment in plant and machinery (http://www.silicon.com/a38872 ). Should we care? In some ways, no. The amount of money spent doesn't always give the full picture.

The latest figures, from consultancy Bourton Group, show that increased IT budgets to cope with the millennium date change have carried over from last year, inflating post-2000 spend.

This kind of increase isn't always a good thing, but obviously can be if an IT department has been historically under-resourced, or technology is being used to grow a business.

At the same time, the research also shows the manufacturing sector is beginning to take ebusiness seriously, and this is to be welcomed.

These metrics are important for another reason - they highlight the broader issue of just how we measure the effectiveness of IT and how we make decisions about deploying it.

Former IT director and Butler Group associate Paul Strassman has strong views on this very subject, and dismisses metrics such as IT spend per capita and IT spend in relation to revenue (http://www.silicon.com/a38862 ).

He moots another metric which can be used - namely the amount spent per knowledge worker.

But this too has its problems, as he explores. If a manufacturing company sees that it's spending £10,000 per knowledge worker and only £1,000 per production line employee, that might convince it to spend proportionally more on plant and machinery. But that would ignore the competitive advantage IT investment can bring about.

Instead, changes in the amount of money spent on IT - whether up or down - should be made in the context of companies understanding what their knowledge workers do, knowing what they want out of IT and forecasting likely return on investment.

It's not how much IT you employ - it's what you do with it.