The Difference in Cost Perception Between Manufacturing Products and IT Investments

公開日: 2024-02-10

This article points out that while many companies are sensitive to manufacturing costs, they often lack cost management for IT investments, and emphasizes the importance of properly managing IT investments as "costs." It also proposes specific measures for efficient operation of IT investments and strengthening company-wide IT strategy and governance.

It’s Time to Reconsider Our Perception of IT Investment Costs

Introduction

Many companies are extremely sensitive to the manufacturing costs of their flagship products. They meticulously check factors that affect manufacturing costs, such as rising raw material prices or labor costs, and spare no effort in cost reduction.

However, what about the perception of IT investment costs? In some companies, cost management in this area may be insufficient.

Differences Between Manufacturing Costs and IT Investments

Direct Impact vs. Indirect Impact

Manufacturing costs directly affect product prices and profits.

If raw material costs rise, the impact is immediately reflected in product prices.

On the other hand, IT investments have a stronger aspect of “investment” for future operational efficiency and service quality improvement, and rarely have an immediate impact on company profits.

Structural Issues in Organizational Management

There may also be structural issues in organizational management where IT department costs are separated from those of other departments.

When manufacturing department and IT department costs are not managed centrally, it is common for each department to conduct its own cost management. This can lead to a dulled sense of IT investment costs.

Importance of IT Investments

As the strategic importance of IT in the manufacturing sector increases, it is necessary to properly understand and manage IT investment costs not only from an “investment” perspective but also from a “cost” perspective.

Here are some specific measures.

Specific Measures for Efficient IT Operations

Transparency in Cost Management: It is important to understand IT department costs in detail and make them transparent, just like other departments.

This makes it easier to develop specific cost-reduction measures.

Clarification of Return on Investment (ROI): To clarify how much return IT investments generate, it is necessary to calculate ROI and evaluate it regularly.
Review of Unused Assets: If there are unused software licenses or hardware, it is important to review them and reduce unnecessary costs.
Utilization of Cloud Services: By utilizing cloud services, resources can be flexibly adjusted as needed, reducing unnecessary costs.

Strategic Management of IT Investments

To strategically manage IT investments, it is important to first view IT investments from a company-wide perspective. More effective IT operations can be realized by developing investment plans in collaboration with various departments, not just the IT department.

Formulation of Company-wide IT Strategy: It is important to formulate a company-wide IT strategy in cooperation with each department and move toward unified goals.

Strengthening IT Governance: To maximize the effect of IT investments, it is necessary to strengthen IT governance and clearly define investment evaluation criteria and processes.

Summary

Reconsidering the cost perception of IT investments in the manufacturing industry is very important for enhancing corporate competitiveness.

By properly managing IT investments as “costs” just like manufacturing costs, efficient operations can be realized, contributing to improved overall company performance.

By strategically viewing IT investments and managing costs from a company-wide perspective, companies can build a foundation to support future growth and development.