The economics of IT are rooted in a firm’s ability to match finite IT resources to business needs and requirements. CEOs should view the company’s IT spend as a percentage of revenue as being merely the first step in determining what is an appropriate level and mix of IT spending for achieving their strategic goals. To understand IT’s ability to deliver business value to the enterprise, CEOs should focus on what Forrester describes as innovation capacity: the potential for the IT function to support new products, processes, and opportunities. Successful companies will grow their IT innovation capacity by focusing on how IT is sponsored, operated, and governed.
