It’s budget time again for most Not for Profits, and so a good time to ask an important question: Is your IT an expense or an investment?
The ATO blurred this answer a few years ago when it no longer allowed organisations to capitalise initial costs for cloud-based software implementations. Now, rather than spreading that initial cost over multiple years, organisations need to expense the full amount in the year it is incurred.
Still, in this digital world, IT is often viewed through two lenses: as an expense to be minimised or as an investment to be leveraged.
The distinction between these perspectives can significantly impact an organisation’s approach to IT management and its overall success.
IT as an Expense Perspective
If your organisation views IT as an expense, then it usually leads to cost-cutting measures. Evidence of this approach includes outdated systems, minimal cybersecurity, and limited technical support.
This approach may result in short-term savings but it can also lead to technical debt, increasing cybersecurity and business continuity risks, as well as hindering the organisation’s ability to drive revenue through digital channels.
IT as an Investment Perspective
Organisations that see IT as an investment understand its role as a strategic asset that drives innovation, efficiency, and growth.
Investing in robust IT infrastructure, cutting-edge technologies, and skilled personnel can yield long-term benefits, including improved operations, enhanced security, and better customer experiences.
Balancing Act
In reality, the view of IT as an expense versus an investment is a balancing act. By aligning IT initiatives to business goals, organisations can ensure that their IT spending not only supports day-to-day operations but also contributes to long-term objectives.
I regularly help Not for Profits with decisions about their IT investments. Let me know if you need some help.
P.S. If you found this article helpful, you might want to read these too:
- What if your Not for Profit cannot afford to upgrade your IT systems?
- When is it time to upgrade your system?
Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today, she helps NFPs with strategic IT decisions, especially around investments.
