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Why You Should Consider an IT Audit

February 6, 2012
URL: http://www.entrepreneur.com/article/222585

Q: Does my company need an IT audit? Will it improve our bottom line?

What about it? Nicole McMackin of Irvine Technology.
What about it? Nicole McMackin of Irvine Technology.
Photo© Jeff Clark

A: Business owners looking for practical recommendations to improve or leverage their information technology (IT) and gain critical efficiencies should consider conducting an IT audit. "An IT audit is an in-depth analysis of a company's technical environment, including its existing computer applications, hardware infrastructure, IT plan and IT-related personnel," says Nicole McMackin, managing partner at Irvine Technology, a Santa Ana, Calif.-based company that conducts such audits for businesses around the world. "The audit usually results in a detailed written report and guide that recommend a strategic business initiative pertaining to rightsizing internal and external IT practices and systems."

We asked McMackin for the how, the why and the bottom-line benefits.

When should business owners consider conducting an IT audit?
When IT budgets are out of line with current economic conditions--notwithstanding timely strategic initiatives--and when IT isn't meeting the basic reporting requirements necessary to make tactical decisions in a rapidly changing or competitive marketplace. Another time to consider an audit is when human resource issues cause factions of competing interests that aren't consistent with strategic direction. And also when IT projects consistently overrun budgets or consistently don't meet expectations.

How can business owners figure out when their IT budgets are out of line with economic conditions?
Unfortunately, there isn't a formula. It's more the ability of key executives to evaluate their current situation and adjust their strategic and tactical plans to match. What's needed is a close look at IT expenditures to determine if they are justified. Warning signs are when sales remain moribund, cuts are imminent in other departments or there are overall reductions in the workplace.

How can an IT audit help a company's bottom line?
A company that is well-positioned in its marketplace will often increase its IT budget in a recession to increase its competitiveness when the economy improves. But companies that are not so well-positioned--either because they have little or no expectation for an immediate turnaround in sales, or are unable to secure financing for day-to-day operations--will find that an audit will accurately determine if IT expenditures are sustainable and what should be considered for reduction in spending, mothballing or elimination.

Can a business without an IT department benefit from an audit?
When IT is an unknown entity, that's perhaps the best time for a new or emerging business to conduct an audit. IT audits help answer many questions, including, "Do I need my own IT team?"