What are the benefits from investing in IT?   Leave a comment

A recent study of more than 400 global firms found a significant positive effect on profitability from continued investments in information technology.

They even found that a dollar spent on IT would return more in income that the same dollar spent on either research and development or on marketing!

Now, there are several reasons behind this improvement:

  1. virtuous cycle: where firms learn how to best manage their IT investment due to repeated attempts at “doing IT right”. Although its obvious, but they take advantage of the opportunity to learn from any failures in upgrading, expanding and improving their IT portfolio over a period of time
  2. learning: while closely related to the “virtuous cycle” reason, this explanation relates to an improvement in the use of information. That is, to improve customer satisfaction, to improve loyalty, to open up opportunities with respect to cross-selling, and to reduce marketing and selling costs. All through the better use of information.
  3. shift to a revenue focus: while initial IT investments are usually focused on cost reduction through automation, those firms that are doing better are doing so due to a revenue growth bias of their IT investments.

One nuance that was discovered related to the nature of the industry. For those that rely on human capital (ie, service industries) the effect was greater than for physical capital intensive industries (ie, manufacturing).

As their are tangible benefits from increasing the level of IT investment in your organisation, the important point that must not be lost – is that IT investment improves your use of information.

And improving your use of your information requires some critical thinking and a strategic approach to reap the potential rewards.


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Posted January 17, 2017 by terop in ICT Strategy, Technologies

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