Technical Assessments to Align Your Technology Investments with Business Requirements
Multiple recent studies show no direct causal relationship between the size of investments and improved operational efficiencies and effectiveness. Put simply, spending more does not lead to better performance. However, when technology investments are aligned with an organization's mission and key process areas and are supported by the right operating model and implementation skills, there is a strong correlation with improved performance.
Information Technology The pervasiveness of technology today means that companies need to make continuous investments in IT to gain operational efficiencies and improve customer service. Yet based on our research, many are not happy with the returns they get on their IT spending. Companies often go in believing that enterprise-wide IT investments such as new enterprise resource planning (ERP) or customer resource management systems will solve their problems, but these projects ultimately fail to either solve problems or deliver value.
A central mistake is not aligning the technology investments to targeted capabilities. Our work with clients frequently shows disconnects between the ways a company differentiates itself in the market and what the new technology enables it to do. Despite corporate governance and approval processes, companies often get distracted by promising new technology, allowing this disconnect to grow.
We recently analyzed 250 publicly traded global companies in the engineering, manufacturing, automotive, and consumer packaged goods (CPG) sectors, looking at their IT investments and their overall financial performance to see if we could find meaningful relationships. Specifically, we looked at their overall spending on IT and their profit growth as measured by earnings before interest and taxes (EBIT) from 2011 to 2013.
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