Emergic: Rajesh Jain's Blog

Emergic: Rajesh Jain's Blog header image 2

IT Productivity

March 18th, 2003 · No Comments

McKinsey Quarterly writes about how companies can maximise their gains from their IT spends:

The first is to identify the productivity levers offering the greatest opportunity for competitive differentiation: Targeting the few specific levers that could well create a competitive advantage produces results more reliably than striving for improvement everywhere. The most promising IT initiatives usually evolve along with related business processes and build on an organization’s operational strengths. When taking this route, companies should beware the siren song of IT success stories from other industries, because the levers that matter in one sector may be irrelevant in another.

The second priority is to master the sequence and timing of investments. Many technology-based advantages, particularly those that don’t involve fundamental business changes, have a limited life because they diffuse rapidly through the sector. Timing is therefore critical if IT investments are to generate returns. Companies that get it right develop a clear understanding of how IT-enabled competition is evolving in their sectors. Investing ahead of the pack makes sense if the technology is hard to mimic, continues to yield benefits even if imitated, or offers great near-term value. Otherwise, companies can often hold down their spending and boost their returns by diving in only after others have made investments–and mistakes.

Tags: Management

0 responses so far ↓

  • There are no comments yet...Kick things off by filling out the form below.

Leave a Comment