| With Mohammed Wadi, a senior business advisor with ETM(e-technology management), a strategic advisory firm that provides research, benchmarking, and business transformation services that enable world-class performance across selling, general & administrative (SG&A) and supply chain activities. wadi is a co-author of new research indicating that companies that are top performers in IT Business Value Management outperform their peers across a wide range of financial and profitability metrics, including net profitability, return |
| Question: With IT’s reputation as a cost center, were you surprised to find a clear connection between investment in IT and overall financial performance? |
| Wadi: If there was no correlation between how well you manage and allocate IT investment and your financial performance, that would be really shocking, considering that IT is one of the biggest areas of investment for most companies. |
| Question: So maybe it’s more surprising that IT has developed this reputation as a cost center? |
| Answer: You can’t have an undifferentiated view of IT. There are going to be certain IT services that are truly commoditized and that everybody has to have. But at the end of the day, you don’t have to look very far to see that most business process innovation is in some shape or form IT-enabled. Also, most continuous improvement initiatives are IT-enabled as well. If you distinguish between the bits and pieces that are utility and others that are differentiating and value-creating, I think that is closer to the mark. |
| Question: One of your findings was that companies classified as top performers spent substantially less on infrastructure and utilities than their peers, leaving room for more discretionary projects geared toward business improvement. Are they more able to clearly see the connection that you just mentioned? |
| Answer: I think it comes back to the recognition of what drives the value for your organization. If you are dominated by nerds, then you may think because you’ve rolled out Vista you are in good shape. But if you are more pragmatic and aware of where value is really created, you may push the lifecycle of XP, recognizing that if there is no business process innovation that is critically independent on that level of infrastructure investment, then why bother. Such organizations can clearly see the distinction between where the value is created and what is just foundational. |
| "There are some things that are inherently more complex around IT investment. How are you going to justify security, for example? It’s hard to put a number on reduced risk as a result of security-related investment. But it doesn’t mean you can’t quantify it and you can’t rationalize it." |
Having said that, there may be some industries where a business process innovation is predicated on an underlying technology innovation. Maybe you need to be on the leading edge with wireless technology adoption in order to drive change and innovation. I can see how in financial services, they needed to be on the leading edge with some of the Web-based technology to really bring their service delivery model online. Certainly there, the underlying technology and infrastructure investment and the business process innovation were closely interrelated. But in other cases, you can do a lot of business process innovation with tried-and-tested technology. Innovation is in how you apply the technology, rather than in the technology innovation itself. |
