Technology Investments Yield Higher Profits

MIT Sloan School of Management researchers on Friday released an IT management book based on a global study of 1,800 organizations that demonstrates what many solution providers and integrators have known for years: Smart IT investments equal strategic business assets to a company and increase margins, drive revenue growth and increase efficiencies. The business case for continued spending on IT infrastructure can’t be overstated. Peter Weill and Jeanne W. Ross, the authors of “IT Savvy: What Top Executives Must Know to Go from Pain to Gain,” argue that best practices by IT and non-IT managers — including how they apply technology and address past mistakes in implementations, streamline processes and make them repeatable, and continue investing in IT – have proven to propel a business’ core objectives forward. Among their research findings: • Firms with above average IT spending and IT savvy have 20 percent higher margins • Firms with above average percentage of shared applications and IT savvy have 30 percent higher return on assets • Firms with above average IT infrastructure spending and IT savvy have revenue growth three percentage points higher than their industry average

From a solution provider perspective, this is a powerful selling point to take to potential and existing customers, especially in today’s economic climate when organizations are more wary than ever to loosen their wallets. But when the sales conversation shifts from a pitch for products and technology features to revenue generation, inventory management, cost-containment, time to market and profitability, it becomes compelling. By making the case that spending on IT will increase profits – especially as the economy begins to turn around – solution providers turn themselves into business advocates for an organization, the type of relationship more likely to endure than one spawned from a product transaction.