IT Savvy: 20% Higher Margins From MIT
MIT Sloane researchers have released a new book, “IT Savvy: What Top Executives Must Know To Go From Pain To Gain“ by Peter Weill and Jeanne Ross, describing what non-IT business leaders need to know to make IT part of the solution rather than part of the problem.
”Firms with above average IT spending and IT savvy have 20% higher margins, those with an above average percentage of shared applications and IT savvy have 30% higher ROAs, and firms with above average IT infrastructure spending and IT savvy have revenue growth three percentage points higher than their industry average.”
They define three major points that must be addressed:
1. Actively choose how to spend IT dollars and assign clear decision rights and accountability…. and eliminate information silos and unscalable projects
2. Automate core business processes: business innovation and execution ”Start by identifying what’s not changing. The core business processes in your firm that are not changing define a reliable set of reusable IT-supported data and business processes. The digitized platform standardizes and automates these processes, thereby increasing reliability, decreasing operational cost, and ensuring quality.”
3. Exploiting the platform for profitable growth: “Once those changes are made, the addition of a new feature or geographic region is much faster because companies don’t have to spend time integrating a new product or service with the silos that exist. Instead, it bolts on like a Lego block, and with this approach, you get faster time to market on products and services which leads to higher revenue growth.”
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