Because nothing is certain 
Still digging out from taking Thanksgiving week off – but as I’ve been catching up on my reading this article in Monday’s Wall Street Journal certainly caught my eye. It is an excerpt of an interview with Dr. Peter Weill, chairman of the MIT Sloan School of Management’s Center for Information Systems Research. I found this section especially interesting:
BUSINESS INSIGHT: You’ve done some research that suggests IT-savvy companies are more profitable than others. Tell me a bit about that.
DR. WEILL: The IT-savvy companies are 21% more profitable than non-IT-savvy companies. And the profitability shows up in two ways. One is that IT-savvy companies have identified the best way to run their core day-to-day processes. Think about UPS or Southwest Airlines or Amazon: They run those core processes flawlessly, 24 hours a day.
The second thing is that IT-savvy companies are faster to market with new products and services that are add-ons, because their innovations are so much easier to integrate than in a company with siloed technology architecture, where you have to glue together everything and test it and make sure that it all works. We call that the agility paradox—the companies that have more standardized and digitized business processes are faster to market and get more revenue from new products.
Those are the two sources of their greater profitability: lower costs for running existing business processes, and faster innovation
Wow – 21% more profitable. One could argue that the increased profitability is a result of operational excellence across the board, with “IT savviness” as a function of that. Or one could argue that leveraging IT helps the company identify and react to new business opportunities more quickly, so it is a direct contributor and enabler of the increased profitability. Dr. Weill has a book out (IT Savvy: What Top Executives Must Know to Go From Pain to Gain) that goes deeper into his research on the topic and the article did its job, I am planning to buy it. If anyone has read it, I would appreciate your feedback and comments!
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T – excellent post. While it is not surprising that poorly managed companies will most likely have poor IT, it’s probably also true that companies that are “IT Savvy” are also well managed generally. The difference is often philosophical – a savvy IT operation rarely is so simply because of one brilliant CIO, it’s more likely its because the overall management of the company BELIEVES in the value that IT can deliver to an organization if it’s treated strategically. On the other hand, weaker management that treats IT as a necessary evil and only invests post mortem or via mandate (unfortunately the majority) is ultimately doomed to fail. In many ways, it’s self-fulfilling.
—-Thanks Steve – Agree 100%. It will be interesting to read the book and get more details behind the research, see what both the qualitative and quantative research shows.
[...] subscribe to the RSS feed for updates on this topic.Powered by WP Greet BoxTerri McClure wrote an excellent blog yesterday regarding the fact that “IT savvy” companies are 21% more profitable than [...]
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