Is it possible to calculate just how much money you’ll make from business technology investments? Management always wants the answer to be ‘yes’, while simultaneously wanting you to spend as little as possible. New research from IBM suggests those investments can pay off, but the advantage remains with early movers.
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For its Reinventing Australian Enterprises For The Digital Economy report, IBM commissioned the National Institute of Economic and Industry Research (NIEIR) to compare the performance of companies in seven key market sectors: retail, telecommunications, health, higher education, mining, financial services and public administration. For each, two scenarios were constructed: one where a fictional but typical company continued with its current approach, and one where it invested in technology improvements.
The differences by 2025 were quite dramatic. Taking the telecommunications example, the report suggests a telco which has invested in analytics and value-added services will be twice as profitable and have an additional $54 billion in market capitalisation.
You could question many of the assumptions made in the report. For instance, the research assumes that the proportion of the overall economy that each of the different sectors represents will remain the same. That won’t necessarily be the case if any of the sectors undergoes a radical transformation. It also seems likely that if the report had found minimal differences arising from technology investments, we’d never have seen IBM publish the report.
However, if you’re looking for data that could convince your managers of the virtues of investing more in technology rather than sticking to ‘lights on’ mode, this might be a useful resource — especially if you work in one of those focus sectors.
That process of convincing someone is likely to be more difficult the larger the company, a point that was made repeatedly at the media launch for the report. “We see enterprises sitting on the sidelines and saying ‘We think we’re well enough prepared’,” IBM ANZ managing director Andrew Stevens said. “It’s not an issue of technology, because the technologies exist; it’s about the application of those technologies.”
Reaction times are faster in smaller organisations. “SMEs are far more switched on than the big guys,” said Phil Ruthven, chairman of IBIS World. “The big guys have the sense they have to be part of this revolution, but they’re not comfortable with how they should get involved.”
Not investing now saves expense, but risks market share in the long run, Stevens suggested. “It’s a choice between a virtuous circle of growth and a rapid decline into insignificance. Our research says that companies which take early steps and invest will be in a position to out-invest the others as new technologies emerge. That compounding effect is at the heart of this.”
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