Keep Strategy in Sync

Technology investments and business processes must be in accord.

What is your complementary technology investment strategy for next year? Technology investments that are not in accord with business goals are doomed to failure. The converse is true as well. Setting business goals without considering what technology investments are needed to support those goals will also leave you with your wheels spinning as competitors move ahead.

According to Erik Brynjolfsson, director of the Center for eBusiness at the Massachusetts Institute of Technology, for every $1 in IT capital investments, companies spend on average $9 to $10 on the intangible technological and organizational assets to accompany that capital spending. However, capital assets are much easier to measure (you know what you spend for a desktop computer or a server), while the intangibles of restructuring a business process, training or time lost in technological transformation are much more difficult to assess. Getting a handle on those intangibles may spell the difference between success and failure in your IT projects next year.

/zimages/5/28571.gifClick here to read Eric Lundquists column entitled "How to Spend Wisely".

Thinking of forsaking old paper-based travel-and-expense reports in favor of digital ones? Rather than fixating on which of the many digital systems is best for your company, spend time (maybe five to 10 times the amount you spend on product selection) figuring out what the change will mean for your company in terms of organization and business process.

Thinking of making a really big change, such as moving all your business processes to a portal to provide a real-time view of how your business is performing? Make sure you spend plenty of energy planning for the business process associated with the change as well as the particular portal product you will select.

Brynjolfsson was speaking about the process of business transformation and the matrix of change during a recent breakfast I attended, hosted by MITs Center for eBusiness. The timing seemed appropriate as research organizations such as Meta Group have started issuing their spending forecasts for next year.

Meta forecasts IT spending will increase by 1 percent to a growth rate of 4 percent. I think that modest growth forecast means three things for IT. First, you must make sure your projects are successful. Second, the best place to find technology investment money will be in further controlling your system maintenance and administration costs. And third, outsourcing will be an increasing competitor to your internal operations.

Next Page: Anticipate All the Changes