Tech Investments Take Time To Thrive

Tech Investments Take Time To Thrive

Helen D'Antoni, Contributor

February 25, 2005

3 Min Read

Regardless of how you look at it--collectively or by revenue--companies generally are optimistic about revenue growth and business prospects in 2005. But does that translate into increased technology investment?

A typical company with annual revenue of $1.56 billion will invest 8% of revenue on IT products and services this year, according to InformationWeek Research's Outlook 2005 survey. That's an average of $125 million. Of the 300 business-technology managers interviewed for our Outlook study, more than half feel optimistic about the future based on their companies' commitment to IT initiatives planned for the first quarter.

chart -- Payback TimeframeThere's no universal formula to ensure the success of IT investments. Implementing standard frameworks such as Balanced Scorecard, IT Infrastructure Library, and Six Sigma provides workable guidelines for making business processes more efficient.

Yet companies are optimizing their technology assets to help achieve greater top-line revenue and bottom-line profits. In fact, 80% of business-technology managers surveyed intend to drive growth by simplifying business processes. Improving security procedures, providing tools and services that enhance productivity, establishing real-time information processes, and improving the usability of business apps and software quality are priorities.

Another objective: gaining better return on IT capital investments. Companies generally don't expect immediate returns from tech initiatives. Most respondents expect payback from IT projects in one to two years.

If your company has achieved an IT windfall in the past 12 months and has annual revenue of $500 million or more, nominate it for this year's InformationWeek 500 study at [email protected].

Helen D'Antoni,
Senior Editor, Research
[email protected]

chartRisk Assessed
Does your company have a consistent framework for assessing the business risk of IT projects and initiatives?

Besides establishing payback tipping points for IT projects, companies in InformationWeek Research's Outlook 2005 study also are taking steps to understand the potential hazards of IT initiatives. For many, it's a standardized procedure. Three in five of the 300 sites surveyed have a consistent framework for assessing the business risk of IT endeavors.

Formal Reviews
Will performance metrics increasingly be used to evaluate IT investments in 2005?

Balanced Scorecard, Six Sigma, and ISO 9000 are among the most popular guidelines for improving the strategic performance of existing technology and business processes. The larger the company, the more likely performance metrics are being used to evaluate IT investments. Only a quarter of companies we surveyed with annual revenue of less than $100 million use standard performance frameworks, far fewer than companies with annual revenue of $100 million or more.


Greater Returns
Will gaining a better return on IT capital investments be a business priority for your IT division in 2005?

IT staff will be hard at work obtaining the most from IT products and systems this year. While growth in IT spending is expected, business-technology managers say gaining a better return on IT investments is a business priority for their tech divisions in 2005. In fact, companies of all sizes say increased returns are a business objective for their IT personnel.


Productivity On The Rise
Will your personal productivity rise in 2005 because of better information technology?

It's no secret why increased productivity remains top of mind for business-technology executives.

It holds the promise of lower expenses, higher revenue, and increased profits. Three-quarters of companies say boosting worker productivity across the enterprise is a 2005 business priority. Among the business-technology managers we surveyed, nearly 70% expect their personal productivity to rise this year because of better IT products and services.


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