Study Suggests Key Ways for IT to Drive Competitive Advantage

Last month the results of a study done by the Hackett Group, a strategic advisory firm, suggested that IT really can be a strategic tool to companies and isn't just a commodity. Based on benchmark data from over 2,100 companies, those that led in IT operations spent more 7% more per end user than the average company. For the average Fortune 500, that would mean an additional $29 million a year.

However, the investment seems to pay off with lower average operational costs of $134 million a year, with IT playing a critical role in attaining the gains, so the total savings is significant. There are five key strategies that the best in class companies use:

• Streamline the number of ERP and other applications and standardize data so you don't spend too much time and money trying to get everything integrated.


• Do risk/reward analysis to find the areas where the greatest gains exist. Be ready to implement process reengineering at the same time if you don't want to simply pave over the cow path.


• Maximize value at the lowest achievable cost rather than simply cut costs across the board. If you just spend less, you might also end up sending less in the areas that can provide real return.


• Make data available in a coherent way to those who aren't computer experts. Let management have access to information that they can use to direct better performance.


• Outsource only to improve effectiveness, not to increase efficiency. In other words, outsource IT systems and functions to increase how well you do something, not how inexpensively you do it.

According to Hackett, these principles can keep executives from seeing IT as nothing but a cost that needs to be trimmed without regard for wht it can provide. If you're interested in more details of teh study and don't mind putting yoruself on a mailing list, use this link.