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As technology continues to transform every industry, companies are making significant investments in technology. Yet many of these investments fl to deliver the expected benefits. Recently, we conducted an analysis of 250 global corporations to determine whether increased technology sping would lead to improved financial performance. Surprisingly, there is no direct correlation between the amount spent on technology and profitable growth; simply investing more does not ensure better financial outcomes.
We have found that there is a strong relationship between effective technology investments and profitable growth if those investments are targeted at specific capabilities enhanced by an optimized operational model and skilled implementation teams. Based on this research, we developed a tool to assess the effectiveness of technology sping in improving corporate performancethe Technology Investment Fitness Index TIFI.
The TIFI includes four key components:
Alignment between IT expitures and business capabilities.
The technological capacity to execute IT initiatives efficiently.
The capability to evaluate the potential value of each IT initiative relative to its risk level.
An optimal IT operating model that sustns results from new technologies.
To develop a strategic technology strategy med at enhancing corporate performance, management teams should consider several pivotal questions:
Investment Focus: What percentage of your investments in IT are dedicated to developing critical capabilities rather than foundational ones? Ideally, foundational investments should not exceed 40 of total sping on any given year.
Organizational Emphasis: Have you allocated significant resources internally for driving innovation andor growth initiatives? Are there appropriate operating processes in place to support these efforts?
Workforce Readiness: Does your team have the right mix of skills, experience, and roles necessary to reach your target state?
Investment Analysis: Are you still using traditional methods to evaluate projects and investments? Can you effectively balance the potential risks versus rewards for specific initiatives?
As technology becomes a cornerstone in every industry, investing wisely rather than merely sping large sums is crucial for success. By focusing on these areas discussed, companies can enhance their TIFI score, ensuring that their technology investments truly impact the bottom line.
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Maximizing Value from Technology Investments: Investing Smartly Instead of Sping Big
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Kumar Krishnamurthy
Principal, Strategy US
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Strategic Technology Investment Analysis Profitable Growth Through IT TIFI: Technology Investment Fitness Index Optimizing IT Expenditures Effectively Aligning IT with Business Capabilities Evaluating IT Projects Risks and Rewards