Wise IT investment brings added strength

Emerging technologies, such as cloud services, mobility and online collaboration, are dramatically improving corporate competitiveness and significant investment can double the likelihood of being highly competitive, from 35 per cent to 74 per cent, a study finds.

However, merely investing in new technologies is not enough to guarantee improved competitiveness, as it requires other strong and complementary business resources in place, according to a research conducted by Insead business school's eLab in collaboration with AT&T.

Senior executives at 225 multinational companies across Europe, the Asia-Pacific region and North America were interviewed.

"Our findings show clearly the direct link between specific technology investments and improved organisational performance when these investments are made carefully," Theodoros Evgeniou, associate professor of decision sciences and technology management at Insead and academic director of eLab, said yesterday.

"We have long known that some technology investments succeed and some fail, but we have never been able to pinpoint why. We are excited by this research because it provides new data that can help business leaders decide how to invest in technology."

The data show that in Asia and the Pacific, companies are investing a much greater proportion of their ICT (information and communications technology) budgets on new technology, and expect to grow those investments more quickly, compared with all other regions.

These companies report that their investment in mobility will grow from 17 per cent three years ago to 31 per cent two years from now, while cloud investment will more than double from 12 per cent to 30 per cent and collaboration tools from 18 per cent to 26 per cent.

In Europe, investment in new technologies will accelerate over the next two years also, though not as significantly as in Asia.

"Increasing productivity is one of the primary challenges facing European companies today," said Andrew Edison, regional vice president for Europe, Middle East and Africa at AT&T. "New technologies like cloud offer great opportunities to do this, which some high performers are demonstrating. However, simply adopting the newest technologies is not the answer, and is in fact a great risk.

"They must sit on top of mature, standardised platforms. Being agile and competitive doesn't mean being the quickest. It means always being able to be quick. The secret is a mature platform and avoiding the creation of 'infrastructure spaghetti' in the rush to adopt the latest tools."

The research team's most important finding was that when companies have strong business enablers and invest more in new technology, the probability of becoming highly competitive can double.

Conversely, when firms with weak business resources make significant investments in new technology, their likelihood of better performance does not increase at all. Their investment in new technology is at great risk of being completely wasted.

Critical insight

Evgeniou said these facts presented critical insight for organisational leaders and chief executives must ask a very simple question before adopting any new technology.

The key business enablers vital to success cover business involvement in technology investment and management decisions, access to technology-focused talent, access to management-focused talent and the extent to which technology, business data and process are standardised, shared or integrated.

The research clearly shows that the most important resource by far is digital maturity.

Companies that have mature digitised platforms and then invest in new technology significantly increase the organisation's likelihood of being highly competitively agile, compared with firms with immature digitised platforms that make similar investments.

Establishing this mature platform is critical for global competition, particularly in Europe.