Every firm spends loads of money on IT, why do only some (Walmart, FedEx) get a clear advantage from the money that they spend? A team of researchers lead by Dr. Gautam Ray talked with 104 insurance firms in order to get to the bottom of this question.
Here’s what they found: the key to getting the most out of your IT investment is to make sure that you have what they call shared IT-Business understanding. This means that business line managers and IT managers have to have shared domain knowledge and a common understanding about a specific business process and how IT can help make things better.
This shared IT-Business knowledge can’t be bought. It develops over time. Firms that have this knowledge are able to achieve superior customer service performance even though the IT tools that they are using are also available to their competition.
The study also showed that technical IT skills by themselves don’t really provide any distinctive advantage (sorry that you worked so hard to get that certification). Oh, and more IT spending does nothing to boost customer service performance.
In the end it comes down to not how much you spend on IT, but rather how your IT resources are deployed in a manner that best meets your firm’s needs. This is how IT provides a true competitive advantage.
Has your spending on IT been going up? Do you measure the benefit that you get from your IT spending? Do you feel that you have good IT-business knowledge being shared in your firm? If so, how was it developed? Leave me a comment and let me know what you are thinking.