Technology Investments and Shareholder Value - A Consulting Perspective

Executive Summary: As per a recent Computerworld  survey , the Information Technology (IT) spending is expected to go up in 2015. The major areas of spending are expected to be in Security, Mobile, Business Analytics and Cloud. As organizations across industries dabble with the IT budget for next year, there are few factors they should consider before deciding the final budgetary amounts. This post is an attempt to discuss those factors that drive the IT decisions. Need for IT investments: Firms invest in IT primarily for two reasons - 1) to achieve Strategic depth 2) to Improve productivity. The priority for these two during the budgetary decisions varies depending on the business cycle and other macro economic factors. When an organization has high growth plans and the broader economy is doing well, the firm is more likely to favor IT investments that increase strategic depth against its competitors. When the organization is operating in an mature market or is facing head winds i...

Insurance companies, banks, retailers - the common theme among all these sectors is the rapid scale of changes in the competitive landscape. If you own a small business fulfilling the grocery needs of the consumers in a lovely neighborhood of Hoffman Estates in Illinois, your business is disrupted. Online retailers can deliver groceries to your customers within a day or two and possibly at a lower price than you. Traditional banks serving local consumers can no longer limit their competitive research to their local areas. Insurance companies have to deal with never ending regulatory requirements. The competition has gone global and can come from all corners. These disruptions mean companies have to continually update their target market segment, understand the evolving needs of the consumer, translate his/her needs into desired features, develop products and services, modify/build new core competencies, assess their global competition, keep their costs down, develop the value proposi...