Before any technology is fully introduced to any industry sector, managers and C-suites executives vet the ideas based on their expected ROI (return on investment). However, most initial IT investments focus on those that will quickly pay for themselves through cost and other efficiency gains.
This tactic allows companies to soak up initial investment and minimize their capital expenditures. Smarter investments could lead to considerable cost and labor savings, however, if the investments improve business outcomes and processes.
Some of the most profitable investments in the IT industry are security advances, data and analytics, and automation strategies. Additionally, the growing cloud-first technology suite is one of the most promising aspects of the industry, especially with the growing reliance on information and remote access.
The primary cost savings from investing in new technology lie in automating or streamlining certain processes. However, to say that this would directly improve savings and cut costs would be an oversimplification. In most situations, the staff that was part of the process that became partially or fully automated is usually absorbed into other vital processes. This way, companies keep their experienced staff and can further improve efficiency and productivity, driving up profit and improving product or service quality.
A quick-return investment can improve the overall business model by creating a feedback loop where a favorable investment can further additional ones. Even if the subsequent investment doesn’t yield as much of a positive result, it is still overall net positive. The added technological advancement accrued through these investments will then continue to improve the company’s productivity in the long run.
According to research done by the Hackett Group, the most effective strategy to lower costs has been using seed money to invest and develop into technologies alongside beneficial investment and efficiency strategies. By using the seed money to purchase technology and improving processes to drive costs down and improve productivity, these companies can then reinvest their savings into another innovation. It should be noted that this method works mainly due to positively aligned communication between stakeholders and IT leadership.
The Hackett Group has published that the top-performing IT companies invest only 3 percent more in new technologies, but yield an average of 29 percent more savings from reduced labor, overhead, and outsourcing costs. This data is evocative of the need to streamline the investment structure to look beyond pure savings to improve overall efficiency and unlock the potential advantages of the new technology.
The overall relationship between actual spending and effectiveness or productivity, however, has been determined to be loose at best. The most likely factor is the diminishing returns of cost savings and the increased effectiveness of every new piece of tech. Some industries also require significantly more investment to achieve the same level of efficiency and savings gains.
One of the key takeaways from the role of new investments is to look beyond the possibility of saving more money by investing some of it into new technologies. Innovation can often enable employees to improve the value of the company significantly by ensuring a better business outcome due to accumulated knowledge and experience. By boiling down the risk assessment of an investment simply to its cost, a company can miss more than half of its potential value.
This tactic allows companies to soak up initial investment and minimize their capital expenditures. Smarter investments could lead to considerable cost and labor savings, however, if the investments improve business outcomes and processes.
Some of the most profitable investments in the IT industry are security advances, data and analytics, and automation strategies. Additionally, the growing cloud-first technology suite is one of the most promising aspects of the industry, especially with the growing reliance on information and remote access.
The primary cost savings from investing in new technology lie in automating or streamlining certain processes. However, to say that this would directly improve savings and cut costs would be an oversimplification. In most situations, the staff that was part of the process that became partially or fully automated is usually absorbed into other vital processes. This way, companies keep their experienced staff and can further improve efficiency and productivity, driving up profit and improving product or service quality.
A quick-return investment can improve the overall business model by creating a feedback loop where a favorable investment can further additional ones. Even if the subsequent investment doesn’t yield as much of a positive result, it is still overall net positive. The added technological advancement accrued through these investments will then continue to improve the company’s productivity in the long run.
According to research done by the Hackett Group, the most effective strategy to lower costs has been using seed money to invest and develop into technologies alongside beneficial investment and efficiency strategies. By using the seed money to purchase technology and improving processes to drive costs down and improve productivity, these companies can then reinvest their savings into another innovation. It should be noted that this method works mainly due to positively aligned communication between stakeholders and IT leadership.
The Hackett Group has published that the top-performing IT companies invest only 3 percent more in new technologies, but yield an average of 29 percent more savings from reduced labor, overhead, and outsourcing costs. This data is evocative of the need to streamline the investment structure to look beyond pure savings to improve overall efficiency and unlock the potential advantages of the new technology.
The overall relationship between actual spending and effectiveness or productivity, however, has been determined to be loose at best. The most likely factor is the diminishing returns of cost savings and the increased effectiveness of every new piece of tech. Some industries also require significantly more investment to achieve the same level of efficiency and savings gains.
One of the key takeaways from the role of new investments is to look beyond the possibility of saving more money by investing some of it into new technologies. Innovation can often enable employees to improve the value of the company significantly by ensuring a better business outcome due to accumulated knowledge and experience. By boiling down the risk assessment of an investment simply to its cost, a company can miss more than half of its potential value.
