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Why IT-Savy Companies Are More Profitable



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Dr. Peter Weill, Chair of the Center for Information Systems Research at the MIT Sloan School of Management. Source of caption information and photo: online version of the WSJ article quoted and cited below.




(p. R2) DR. WEILL: The IT-savvy companies are 21% more profitable than non-IT-savvy companies. And the profitability shows up in two ways. One is that IT-savvy companies have identified the best way to run their core day-to-day processes. Think about UPS or Southwest Airlines or Amazon: They run those core processes flawlessly, 24 hours a day.

The second thing is that IT-savvy companies are faster to market with new products and services that are add-ons, because their innovations are so much easier to integrate than in a company with siloed technology architecture, where you have to glue together everything and test it and make sure that it all works. We call that the agility paradox--the companies that have more standardized and digitized business processes are faster to market and get more revenue from new products.

Those are the two sources of their greater profitability: lower costs for running existing business processes, and faster innovation.



For the full interview, see:

Martha E. Mangelsdorf, interviewer. "EXECUTIVE BRIEFING; Getting an Edge From IT; Companies need to think strategically about their tech investments." The Wall Street Journal (Mon., November 30, 2009): R2.

(Note: bold in original.)






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