'Tech led cos have edge over tech laggards'

NEW DELHI, INDIA: One-fifth of Indian enterprises are ‘tech led’, while a third are ‘tech laggards’, reveals a study by CyberMedia Research and knowledge services firm Coeus Age. The study — ‘The Process of Building Business Value from IT: Concept, Empirical Support and Change & Development Framework’ — further says that the remaining 47 per cent are between the two extremes.

The study, conducted in 305 enterprises across nine industry verticals, also says that ‘tech led’ firms are able to demonstrate a higher impact of IT on business processes and creation of competencies through IT as compared to the ‘tech laggards’.

Based on how the companies scored on the three levers, identified by Coeus Age, the study mapped enterprises on the empirical model — the BVIT Matrix.

Interestingly, the spending of ‘tech led’ enterprises’ on IT as a percentage of revenue is lower than other enterprises. “Hence, ‘tech led’ enterprises are able to generate the highest impact of IT on business processes and business competencies, at relatively lower spend levels, indicating higher value realization per dollar spend,” commented Kapil Dev Singh, founder and principal consultant, Coeus Age.

“As enterprises expect faster results from IT investments with reduced budgets, it is extremely important for the CIO to know how to manage the paradox. As our research suggests the focus has to be on change and development within an organization for IT to perform and deliver”, said Thomas George, head, CyberMedia Research.

Based on an empirical model developed by Coeus Age, any enterprise can be mapped on three levers of business value of IT — Business-IT Alignment, Strategic Vision for IT and IT Infrastructure Maturity. The model and the mapping are depicted in Figure 1.

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‘Tech Laggards’ and ‘Tech Led’ enterprises differ significantly on the three levers of business value and their underlying aspects, as listed out below:

1. The role of IT as perceived by the senior management and practiced by the organization

2. Communication, partnership and architectural alignment between business and IT

3. Governance structure and mechanisms for IT decision-making

4. CIO role definition and organizational support for the same

5. Value measurement mechanisms (and metrics) for evaluating IT investments

6. IT management processes

7. Architecture definition at data, application, technology and communication levels

8. IT infrastructure, applications, security and communication technologies deployed

9. Integrated framework for IT and communication platforms

10. New technology identification and development processes.

11. IT skills availability and development

“In view of the above, building business value involves a change with a three-pronged focus — the attitude or ‘mental makeup’ of senior management, the organization structure and its ‘formal’ and ‘informal’ relationships, and the business practices followed. In an era of uncertainty and increased global competition, businesses everywhere urgently need the ‘know how’ to compete with the help of IT,” Kapil concluded.