Innovate with IT to thrive

Dave Bailey, Computing, Wednesday 2 September 2009 at 17:34:00

Firms continuing to invest in technology will weather economic downturn
better, says survey

Firms that continue to invest in and innovate with IT through the recession
will weather the downturn better than those focusing mainly on cost control,
according to a survey conducted by research consultancy Loudhouse for software
firm BMC.

The 2009 European IT Survey of 300 UK, French and German firms ? 100
from each country - with annual revenues of more than �2bn, classified companies
into three primary profile types ? Hiders, Survivors and Thrivers.

Asked what the board outlook was over the next year, 36 per cent said the
firm was in either a concerned or challenging position (Survivors), 41 per cent
considered the board was taking a business-as-usual approach (Hiders), with only
23 per cent being proactive and seeing the recession as a real opportunity
(Thrivers).

The key finding of the study was that consistent IT investment delivered a
positive impact to business performance, according to the IT leaders surveyed.

The survey showed 77 per cent of respondents delivering cost savings over the
past year, but only 46 per cent of those re-invested the money in technology.

Thrivers had a greater focus on IT automation as a route to cost cutting ? 41
per cent as against 22 per cent of Survivors. Thrivers also only reduced
innovation spend by 0.5 per cent, while Hiders saw their budgets drop by five
per cent, compared with Survivors who saw a 15 per cent cut.

Dr Alexander Grous from the LSE's Centre for Economic Performance, who has
studied the link between IT investment and business performance, said: "The
lesson we can draw here is that companies cannot simply save their way back to
recovery. Innovation deficits are extremely hard to redress. Organisations that
recover best are those investing in areas of the business that can deliver
long-term returns ? areas such as IT.?

The research showed an average of 20 per cent of the IT budget being invested
in IT-based innovation IT, with a sample range of between three and 48 per c
ent. German businesses invested 24 per cent of their IT budget on innovation
while the UK and France invested 17 and 15 per cent respectively.

Interviews were conducted over the phone during July 2009 with a respondent
breakdown of 27 per cent chief information officers, 46 per cent IT director and
27 per cent classed as "others".

Full story at http://www.computing.co.uk/computing/news/2248724/innovate-thrive-lse-research