IT Investment Is Central To Your Business Strategy

Many companies view information technology as the odd man out in their overall business strategy. In the 21st century, that attitude won't hold. If your information technology initiatives are not aligned with your core business strategy, then you can say good-bye to relevance.

Balance is the operative keyword here. You want your IT portfolio to achieve a level of balance in order to achieve the desired alignment with your business strategy. From there, it's a matter of reaching your short-term and long-term objectives.

How To Ensure Balance In Your Information Technology Portfolio
So how do you achieve this balance? I'd like to suggest that you do it via these  four management objectives.

  1. Strategic - A strategic IT investment is one that helps your company achieve a competitive advantage. Your technology is an integral part of how you do business and it should give you a leg up on the competition and make you more competitive in the marketplace. Otherwise, you're just throwing good money after bad.
  2. Informational - You cannot manage your operations without solid information delivered in a timely manner. Your information technology is a key part of your management team's ability to acquire actionable information that allows them to quickly make business decisions.
  3. Transactional - Information technology should help you achieve your core business objectives, processing transactions and cutting business costs.
  4. Infrastructure - Ask your IT manager to build a network infrastructure that will make sharing information easier and allow your key managers and decision makers to integrate their internal processes. Streamlining your company-wide business processes will cut costs and make your organization more efficient.

 

Characteristics Of The Four IT Asset Classes

According to MIT Sloan, the following four asset classes are necessary and distinct components of an effective, efficient IT portfolio. But what are the characteristics of these asset classes?

  • Strategic assets in the public sector improve innovation, lead to major changes within the organization, make process facilitation easier, increase value-added propositions, and improve customer interaction. When implemented properly in the private sector, strategic assets will lead to more sales, a competitive advantage, and better market positions.
  • Informational assets lead to increased control over your operations, better information and process integration, improvements in information quality and faster cycle times.
  • Transaction assets cut costs and increase throughput.
  • Infrastructure assets improve business integration and flexibility, reduce IT costs and marginal costs of business units, and lead to more standardization.

 

Organizations that implement the information technology asset classes successfully find their profit margins increasing while maintaining a moderate risk posture across the IT department. Transactional assets have the lowest risk and lowest business costs overall with a potential for a respectable return on investment. The strategic asset class has the highest risk and failure rate but the largest potential upside if implemented successfully.

In the 21st century, your core business strategy will be affected by the investment you put into your IT assets. Build a strong information technology portfolio with the right asset risk and investment and you'll achieve corresponding rewards.

By Russell

Atticus Management