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Study Provides Evidence that Technology Execution Leads to Business Performance

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The BTM Institute, a nonprofit think tank established to study how best to manage business and technology, has come up with a definition for agility, innovation, resilience and adaptability: consistent execution, with constant growth that's tied to financial performance.

Faisal Hoque, founder and chair of the BTM Institute, cites three key lessons from his group's study of business-IT convergence:

  1. Top corporate executives should realize the financial impact that a unified business technology organization can have. "That is the most important thing," Hoque says.
  2. Being a converged business technology company does require a different level of management thinking. "You cannot just say, 'Let's manage IT as a business,'" he says. "You cannot separate IT from the business. [Business technology] has to be institutionalized."
  3. You have to be able to measure how these business technology management capabilities are guiding organizational maturity and how that connects back to the financial results.

"This is not about a project or ROI, but it's about overall performance of the company," Hoque says. For example, those companies with converged business technology management had 12 percent average annual revenue growth, compared with 4 percent for their industry groups. They also achieved 36 percent average annual earnings per share growth versus 7 percent for the industry groups.

In addition, the converged business technology companies also grew at a faster pace and had greater returns than did their peers, says the report. The supporting data found that they had 6 percent higher EBITD (earnings before interest, taxes and depreciation) margins, 4 percent average higher return on equity, 8 percent average higher return on assets and 14 percent higher return on investments.

Companies such as FedEx, Walmart, Lockhed Martin, and UPS are those with "converged business technology management. "By developing these management capabilities, an organization creates an environment for strategic exploration and business agility," says the report. "It has a clear understanding of technology's ability to accelerate both the development of strategic positioning and innovative business models."

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    May 29, 2009
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