Create value with technology
Avoiding the austerity trap
By Bob Suh
In today's uncertain business climate, IT investment is often in the budgetary crosshairs. But in fact, now is the ideal time to upgrade existing infrastructure and invest in next-stage technologies that create value.
Management decision making can be fairly straightforward when the economy is clearly headed in one direction or the other. When it is growing, business leaders invest to meet demand. When it is shrinking, they cut costs to meet quarterly earnings expectations. But what do executives do when the economy has bottomed out and growth is somewhere on the horizon but not yet robust? When the obvious cuts have been made and
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combine the significant investments they have already made in basic applications, communications and computing infrastructure with investments in newer value-creating technologies as they emerge. The late 1990s produced a number of technology breakthroughs, which led to improved performance at lower prices. At the same time, technology suppliers increased their capacity. Now, in their own struggle to keep and gain market share, many of these suppliers are offering significant incentives—which means this is the ideal time to invest in next-stage technologies built on existing infrastructure. High-performance businesses have a perspective on technology investment that sets them apart. They watch for opportunities to create business value in the short and long terms—and make a careful distinction between spending and investing. These businesses avoid the austerity trap that is sending too many companies into a downward spiral. This trap is triggered when companies, responding to short-term pressure for greater earnings and convinced that information-related technology cannot create value, focus on cost cutting. As new technology projects are cut, hardware and software are replaced only when they fail or expire, so all components in the technology portfolio become older and less efficient. An Accenture