Friday, March 10, 2006

Demanding more from IT

Sadagopan writes:

“IT today consumes more than half the capital investments around the world and software alone consumes more than ten percent of global capital investments. Obviously, the rigor that goes into traditional investments would begin to get applied in future IT related investments. With the exalted status that IT enjoys with business, it was probably the case; hitherto IT got away with liberal treatment. While SAP routinely claims, companies that run SAP are 32% more profitable, Nicholas Carr points to a to be released report assessing the relative profitability of SAP customers from Nucleus research with key findings therein –“SAP customers are 20% less profitable than their peers”. Carr writes, “Nucleus Research looked at the 81 public companies that SAP lists as customers on its own website. It determined the return on equity (ROE) earned by each company, based on formal financial filings, and then compared that number with the average ROE for the company's industry, as calculated by Hoovers. ………….
Clearly time to demand more from IT – not for damning IT but for finding better business models for IT companies and more importantly to make user organizations optimize better to get better yields.”

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