Is Your Company’s IT a Strategic Asset?

What kind of IT strategy does it take to prosper in today's increasingly digital economy? Peter Weill, chairman of the MIT Sloan School of Management's Center for Information Systems Research, explored this question in a recent interview.  According to Weill, companies that are "IT savvy" -- whose IT is good enough to be a strategic asset rather than a strategic liability—tend to be more profitable than their less "IT-savvy" counterparts.

Two key elements present at IT-savvy companies, Weill observed, are executive guidance for IT strategy and platform reuse. At IT-savvy companies, Weill said,

"Executives make the decision about which business processes will be standardized and which ones will be integrated throughout the business.

With that level of guidance, the IT unit really knows how to architect a company. But if that kind of executive guidance isn’t given, the IT unit ends up in a much more project-oriented, order-taking role. The IT unit is just receiving a whole bunch of relatively uncoordinated projects that don’t add up to anything.

The real secret to IT-savvy companies is that each project links together—like Lego blocks—to create a reusable platform. IT-savvy companies think reuse first. When they have a new idea, the first question they ask is: Can we use existing data, applications and infrastructure to get that idea to market fast? When we look at the impact of reusing processes and applications, we see measurable benefits in the top and bottom lines."

 You can read the interview with Weill in the new edition of Business Insight, MIT Sloan Management Review's collaboration with The Wall Street Journal. For more details on Weill's research on this topic, see "Generating Premium Returns on Your IT investments," an article by Peter Weill and Sinan Aral in the Winter 2006 issue of MIT Sloan Management Review.