Here is an excerpt from an article that shares the results of an especially important survey, featured in the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
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Companies may be postponing further evolution of their technology organizations, a survey finds. Yet they should take heart: investing in these changes will likely pay off—and may be nothing short of essential to their competitiveness in the future.
A strong technology organization is widely seen as a competitive edge and a growth engine
For many years, our research on business technology has shown that technology organizations often fall short of executives’ expectations. They have underperformed on core activities. Many managers outside IT have seen their technology counterparts as replaceable or as merely a cost center, and IT leaders have struggled to secure a seat in strategy discussions. But now, respondents’ three-year outlook on the value of their technology organizations is more positive. A majority (54 percent) of respondents in IT and other functions say their technology organizations’ performance will significantly or completely differentiate their overall business from that of competitors (Exhibit 1). A similar share say the same of their companies’ use of IT. At companies with the best-performing technology organizations on core IT tasks, respondents are even more likely to describe their technology organizations and their use of technology as competitive advantages. (Explore the results from respondents at these companies in “An interactive look at technology transformations and IT activities.”)
What’s more, 65 percent of respondents expect that their companies’ use of technology is most likely to support revenue growth, rather than cost reduction, over the next three years. One-quarter of respondents say that increased revenue from new customers will be the primary outcome of their technology use in the next few years, and roughly one-fifth of other respondents expect technology to increase engagement with current customers (21 percent) or to increase revenue from new products or business models (19 percent). Another 21 percent of respondents say reduced costs through automation and digitization will be the most likely outcome of their companies’ technology use, though respondents at companies with top-quartile technology organizations are half as likely as others to make this prediction.
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