The research from INSEAD, the leading international business school, in collaboration with AT&T*, shows that high investors in new information technologies can double their likelihood of being highly competitive – from 35% to 74% – and outperform their peers.
However, investing in new technologies alone isn’t enough to guarantee improved competitiveness. Some high investors in technology are seeing no improvement in their competitiveness at all, and perform the same as companies with low or no investment. The most critical factor in making technology investments succeed is to have other strong business resources in place.
The research findings are drawn from detailed responses from senior executives from 225 multinational companies active across Europe, Asia Pacific and North America.
The data shows that in Asia-Pacific, firms are investing a much greater percentage of their total ICT budgets in new technology, and expect to grow those investments more quickly, compared to the other regions:
- Investment in mobility will grow from 17% three years ago to 31% two years from now (82% growth);
- Cloud will more than double from 12% to 30% (150% growth); and
- Collaboration tools will increase from 18% to 26% (44% growth)
Investment in new technologies in Europe will accelerate over the next two years. Survey data shows that as a percentage of the total European ICT budget:
- Investment in mobility will increase from 12% three years ago to 20% two years from now (66% growth)
- Investment in cloud based services will almost double from 12% to 23% (96% growth); and
- Investment in collaboration tools will rise slightly from 16% to 17%
Strong Business Resources
The most important finding of the research shows that when firms have strong business resources and invest more in new technology, the probability of becoming highly competitive can double – from 35% to 74%. Conversely, when firms with weak business resources make significant investments in new technology, their likelihood of better performance does not increase at all; their investment in new technology is at great risk of being completely wasted.
As part of the research, INSEAD eLab, a centre of excellence at INSEAD that provides insights into the impacts of digitization on leadership, organizations and countries, identified the following key business resources as vital to success.
- Business involvement in technology investment and management decisions
- Access to technology-focused talent
- Access to management-focused talent, and
- Having a mature digitized platform – the extent to which the technology, business process and data components of a company are standardized, shared and integrated. This is sometimes referred to as “digital maturity”.
The research clearly shows that the most important resource by far is digital maturity. Firms that have mature digitized platforms and invest in new technology significantly increase the likelihood of being competitively agile, compared to firms with immature digitized platforms that make similar investments.
This is critical for global competition. European companies are spending less on new technology, but have the opportunity to leverage their past investments to make every new investment count. In Asia, companies must be careful not to rush too quickly to adopt new technologies, and make sure their platform is ready to make use of them.
There are also clear messages for governments and policy makers in the research. European policy makers can help businesses mature their digitized platforms more rapidly by creating the right regulatory environment that facilitates the storage and flow of data in a stable, seamless and secure way. They can also help businesses define, access and foster talent to make the most of their investments in technology by coordinating industry and universities to ensure demand for key skills is clearly matched with supply.
Neelie Kroes, Vice President of the European Commission said:
“To emerge from economic crisis, companies and governments need to identify how technology can be most productive; and how it can best help Europe compete in a global race.
The fact is, we need to fully understand what emerging technologies mean for performance; and how to ensure that they bring most return for your euro. At the moment, it is more important than ever to get the most out of investment: whether public or private. So we need not just to make judicious decisions about new technologies, but also to build the environment where investment has the best chance of success.”
Andrew Edison, Regional Vice President for EMEA, AT&T said:
“Increasing productivity is one of the primary challenges facing European companies today. New technologies like cloud offer great opportunities to do this, which some high performers are demonstrating. However, simply adopting the newest technologies is not the answer, and is in fact a great risk. They must sit on top of mature, standardised platforms. Being agile and competitive doesn’t mean being the quickest, it means always being able to be quick. The secret is a mature platform and avoiding the creation of ‘infrastructure spaghetti’ in the rush to adopt the latest tools.”
Theodoros Evgeniou, Associate Professor of Decision Sciences and Technology Management at INSEAD, and Academic Director of INSEAD eLab said:
“Our findings show clearly the direct link between specific technology investments and improved organizational performance when these investments are made carefully. We have long known that some technology investments succeed and some fail, but we have never been able to pinpoint why. We are excited by this research because it provides new data that can help business leaders decide how to invest in technology. CEOs must ask a very simple question before adopting any new technology – is our organization and our digitized platform ready?”
Nils Fonstad, Associate Director of INSEAD eLab, said:
“Any firm that is investing in technology to enhance agility would do well to first assess the strength of their key business resources. In the process of identifying what distinguishes high performing firms from others in terms of their investments in ICT and key business resources, we have identified both the benefits of having strong business resources and the risks of having weak ones.”
John Higgins, Director General, Digital Europe, said in response to the research:
“Europe is letting its advantage in technology driven productivity erode. It is investing less, and growing that investment slower than places like Asia. European businesses must leverage their years of investment in technology and ensure their digital platforms are sufficiently mature, so they make every investment count and stay competitive in this tough environment. The technology industry is proving that it can make a serious difference to productivity, but technology must work with the rest of the business if it is to be successful.”
The full report and supporting information is available at: www.corp.att.com/bemoreproductive
*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.