Article at a glance:
Cost pressures have led many companies to cut spending on IT initiatives aimed at improving performance. The McKinsey Global Institute finds that this is a risky approach, since well-targeted IT spending can make companies more productive when it helps them to innovate. Companies should identify and invest in the right productivity levers as well as time IT investments carefully, so that basic corporate systems are ready to benefit from them. Being the first to innovate sometimes offers competitive advantages, but investing in leading-edge technologies often costs more than waiting until the bugs have been worked out.
The take-away
IT is not just another cost to be managed. Companies that focus excessively on slashing expenditures can miss out on technology's potential to promote innovation.