Executives are anxious to trim spending. Yet a McKinsey survey shows that judicious IT investments can generate short- and medium-term revenue and efficiency gains that greatly exceed the savings from traditional cost-cutting efforts. The key is to have business and IT executives jointly take an end-to-end look at business processes and scan for opportunities such as improving the customer experience, reducing revenue leakage, and improving operating leverage.

The exhibit below illustrates the two fundamental ways for technology investments to have a substantial impact: developing new insights (for example, by comparing best practices across regions) or optimizing processes and systems, often with targeted work-arounds that generate value disproportionately.

To learn more about how companies can benefit from information technology investments in a slowing economy, read “Managing IT in a downturn: Beyond cost cutting” (September 2008).