Month: September 2012

The Flip Side of IT Spending and Productivity

In our last post we explored the companies in The Global 5000 that showed the biggest gains in revenue per employee AND spent the most on IT.  The idea is that this group will continue to spend and strive for continuous improvements — making some great potential targets for those IT suppliers that can show their offerings help save money.

Now, we turn the page and explore the other end of the spectrum. Again, taking companies in the Global 5000 data base we now look at the bottom 2000 companies in terms of revenue per employee change  That is — they are not on a positive track. From this group we then took the lowest 1000 firms in terms of IT spending.

We can look at this set of companies in one of two ways – either:

  • they are ripe opportunities who will need to invest in order to grow their revenue faster or get more productivity out of the existing workforce
  • OR – they are not going any further with technology spending and their growth is not going to be via increasing spending per employee.

We should run to the first group and run away from the second.  Here is the profile of these 1,000 companies where these industries have traditionally been a challenge for the IT suppliers.

The top countries are:

  • USA
  • UK
  • Japan
  • Canada
  • France
  • Spain

And the top industries:

  • Industrial Manufacturers
  • Retailers
  • Consumer Goods Manufacturers
  • Business Services
  • Construction

For more information about The Global 5000 database [yellow]click here[/yellow]

 

IT Spending and Productivity Improvements in Global 5000 Companies

One of the simple questions that business management has to ask when considering new spending is “will this help me make money or save money?” If the answer is not clear to either of those choices, it is hard to see that investment happening. It does not matter if this pertains to IT spending, a new facility or any other kind of major outlay. There has been a great deal of research conducted  in past years showing that the investment in technology does, in fact, lead to an increase in productivity in many cases.

A convenient way to look at this is to simply calculate the revenue per employee figures for a company and compare them to your peers. We did this recently with The Global 5000 companies and took it a step further.

First we looked at companies in the Global 5000 list that have shown an increase in their revenue per employee ratios over the past two years. We selected the top 2,000 based on the largest percent increases in revenue per employee figures. Next, from this top 2000, we looked their corporate IT spending and ranked them from largest to smallest and selected the top 1,000 IT spenders out of the selection.

Therefore, the group of 1,000 we have examined are those growing revenue per employee the fastest and spend the most on IT.  A reasonable assumption would be that will continue to spend and strive for continuous improvements — making some great potential targets for those that can show their offerings help save money.

Our list of the best 1,000 for this selection are in these industry groups:

  • Financial Services
  • Large Industrials
  • Oil & Gas
  • Technology companies
  • Basic Materials
  • Business Services

And the leading countries for these key targets are:

  • USA
  • Japan
  • China
  • UK
  • Germany
  • France
  • Canada
  • Switzerland
  • Australia
  • Brazil

In our next post, we will flip this analysis and look at those that are not growing revenue per employee and do not spend a lot on IT — those may be an opportunity in waiting or places to avoid spending a lot of time on.

You can find more information about The Global 5000 database by [yellow]clicking here[/yellow]

 

Comeback Kids – IT Spending and Growth in Construction and Retail Markets

During the global economic crisis in 2008 and 2009, the financial industry had all kinds of problems as we are all aware which not surprisingly  impacted IT spending. Since then they seem to be doing just fine. But other problems have lingered. One of those challenging segments is the construction industry which has taken a lot longer to recover. In addition, particularly in the US, retail drives so much of the economy and that industry suffered as well.

Fast forward to 2012 as the economy has been on the mend and we look back at the progress over the past few years and see 2 industries that have seen solid growth in IT spending along with growing revenue.

Among the Global 5000 companies, there are 210 companies in the Construction industry and 340 companies in Retail.

Over the past few years, the Construction companies saw year over year changes as follows:

  • 2008 grew at 12.3%
  • 2009 was negative – 7.6%
  • 2010 grew again at 6%
  • 2011 surged ahead 12.2%

Revenue for Retail companies did not fall as much and did not bounce back as high either.

  • 2008 growth was 6.9%
  • 2009 was negative – 2.6%
  • 2010 grew again at 5.6%
  • 2011 showed growth at 7.7%

Looking at IT spending in those industries, the Construction companies in the Global 5000 spend approximately $11 billion annually while those in the Retail industry spend over $62 billion per year … both substantial sums.

In both cases, the IT spend in these two sectors grew more than 9% from 2010 to 2011 and for those providers in the right spot to watch these comebacks, the rewards can be attractive.

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