Category: Investing

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]

 

Why marketing is the next big money sector in technology

Ajay Agarwal from Bain Capital Ventures predicts that because of the confluence of big data and marketing Marketing is the next big money sector in technology and will lead to several new multi-billion dollar companies. His post is succinct and convincing, but there are additional reasons to believe he is correct.

Marketing spending more on IT than IT

Ajay opens his post with a quote from Gartner Group: “By 2017, a CMO will spend more on IT than the CIO”. It is difficult to judge this prediction without evaluating the supporting research, but it doesn’t sound unreasonable and the trend is unmistakable. Our own experience as conference organizers and consultants offers strong support for the trend. We cover the use of web, mobile, and content technologies for enterprise applications, and our audience has historically been 50% IT and 50% line of business or departmental. Since at least 2008 there has been a pronounced and steady increase in the percentage of marketers in our audience, so that 40% or more of attendees are now either in marketing, or in IT but assigned to marketing projects – this is about double what it was in earlier years. While web content management vendors have moved aggressively to incorporate marketing-focused capabilities and are now broadly positioned as hubs for customer engagement, the real driver is the success of the web. Corporate web sites have become the organizations’ new front door; companies have recognized this; and marketers are demanding tools to manage the visitor experience. Even during the peak of the recession spending on web content management, especially for marketing applications, was strong.

“Cloud” computing and workforce demographics have also beefed up marketers’ mojo. The increased ability to experiment and deploy applications without the administrative overhead and cost of IT or of software licenses has encouraged marketers to learn more about the technology tools they need to perform and helped instill the confidence necessary to take more control over technology purchases. A younger more tech-savvy workforce adds additional assertiveness to marketing (and all) departments. Now if only marketers had more data scientists and statisticians to work with…

Big data and big analytics

Big data has not caused, or contributed very much, to the increase in marketing spending to-date. Certainly there are very large companies spending lots of money on analyzing vast amounts of customer data from multiple sources, but most companies still don’t have enough data to warrant the effort of implementing big data technologies and most technology vendors don’t yet support big data technologies at all, or sufficiently. I agree with Ajay though that the “several multi-billion dollar” marketing technology companies that may emerge will have to have core big data processing and analytic strengths.

And not just because of the volume. One of the main reasons for the enterprise software bias for back office applications was that front office applications beyond simple process automation and contact data collection were just too difficult because they required processing unstructured, or semi-structured, data. Big data technologies don’t address all the challenges of processing unstructured data, but they take us a long way as tools to manage it.

The level of investment in this space is much greater than most realize. Ajay is right to invest in it, but he is not alone.

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