Share Prices & IT

As share prices and the stock market head south, and as companies hunker down to survive the down cycle, there may be few that realise the impact that corporate IT can have on share price and survival.

In the short term, financial markets are largely driven by emotion. But in the medium to long term they are driven by fundamentals such as profitability & growth, which is where IT comes in.

Take Standard Life, for example, the Edinburgh based life & pensions company.

Last year, in 2007, Operating profit shot up by 71% and new business grew by 31%, after the company started to focus seriously (a couple of years ago), on achieving the promise & potential in IT.

Another example is British Airways (BA) whose return to financial health is largely due to its corporate IT, and particularly its customer-reaching e-ticketing and e-check-in sysem

But Standard Life and BA are not isolated cases. There are other examples of business organisations ramping up performance through IT. MIT's Centre for Information Systems Research, for example, has a number of studies showing the connection between IT performance and business performance.

The main point is this:
If the promise & potential of IT were achieved in business organisations it would (ceteris paribus), have a significant impact on satisfacion, value and purpose, with this impact being shown @ the bottom line in profitability, growth, and shareholder returns.

In the case of Standard life, the company turnaround came largely through the following.

1. A change of mental models, as for example in the 'traditional' separation between Business on the one hand, and IT on the other. Everyone started speaking the same language.
2. Close collaboration & synergy between IT specialists and Business client/users. In fact IT people got out into the business areas and worked alongside their client/users, with the third party in the equation being the customer - what might be referred to as Synergy Circles.
3. Business process re-design (BPR), which has a lot to do with total quality management (TQM), to squeeze out the parts that add cost and take time, and optimise the parts that add customer value and cut time.
4. Lean/agile development, which is the IT version of BPR, re-designing the development & support processes so as to be lean & mean and rapidly responsive.
5. A flexible/integrated IT architecture, which enabled rapid response to business needs.

But the secret ingredient as it were, in all of this, in any organisation that wishes to fulfil the promise and potential of IT, is senior management if not Board active involvement & support.

After all, if IT really does have the promise and potential to significantly impact profitability and growth, then the need for senior management if not Board active involvement & support, is evident.

Do you have experience with IT making a difference
to business performanc?
What, in your view, were the key things that made it happen?