The Role of IT in Business

Author: Mark Kornegay

July 2008

While the world becomes smaller from a communications perspective, global economic expansion continues to increases at unprecedented levels.  Continuing gains in productivity, the ever-faster flow of goods and information, and other factors have combined to bring new levels of prosperity to millions of people around the world. The result, as The Economist magazine noted not too long ago, is that “the first decade of the 21st century could see the fastest growth in average world income in the whole of history.”

The driving force behind all this change, of course, is dramatic advances in digital technology that have given us new ways to communicate, to create and share information, and to work with colleagues, partners and customers.

Or is it?

One of the most interesting — and important — debates in the world of business concerns the role that information technology plays in creating economic opportunities and business success. There are almost as many positions in this debate as there are participants. At one end of the spectrum, there are those who claim that IT is the essential engine of progress, and at the other, those who insist that IT doesn’t matter.

From one perspective, the heart of this discussion is the premise that IT does matter, but that it is a company’s employees who ultimately determine whether a business thrives or fails. Microsoft has built our company — and our products for businesses — on an approach that recognizes that business success depends on the thousands of decisions employees make every day. Our business software is designed specifically to enable employees to use their knowledge of customers, markets and operations to make informed decisions that create strategic business advantage.  Furthermore, our licensing programs seek to offer a range of customized programs tailored to the needs, size, and purchasing preferences unique to every organization.  

A recent study by the Economist Intelligence Unit, the business research and advisory organization founded by The Economist more than 60 years ago, provides new validation for this approach. Based on a survey of 1,351 senior executives from around the world, the study offers compelling evidence that there is a positive correlation between business success and the use of IT to enable employees to optimize decision-making and act autonomously.

Sponsored by Microsoft, the study set out to determine how “enablement” — which the Economist Intelligence Unit defines as the “organizational structures, informational technologies, and other resources that let employees make decisions” — contributes to profitable growth.

In “Ready, Willing, and Enabled: A Formula for Performance,” the report that summarizes the study’s findings, the Economist Intelligence Unit concluded that “firms which embrace information technology to allow rapid collaboration can benefit from their employees’ collective knowledge, improving the performance of individuals as well as that of the organization overall.” For example, “58 percent of respondents who use collaborative software work for firms with revenue growth stronger than that of their competitors.” According to the report’s authors, “statistical analysis demonstrates the positive association between enablement and self-reported company performance, be it in profitability, revenue growth, tangible assets, or strategic success. The evidence is strong and consistent across dozens of significant variables.”

The report also reveals that at many companies, there is a significant “enablement gap.” Although nearly two-thirds of the business executives surveyed reported that their organizations have a high degree of enablement, only 53 percent said they have the IT tools they need; fewer than half have the information they require; and only one-third make use of tools such as collaborative software.

I believe these numbers mean that we are really still in the early stages of the IT revolution. During the past 30 years, wave after wave of technology innovation has truly transformed the world of business. From e-mail to productivity software, ERP solutions, supply chain management software, and much more, business technology has provided new ways for companies and their employees to securely communicate, create and share information, manage operations, and respond to changing markets and new opportunities. These innovations have helped to create a global knowledge economy that has benefited hundreds of millions of people.

But in many ways, we’re just now beginning to unleash the real transformational power of information technology in the workplace. A new generation of software innovations is making computing more powerful, more affordable, and much easier to use.  At the same time, companies around the globe are improving their ability to use the tools of technology to make it easier for employees to use information to create business success. This will unleash new ideas that will create exciting new economic and social opportunities for companies and communities around the world

About the author: Mark Kornegay is the Heartland Area General Manager for Microsoft’s Small and Mid-market Solutions and Partners (SMS&P) group, which consists of Kentucky, Michigan, Ohio and Tennessee.  For more information, please visit www.microsoft.com/midsizebusiness.