If you’re in the business of building software for businesses, you’ll want to check out the October edition of the The McKinsey Quarterly. This month’s Chart Focus is a quick representation of how large companies are investing in their IT infrastructures just now — which happens also to be a leading indicator of the health of the economy, or a possible future recession.
Under the heading “Smarter IT investments”:
…McKinsey assessed the IT strategies of ten leading global corporations…We found that they treat IT investments like financial ones—as low risk (“stay in the race” projects to improve basic services), medium risk (“win the race” efforts to raise the efficiency and cut the cost of current business activities), and high risk (“change the rules” innovations to enter new or transform existing markets).
We expect most of our readers’ businesses fall into the high risk, “change the rules” category. Look at the chart, and spend some time thinking about whether your business targets companies like the ones described in cases 3 & 4 , where “high risk” IT installations are 30% or 40% of total budget spend. If not, it’s probably time to adjust your strategy. In that case, consider repositioning your product or service to the medium risk category where “efficiency and cost-cutting” are the goal. And go global: as case 2 demonstrates, companies that are expanding internationally, or through M&A, need this kind of help and they are devoting 60% of their IT budgets to get it.
We think the McKinsey Quarterly is great reading. Register for it here.

Comments have been disabled for this post