Continuing with the theme of operational versus strategic IT investment, this week is a brief look at Computershare, an Australian company that started life providing third party share registry services to Australian listed companies. The company has expanded both internationally and into complementary high volume services such as handling parking fines and administration of rental bonds. It has increased revenues 36% over the past 5 years and profit by 106% and employs 11,000 staff in 20 countries. It really is a great Australian success story.
It's relevance to this blog is that Computershare has used and developed its IT platform extensively to continually automate its processes and services. In short its IT capability forms an integral part of the company's sustainable competitive advantage. Using the analysis developed in this blog over the past few weeks Computershare stands out on some key criteria:
1. The board of directors and senior management take an active interest in IT strategy and spending (none of this reporting via the CFO)
2. IT spending averages 10% of revenue (9.9% in 2011), significantly higher than the 2.2% average for operationally focused IT operations
3. Portfolio management underpins all IT investment decisions
4. The strategic importance of IT is recognised by the board and senior management - it even gets a mention in the annual report to shareholders.
5. R&D makes up 41% of the IT budget compared to industry average of 30%
6. Contractors and outsourced IT is mininimal, 95% of IT manpower is in-house allowing critical knowledge to be developed and protected.
So should you race out and spend 10% of your annual revenue on IT? Well that depends on whether IT is part of your competitive advantage or not. What Computershare illustrates is that IT investment and management should be a series of deliberate decisions consistent with its place in an organisation. Cutting IT costs while claiming IT should be strategic is just plain fantasy, bad management or both.
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