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The Competitive Advantage of Investing in Technology

coin stacked - investing in technology

In order for a business to become a leader in their industry they need a competitive advantage To do this there are typically two general routes a company can take: being a cost leader, or an innovator. A cost leader by providing a product or service for less than the competition. Or as an innovator differentiating themselves with a unique product, service, or business capability. Technology is the way to be successful at both. Technology allows for growth and the ability to outperform your competitors.

How Much is Enough?

How much should you invest in technology to get this advantage? A number you will see in research is 3% of your company’s revenue should be spent on IT (. This number can fluctuate however if you are looking for, or are going through, a time of aggressive growth, then you may want anywhere from 4-7% of your revenue being reinvested in your company’s IT systems. According to a study done by an ROI consultancy firm, the size of your company also impacts what proportion is typical when it comes to IT spending. Smaller firms tend to spend the most proportionally with 6.9% of their revenue going back towards IT, while medium sized and large companies spend quite a bit less with 4.1% and 3.2%, respectively, of their revenue going back towards IT Investments.

How to Allocate Resources?

Knowing how to allocate the proportion of revenue in your IT budget can tricky in today’s competitive marketplace. In many sectors, technology is becoming somewhat of an arms race with companies trying to get the newest, most innovative technology first. They want to capture more market share by using social media and other location= based technologies, and expanding into other hot technologies such as mobile computing, analytics, and/or cloud computing.

Another hot commodity in the tech space is implementing an ERP (Enterprise Resource Planning) system which is key for improving business processes and other key facets of business such as productivity, collaboration, decision making capabilities, lowering operating costs, and more.

Understanding what technologies will help your company get a competitive advantage, and which ones will just be new or different is key. Once you understand the end goal you can determine how to allocate your resources appropriately. Contact the experts at ArcherPoint to determine how we help you get the most business value from your IT systems.


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