Technology Economics

Dr. Howard Rubin, of Rubin Worldwide, spoke at the CIO Summit of America held in New York City in January.  Dr. Rubin is internationally recognized for his work as an author, researcher, speaker, and consultant in the areas of IT measurement, techno-business strategy, global software economics, the workforce of the future, the business value of technology, performance measurement and benchmarking, and "green IT."

In his address, Dr. Rubin discussed how IT has changed over the past decade, and how information technology can positively drive businesses.  He postulated it can help companies run better, manage, and change their businesses.  He said that last year $4.35 trillion was spent on information technology worldwide. 

According to Dr. Rubin, technology investment was driving Gross Domestic Product (GDP) growth in most countries, and that companies which are recognized as technology leaders are growing faster than others.

The financial services sector proved, Dr. Rubin said, how leveraging technology works in challenging economic times. Between 2006 and 2010, the leading banks saw their revenue up 19 percent and operating expenses up 14 percent, with employees flat, which led to margins that are up 26 percent. 

During the same time, their computing capacity went up 74 percent, with computing costs only up 9 percent. Rubin also noted that financial services companies typically spend 10 to 15 percent of their revenues on IT.

In a recently published paper, Dr. Rubin further stated”…IT investment provides an enhanced competitive advantage in sectors that are particularly data intensive and require tailored, customer-centered services.  Even more interesting is the fact that in the heart of the economic recession this sector was under considerable pressure to reduce IT spending.  However…..firms that decided to maintain a greater level of IT investment have not only remained competitive but even outperformed, and continue to outperform their more conservative peers.”

What should we conclude?  Perhaps we need to rethink the notion that technology is a necessary evil.  Maybe we should change our thinking to align it with the concept that technology can and is a strategic lever and a tool to be used to drive business, reduce risk and manage cost.