Companies should focus on the effectiveness of their investments

Companies should focus on the effectiveness of their investments

Business and management needs, along with trends in IT products and solutions, are in focus at IDC Directions 2010, the consultant’s annual conference in Portugal which this year brings together over 1,000 business decision makers at the Estoril Congress Center and Portuguese bodies.

The way companies can react to an economic environment marked by volatility – a nice way to classify the economic crisis – was precisely the dominant theme of the opening session, where Cort Isernhagen, vice president of industry analysis at IDC, was present . «Companies are increasingly focused on business and cost reduction, which has been identified as the main concern of 60% of companies in the next 12 to 18 months», underlines this person.

But this strategy has risks and the simple focus on reducing costs, creating efficiencies and optimizing strategies can cause loss of competitiveness in the long run. «The companies that take risks at this stage are the ones that will come out of the crisis better,» acknowledges Cort Isernhagen.

According to an analysis of the responses to an IDC survey of managers, companies currently focus 80% of their investments on operational efficiency, and only 20% on the effectiveness of those investments. The vice president of IDC believes that companies need to rethink this balance. «This year the economy forces us to focus on short-term strategies, but we quickly have to think about long-term strategies again,» he says.

Continuous innovation remains the key for companies to guarantee competitiveness, and IT customers are increasingly looking for innovative offers in solutions and in the relationship with partners, with payment for performance. «We have been talking about this model for years, but in recent months people have increasingly referred to these pay-per-use solutions, which are also linked to the new cloud computing paradigm,» explains Cort Isernhagen.

IDC’s vice president for industry also points out five of the best practices for companies to manage this volatile economy environment, focusing on automating operations as much as possible, managing only exceptions, developing formal processes to manage innovation and increasing transparency at various levels of the organization. The assumption of calculated risks is part of this check list, because only those who manage to do so will be able to get out of the crisis in a better way, and companies should never forget operational efficiency, although this should be guided by the search for investment results, in the effectiveness required of the business.