The decision to invest in IT usually first focuses on the cost saving advantages that can be realized. A recent study, however, suggests that the direct impact of an IT investment on profits should be given equal or even greater importance by companies. The findings, reported in the MIT Sloan Management Review (Spring 2012 edition), say, in part, that executives “should accord higher priority to IT projects that have the potential for revenue growth.”

The research found that IT investments had a greater impact on profits than expenditures in either advertising or R&D among its universe of more than 400 global companies. The reason, they conclude, is “because IT involves novel technologies that offer more room for creativity and innovation.” The researchers, a team of academics, also noted that “most businesses already know how to manage advertising and R&D to their best advantage, but only some have mastered managing IT.”

The implication for CEOs is clear. They need to take a balanced approach to encourage and implement IT strategies that not only increase efficiencies and cut costs, but also serve to energize sales growth and profitability. 

READ MORE: http://sloanreview.mit.edu/the-magazine/2012-spring/53302/the-impact-of-it-investments-on-profits/