The McKinsey Quarterly chart focus this morning addresses the question, what has the bigger impact on performance: additional spending on IT or improved management practices?
According to a study of 100 manufacturing companies in Europe and the US, the percent of business productivity increased by 2% when IT investments increased. It increased by 8% when “first-rate” management practices are applied. But it increased by 20% when doing both in tandem.
As the text for the chart explains:
We rated companies on how well they used three important management practices: lean manufacturing, which cuts waste in the production process; performance management, which sets clear goals and rewards employees who reach them; and talent management, which attracts and develops high-caliber people. The companies that had the highest marks in these areas became more productive, with or without higher spending on IT. Those that combined good management practices with IT investments did best of all.
