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Monday, October 6, 2008

The Business Case for BT Convergence


The structured approach of Business Technology Management (BTM) is a proven methodology that seeks to unify business and technology decision-making at every level within a company.

Originally conceived to address the needs of large enterprises, there are now very apparent benefits for both small and medium sized businesses. Let's consider the growing body of evidence that supports that business case.

Put simply, BTM is applied to ensure that a company's business strategy can be realized by the technology it deploys. This approach is used by business leaders to align, synchronize and even converge technology and business management for the purpose of ensuring better execution, risk control and profitability.

The Path of Total Convergence
Clearly, these are the type of guiding principles that should transcend all businesses, regardless of their size. Let's explore the meaning of those three states of progression.

Alignment is defined as a state where technology supports, enables, and does not constrain the company's current and evolving business strategies. It means that the IT function is in-tune with the business thinking about competition, emerging threats and opportunities.

Synchronization implies that business technology (BT) not only enables execution of current business strategy, it also anticipates and helps to shape future business models and strategy. In this state, BT leadership, thinking, and investments may be ahead of business needs.

The state of Convergence includes both alignment and synchronization, with technology and business leadership willing and able to operate simultaneously in both spaces. Essentially, the disciplines have merged in both the strategic and tactical senses. A single leadership team working together to orchestrate one intertwined agenda.

A Business Impact Case Study
Does this seem like an academic exercise? Consider the following facts, and then you decide.

According to the BTM Institute, in research covering 50 industries, companies with a more converged business technology management exhibited superior revenue growth and net margins relative to their peer group:
  • 12% average annual revenue growth vs. 4% for their industry groups.
  • 36% average annual earnings per share growth vs. 7% for their industry groups.
Not only did these companies grow at a faster pace than their peers, but they also exhibited consistently greater returns than those of their competitors:
  • 6% higher EBITD margins than those delivered by their industry groups.
  • 4% average higher return on equity, 8% average higher return on assets and 14% higher return on investments.
Therefore, perhaps the most important question is not whether you should strive for BT convergence, but how will you be able to compete with those companies that have already evolved to that state? It's something to think about, as you consider your next steps.