The Power of Convergence
Linking Business Strategies and Technology Decisions to Create Sustainable Success
Author: Faisal Hoque
Pub Date: May 2011
Print Edition: $27.95
Print ISBN: 9780814416952
Page Count: 256
e-Book ISBN: 9780814416969
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Measuring Results:The Convergence Index
THE POWER OF CONVERGENCE by Faisal Hoque expands upon by his company's, BTM Institute, original study – The Business Technology Convergence Index - and incorporates the results of several collaborative research studies on the topic. The Convergence Index study examined such companies as UPS, Wal-Mart, and Starwood, and shows that working in the same environment as their direct competitors, enterprises with a more nearly converged business technology management exhibited superior revenue growth and net margins relative to their industry groups between 2002-2006. The sequel to the index comprised of 250 organizations, an increase from the original 100. The data shows that maturity is not dependent upon an enterprise’s industry or size. BTM assessed corporations across dozens of market sets and sizes by top-line revenue.
Not only did these enterprises grow at a faster pace than did their peers, but they also exhibited consistently greater returns than those of their competitors, such as:
• 6% higher EBITDA margins than those delivered by their industry groups
• 4% average higher return on equity
• 8% average higher return on assets
•14% higher return on investments
As a result of convergence, there are a variety of associated benefits an organization realizes, including:
• Hard savings: reduction of recurring expenditures
• Soft savings: driving efficiency and effectiveness
• Growth and innovation: increase in revenue
The success of an organization depends on its leaders’ ability to be future-oriented, take advantage of external opportunities and continuously transform from unforeseen challenges.To create an environment where technology helps to shape strategic choices, leading enterprises are already working to synchronize their business and technology decision-making. In the best-managed modern enterprises, technology and business management will converge completely. Convergence occurs when business and technology activities are intertwined and the leadership teams operate almost interchangeably.
Technology is a major expense in modern corporations and is deeply embedded in nearly every aspect of doing business. Moreover, it is the critical enabler of strategic imperatives – to be agile, resilient and innovative. This research further highlights that:
• Disruptive innovation creates new markets.
• Evolutionary or sustained innovation creates great enterprises.
• Adaptability allows rapid response to unforeseen changes.
• Globalization enables extended enterprises, reinforcing their competitive edge.
• The convergence of business and technology builds agile, innovative, extended enterprises.
• Convergence relies upon repeatable, cross-disciplinary management capabilities.
• Whatever the nature of the firm—whether a new hybrid or a large traditional organization—the management practices that create convergence can enable the firm to realize its strategic mission.
As the Business Technology Convergence Index shows, success is the reward for those that achieve the higher levels of management maturity.
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