Computer usage among employees is at an all time high. One of the largest (and most often overlooked) investments a business will make is the time employees spend using IT applications. Is IT worth the investment? How does your industry's IT efficiency and productivity compare?

Michelle Bailey - Director of Research, ITCentrix

There has been much written about the impact of IT on business. In the 1980's many executives questioned the payback of IT as less automated businesses in Germany and Japan were seen as more competitive. Many an academic has spent years studying the productivity improvements that computers have on employees, and have published numerous studies that by and large confirmed what we learned in the 1990's, that computer usage positively impacts worker productivity.

There can be no doubt that computing has had a revolutionary effect on the way that all of us conduct business. Just as the agricultural revolution dramatically altered farming and the industrial revolution forever changed manufacturing, computing has created an information explosion that has transformed communication. Over the last 20 years, organizations have rapidly adopted technology in the quest to automate employee functions. Since 1984, the percent of US employees using a computer at work has risen from 25% to almost 55%. This is a staggering adoption of technology, and once again, business leaders have put IT investments under the microscope.

A recent survey from ITCentrix among 650 workers found that employees who access computing as part of their job spend more time using computers than any other task during the workday. More than one-third (38%) of the average computer user's day (or about 3 hours) is spent using a computer. In some industries, such as finance and banking, workers will spend more than half of their day using a computer. Given the rapid adoption of computing, and its pervasive use among 71 million US workers, it is not a stretch to postulate that the impact on employees -- and the businesses they work for -- is positive. The question is, how positive?

IT Productivity

To answer this question, ITCentrix regularly conducts surveys that measure the productivity of computing against other business tasks. Consistently, across industries and occupations, employees rate computer usage as their most productive daily task. Analysis of this data reveals that computing makes US employees about 33% more productive relative to other things they do in order to get their job done. Interestingly, while the level of computer usage will vary by industry, productivity uplifts from computing are remarkably consistent, meaning that even for those industries that do not rely heavily on computing, technology is used appropriately to optimize on efficiency.

Given that one of the largest investments that any business will make is in its employees, and that at any point in time upward of 20% of all workers are actively using a computer, it is enlightening to compare the business contribution of IT to the spend on IT.

The following graphic compares the computing profile of all the major US industries. Along the x-axis is the cost efficiency of IT. On average, for every dollar spent on IT, $6 is returned to the business in net value (revenue minus the IT cost of revenue). On the y-axis is the percent revenue contribution of IT to the business. On average, IT organizations support about 28% of the company's revenue. This leads us to four quadrants of computing:

• Optimized - Highly efficient IT operations, High Business Contribution
• Tactical - Highly efficient IT operations, Low Business Contribution
• Strategic - Low IT efficiency, High Business Contribution
• Questionable - Low IT efficiency, Low Business Contribution

From this analysis, Finance/Insurance, Real Estate, Utilities, and Wholesale Trade are making the best use of IT, both in terms of their execution and ability to derive value. Mining, manufacturing, and retail are highly efficient, but are less likely to derive as much value relative to other industries. Information-based companies, professional services and public administration are highly reliant upon computing; yet this comes at a higher cost of IT operations. In the questionable category are healthcare, transportation, education, construction, and agriculture. Many of these industries are in the process of ramping up their IT operations, but have yet to realize the value from their investments.

Click to enlarge

This data highlights the pervasive nature of computing, and the reliance of businesses on IT operations. A delicate balance exists between the value derived from IT and the level of investment. Among organizations where the dependence on IT is particularly high, cutbacks in IT spending and halted application development can have severe repercussions on the overall health of the entire business. Knowing the level of dependence on IT, and where the value from IT is derived is as important as understanding the overall company financials.