In this blog I look beyond the obvious and try to find out why people and companies do what they do - and what it means for the rest of us. 
Terri McClure wrote an excellent blog yesterday regarding the fact that “IT savvy” companies are 21% more profitable than others.
That got me thinking – if it’s true, and it sure seems logical that it is, then how long will it take portfolio managers to start going right into IT to look for these long term indicators? Bad IT = bad company most of the time, and bad companies tend to be good stocks to short. The opposite is probably true as well. If you can uncover an excellent IT organization, you most likely have stumbled upon an excellent organization in general. If you compare that company with its competitors, and find the competition is weak in IT, you probably have a stock winner.
I’m going to think more about this – it’s a very interesting metric that could be of value to my friends in IT as a way to elevate their strategic value inside their organizations.
No related posts.
blogs
Clarification: If your CEO knows that IT is a metric Wall St. will use to drive valuation, a CIO should find it easier to get the $$$ and attention it needs to do the job properly. Lets teach our management how investing in IT MAKES us money by jacking our stock value. They may not do it simply because its the smart/right thing to do, but I bet they will if you use that kind of logic.
[Full disclosure: Riverbed manager]
I’ve been totally tempted to set up a fund that buys stock in companies that purchase Steelheads and shorts companies that chose the “well known, politically safe, but not leading product” company’s wan accelerator. Seems like a really good indicator of the health of their IT org., taking that as a proxy for how much their company as a whole values execution quality over politics. The problem is that who-buys-what is apparently confidential info, so I can’t have a fund which trades on it…. Drat, foiled again!