The concept of IT intensity is explained, and I show how an organisation with the correct IT intensity will be better able to survive future threats. This little understood concept can change the way you do business and the way you think about IT. However IT intensity is much more than just adding more technology. This must be linked with your processes and strategy. The bottom line: Do it to yourself before someone does it to you

1. CXO Advisor
Insight – Innovation - Acceleration
IT intensity and your organisation’s ability to change quickly

2. Why does IT Intensity matter?
Many authors talk about IT intensity:
 Most refer to it as the spend on IT versus the cost base of the business
This may be too narrow. I believe that IT intensity is:
 The amount of IT needed/used in the production/operation/innovation
of a company’s products/services . IT intensity relates to both business cost and
revenue

3. IT Intensity – increasing your scale and reach without
increasing your mass
Using IT you can reach new clients, increase customer loyalty, open
new channels to customers, and create new products (scale) –
IT intensity allows companies to compete convincingly no matter the
size of the companies
IT intensity allows companies to leap-frog competitors more easily
IT intensity allows companies to propagate innovations that are less
structured than entire business processes (Trial, Proof of concept,
Minimum viable products)
IT intensity allows companies to capture and retain customers
remotely
IT intensity is more than a financial measure – it is a measure of
use and dependency on IT to deliver business products and
services

4. IT Intensity – increasing your scale and reach without
increasing your mass
Using IT you can reach new clients, increase customer loyalty, open
new channels to customers, and create new products (scale) –
without opening new branches, increasing production facilities etc.
(mass)
IT intensity allows companies to compete convincingly no matter the
size of the companies
IT intensity allows companies to leap-frog competitors more easily
IT intensity allows companies to propagate innovations that are less
structured than entire business processes (Trial, Proof of concept,
Minimum viable products)
IT intensity allows companies to capture and retain customers
remotely
IT intensity is more than a financial measure – it is a measure of
use and dependency on IT to deliver business products and
services

5. Sample IT Intensity by industry
The numbers are variable across samples but consistent within a single
sample
Source: Gartner

6. Sample IT Intensity by industry
The numbers are variable across samples but consistent within a single
sample – this is just the top 20 of 94
Rank Industry Name Average IT Intensity
HIGH IT INTENSITY
1 Computer systems design and related services 46.09514
2 Miscellaneous professional, scientific, and technical services31.66354
3 Information and data processing services 31.00029
4 Publishing industries (includes software) 15.44312
5 Securities, commodity contracts, and investments 13.45748
6 Administrative and support services 12.67477
7 Legal services 11.1754
8 Insurance carriers and related activities 10.77791
9 Rental and leasing services and lessors of intangible assets 10.63165
10 Computer and electronic products 9.622643
11 Other transportation equipment 9.1888
12 Machinery 8.920644
13 Credit intermediation, and related activities 8.850244
14 Wholesale trade 6.304108
15 Motor vehicles, bodies and trailers, and parts 6.059119
16 Chemical products 5.65757
17 Construction 5.163015
18 Miscellaneous manufacturing 4.595446
19 Electrical equipment, appliances, and components 3.835276
20 Broadcasting and telecommunications 3.821168
Source: Brynjolfsson, et al. (2008) Scale without Mass: Business Process Replication and Industry Dynamics;
Electronic copy available at: http://ssrn.com/abstract=980568

7. Ad Hoc Service Process Differentiate Core
Definition Don’t use
much IT at all.
E-mail, word
etc.
Use IT to
service
business
administratio
n needs.
Some GL, HR
Fully
automated
and
integrated
business
processes
Use IT to
differentiate
products and
services,
reach new
markets and
provide new
channels
IT products
and services
are the
business
product and
services
IT Intensity – five levels
The amount of IT needed/used in the production/operation/innovation
of a company’s products/services . IT intensity relates to both business
cost and revenue.
IT Intensity increases scale without increasing mass

8. Ad Hoc Service Process Differentiat
e
Core
IT Dept.
Posture
Ad hoc Supplier IT Experts Business
Partner
Core
Use IT
straight
from the
store, as
and
when
needed
IT
department
told what
the business
wants. They
get it and
run it
IT department
are experts in IT,
but not business
experts.
Business have a
problem, IT
looks for the IT
solution
IT and
business
work
together on
business
problems. IT
brings a
unique
technology
perspective
to business
issues
IT and business are
the same. IT
innovation is
business
innovation. New
products, markets
and channels are a
business
imperative.
Business increases
scale without
increasing mass
IT Intensity affects IT Department posture
Posture: The way business sees and uses IT in relation to their business
activities, products and services

9. Ad Hoc Service Process Differentiate Core
< 0.5% 0.5% - 1.0% 1.0% - 2.0% 2.0% - 5.0% 5.0% - 10.0%
IT spend as a
percentage of
business
revenue
Tends to be ad
hoc, low
spend. Use ad
hoc support
from outside if
something
goes wrong.
Business spends
on IT (often
reluctantly) to
service business
administration
needs. IT often
feels
undervalued,
under-resourced
and
unappreciated.
May go up to 2%
Business
processes are
fully automated
and integrated.
IT spend focused
on business
improvement at
best.
May go up to
3.0%
Business
understands
that IT can
change the
game for them,
and uses IT to
differentiate
their offerings.
May go up to
10%
IT is the
business
offering.
Internal IT has
an external
focus. Internal
IT used as the
test-bed for
new products
and services.
May go up to
45%
IT Intensity and IT spend
There is a proven relationship between IT spend and business
performance. However this relationship is often skewed by poor spend
decision making, and definitely affected by legacy spend. (IT spend to
business improvement does reach a stage of diminishing returns)

10. Ad Hoc Service Process Differentiate Core
Above the
momentum line
spend
0 % 5% 20% 30% 40%
IT budget
(How IT spend is
used in the
company)
Below the line =
“Keep the lights
on”
Above the line =
Resourcing IT for
business
improvement
No business
improvement
initiatives
using IT
Business
improvements
focused on improving
admin processes and
automation.
Above the line spend
tends to be ad hoc, as
needed
Business
understands they
need IT to operate
efficiently.
They tend not to
fund strategic,
innovative, or
speculative IT
initiatives
Business knows
that a constant
stream of
differentiating
technologies links
them closer to
customers and
markets. They
also understand
that
differentiation is
temporary and
fund constant
development
Business is IT.
They know that
R&D is essential
to business
success, and fund
new IT effectively.
They understand
that constant
funding of
development,
innovation and
breakthrough
products is
essential
IT Intensity and business momentum
Business momentum is the amount of money a company needs to spend on IT to
maintain the existing momentum of business: Mass (geography, staff, assets etc.),
Speed (How fast the business/product/customer cycle works), and Direction
(acquisitions, growth, defence of share)

11. Ad Hoc Service Process Differentiate Core
IT Projects None 1-2 per annum 5 – 15 pa 15-30 pa > 30 pa
Do no IT
projects
Any “project” is
ad hoc as
business
administration
requirements
dictate
A number of
business (and
IT)
improvement
projects are
undertaken
In addition to
business
improvement
projects, there
are a number of
new products,
markets, and
channel
projects.
Usually Proof of
Concept and
Pilot projects
Much of what
the business
does is new
business using
IT. Maintenance
and
improvement of
IT products /
services is well
funded. New IT
products and
services are
also extensively
pursued.
IT Intensity and projects
“Projects” may reflect the change using IT in a business. Depends on the nature of the
project – four value layers – fix (broken), maintain, improve, create value

12. Ad Hoc Service Process Differentiate Core
Applications Office Admin System System of
record
Business
process
Differentiating
Applications
Core product /
service
Use off the
shelf personal
productivity
tools
Use off the
shelf
administration
IT tools
Use COTS ERP
systems. Use
business
process
automation
tools
Have rapid
application
development
tools, to trial
and deploy
differentiating
applications to
customers
Develop, test,
deploy, and
maintain IT
services and
applications
into the
customer base
IT Intensity and applications
Typical applications used per intensity level.
Cumulative from the left.

13. Ad Hoc Service Process Differentiate Core
IT Dept. Posture Ad hoc Supplier IT Experts Business Partner Core
IT Spend / TO < 0.5% 0.5% - 1.0% 1% - 2 % 2% - 5% 5%-10%
IT Budget Below Above Below Above Below Above Below Above Below Above
100% 95% 5% 80% 20% 70% 30% 60% 40%
IT Projects None 1-2 pa 5-15 pa 15-30 pa > 30 pa
Applications Office Admin System System of record
Business process
Differentiating
Applications
Core product /
service
Industry Norms
Education
IT Intensity – the big picture
Farming
Manufacturing
Food industry
Logistics
Retail
Banking
Software
Media
IT Services
Consulting
Telecommunications
Healthcare
Energy & Utilities
Government
Mining
Cloud services
Big Data services
IT Intensity increases scale without increasing mass
BPO
Airlines

14. IT Intensity Scenarios
Scenarios define possible future paths and the “road-signs” that will indicate
which path is unfolding
Scenarios allow for rapid and intelligent response to different paths
Scenarios aid future decisions
Discontinuous
Technological
Change
Predictable
Technological
Change
Low IT
Intensity
High IT
Intensity

15. IT Intensity Scenarios
Scenarios define possible future paths and the “road-signs” that will indicate
which path is unfolding
Scenarios allow for rapid and intelligent response to different paths
Scenarios aid future decisions
Discontinuous
Technological
Change
Predictable
Technological
Change
Low IT
Intensity
High IT
Intensity
Aliens at the
Door
(Surprise!)
Boiling Frogs
(What
happened?)

16. IT Intensity Scenarios
Scenarios define possible future paths and the “road-signs” that will indicate
which path is unfolding
Scenarios allow for rapid and intelligent response to different paths
Scenarios aid future decisions
Discontinuous
Technological
Change
Predictable
Technological
Change
Low IT
Intensity
High IT
Intensity
Aliens at the
Door
Me too
(Fast follower)
Shapers
(Leaders /
disrupters)
Boiling Frogs

17. IT Intensity Scenarios
Scenarios define possible future paths and the “road-signs” that will indicate
which path is unfolding
Scenarios allow for rapid and intelligent response to different paths
Scenarios aid future decisions
Aliens at
the door
Discontinuous
Technological
Change
Predictable
Technological
Change
Low IT
Intensity
High IT
Intensity
Aliens at the
Door
Me too
ShapersBoiling Frogs
Roadmap
Organisationsuccess
Time

18. IT Intensity Scenarios
Scenarios define possible future paths and the “road-signs” that will indicate
which path is unfolding
Scenarios allow for rapid and intelligent response to different paths
Scenarios aid future decisions
Aliens at
the door
Discontinuous
Technological
Change
Predictable
Technological
Change
Low IT
Intensity
High IT
Intensity
Aliens at the
Door
Me too
ShapersBoiling Frogs
Roadmap
Organisationsuccess
Time

19. Summary
IT intensity is about business understanding of what IT can and should do for
the organisation
Often the IT Department acts as a brake on increased IT intensity
 Through their posture
 Defence of their delivery model
 Lack of agility
 Inability to communicate at a business level
Increasing IT intensity (the right way) increases an organisation’s ability to
respond to economic and competitive threats
Optimum IT intensity allows organisations to disrupt their market… To lead
rather than follow
None of this matters if the relationship between IT and the organisation is
not a full partnership striving for business success

20. IT INTENSITY INCREASES SCALE WITHOUT INCREASING MASS
Terry White
terryw@cxo-advisor.co.za