Technology Investment Analysis

In the US, enterprise tech spending has grown 8% annually while labor productivity has grown less than 2%. The tech spend to productivity relationship is showing up in mid-year budget discussions currently underway at most companies. The economics of IT/tech/digital/AI are (again) under a microscope. It was the same last year, and the year before that and every year prior for as long as I have been a professional adviser to CEOs, CFOs, and CIOs.  Tired of this Groundhog Day moment every year, we decided to dig into the economics of enterprise tech. There is some “new news” and some new insights on “old news”. The “new news” – what’s driving up costs: 1. Cyberattacks increased over 25% last year, resulting in a 15% increase in cybersecurity spend this year. While much of this is necessary, it doesn't correlate with an ROI a company can point to. 2. Increase in AI and geopolitical-related spending. On AI, most companies haven't seen value from their investments (only 1% describe themselves as “mature” in their AI deployments).     The new insights on “old news” are: 1. Indirect costs of product development (cloud/security services/tool licenses) can account for 80% of a product’s lifetime costs.   2. Incentive misalignment leads to poor decisions on enterprise tech spend and results in a 20-30% loss of value.  3. Companies pay an additional 10-20% to address tech debt on top of the costs of any project, creating a significant drag on productivity.  4. 5-10% of IT productivity improvements can be lost to vendors (for example, when providers don't pass along reduction in hardware costs).     Clearly, there's a need for deeper understanding and transparency into the economics of enterprise tech. In this new analysis with my colleagues Pablo Prieto, Ph.D., Jeffrey Lewis, James Kaplan, we lay out 4 ways to optimize these investments.  1️⃣Meter and measure: Track tech usage cost at a granular level to foster accountability and minimize tech debt, use models like FinOps. 2️⃣Treat everything as a product: Manage all technology initiatives as products with autonomous, accountable, and incentivized cross-functional teams (led by product managers) to ensure cost responsibility and value capture. 3️⃣Go big: Prioritize domains (end-to-end processes) over single use cases, leverage analytics to pinpoint and amplify initiatives with the most impact. 4️⃣Embrace and accelerate: Optimize agentic AI to modernize and rethink talent models with more flexible systems. In this season and beyond, the choices CEOs, CFOs and CIOs make now will be the cornerstone of success in an AI-driven future.  Looking forward to discussing this more with clients over the rest of the year to ensure 2026 decisions and priorities are better planned, executed, and value is fully realized. #NeverJustTech #McKinseyTechnology #TechEconomics #CIO #CFO https://lnkd.in/grFUuQks

𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗮𝘀 𝗣𝗿𝗼𝗳𝗶𝘁 𝗖𝗲𝗻𝘁𝗲𝗿: 𝗧𝗵𝗲 𝗡𝗲𝘄 𝗠𝗮𝘁𝗵 𝗼𝗳 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗩𝗮𝗹𝘂𝗲 𝗖𝗿𝗲𝗮𝘁𝗶𝗼𝗻 Most board conversations about technology still frame it as a cost center. This legacy perspective is increasingly dangerous in a market where technology-driven revenue streams now represent the primary growth engine for market leaders. After leading digital value creation initiatives across multiple enterprises, I've observed a fundamental shift in how successful organizations measure technology's contribution to enterprise value. 𝗧𝗵𝗲 𝗧𝗿𝗮𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗘𝗾𝘂𝗮𝘁𝗶𝗼𝗻: 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗮𝘀 𝗖𝗼𝘀𝘁 For decades, execs evaluated technology through the lens of: • Cost reduction (improve efficiency) • Risk mitigation (maintain stability) • Capital expense management (minimize spend) This framework produced predictable outcomes: technology budgets constrained to 2-5% of revenue, innovation limited to incremental improvements, and strategic discussions focused on cost containment rather than value creation. 𝗧𝗵𝗲 𝗡𝗲𝘄 𝗘𝗾𝘂𝗮𝘁𝗶𝗼𝗻: 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗮𝘀 𝗩𝗮𝗹𝘂𝗲 𝗠𝘂𝗹𝘁𝗶𝗽𝗹𝗶𝗲𝗿 (business accelerator) Market-leading organizations now evaluate technology through a fundamentally different formula: 1. Revenue multiplication (over cost reduction) 2. Margin expansion (over operational efficiency) 3. Valuation multiple enhancement (over capital management) This framework produces dramatically different outcomes. When we implemented this model at one healthcare organization, technology investments shifted from 4% to 8% of revenue—while increasing EBITDA by 14%. 𝗤𝘂𝗮𝗻𝘁𝗶𝗳𝘆𝗶𝗻𝗴 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆'𝘀 𝗣&𝗟 𝗜𝗺𝗽𝗮𝗰𝘁 The organizations achieving exponential returns apply three specific calculations: 1. Revenue per digital channel: One financial services firm discovered their digital-first customers generated 2.8x higher lifetime value than traditional channels. This insight transformed their technology roadmap from cost management to revenue acceleration. 2. Margin by technology enablement tier: A manufacturing company segmented product lines by technology enablement level, revealing a direct correlation between digital capabilities and margin expansion—from 12% to 38% across tiers. 3. Valuation premium from technical architecture: Companies with modular, API-first architectures command 2-3x higher valuation multiples than legacy competitors—a metric now explicitly tracked in board-level technology reporting. Organizations that measure technology as a profit center outperform those that measure it as a cost center by 340% over a five-year horizon. This is not mere thought leadership! I've implemented this framework across multiple organizations, transforming technology's position from cost burden to value driver. 𝘋𝘪𝘴𝘤𝘭𝘢𝘪𝘮𝘦𝘳: 𝘝𝘪𝘦𝘸𝘴 𝘦𝘹𝘱𝘳𝘦𝘴𝘴𝘦𝘥 𝘢𝘳𝘦 𝘮𝘺 𝘰𝘸𝘯 𝘢𝘯𝘥 𝘥𝘰𝘯'𝘵 𝘳𝘦𝘱𝘳𝘦𝘴𝘦𝘯𝘵 𝘵𝘩𝘰𝘴𝘦 𝘰𝘧 𝘮𝘺 𝘤𝘶𝘳𝘳𝘦𝘯𝘵 𝘰𝘳 𝘱𝘢𝘴𝘵 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘳𝘴.

Most enterprises waste millions on tech without seeing real impact. I learned this the hard way. Early in my career, I saw companies invest in cutting edge tools only to struggle with adoption, integration, and ROI. That’s when I developed a smarter, outcome-driven approach. Here’s the exact method I use to maximize ROI from technology investments:  Start with Business Outcomes, Not Features ↳ Define the measurable impact before picking the tech. What problem are you solving? What KPIs will prove success?  Ensure Alignment Across Teams ↳ IT, finance, and business leaders must be on the same page. Misalignment leads to wasted budgets and underutilized tools.  Adopt in Phases, Not All at Once ↳ Test, refine, and scale. A phased rollout prevents disruptions and maximizes adoption.  Measure, Optimize, Repeat ↳ Regularly assess ROI. What’s working? What needs adjustment? Continuous refinement drives long-term value. Tech alone doesn’t drive transformation—strategy does. How do you ensure your technology investments deliver real business impact? Let’s discuss. 👇 🔹 Follow me for more insights on digital transformation. 🔹 Connect with me to explore strategies that drive real impact. ♻️ Repost this to help your network. P.S.: Thinking about how to maximize your tech investments? Let’s chat. I’m happy to share insights on what works (and what to avoid).

Beware of digital transformation consultants offering you quick AI fixes without understanding your company’s innovation profile and market timing in the first place. 🚨 Undoubtedly, you should be profoundly looking into AI deployments, but doing so without a clear strategy will likely result in frustration and a massive waste of money. The transformation curve below hints at what I’m talking about. - Companies need to understand their willingness to invest in early-stage vs. proven technologies - Misalignment between desired innovation and company profile can lead to frustration - Even with the right innovation profile, timing must be considered through factors like grant availability, customer readiness, and internal bandwidth. Here’s how to design a winning Digital Transformation Strategy: 👇 1. Assess and define the company's Innovation Profile - Get C-level agreement on the company's appetite for risk and innovation - Determine whether the company is suited for early-stage R&D, startup partnerships, or proven technology adoption 2. Evaluate market conditions - Analyze where relevant technologies are on the Market Point Curve (AI, blockchain, IoT) - Assess the readiness of customers and partners to adopt processes powered by these technologies 3. Gauge internal readiness - Evaluate the bandwidth and capabilities of teams to implement new technologies - Assess the decision-making cycles and approval processes for new initiatives 4. Audit existing tech infrastructure - Determine if your current IT infra can support or integrate with planned digital initiatives so you can identify any necessary upgrades. Once this preliminary assessment is complete, your Digital Transformation teams will likely be more prepared to make the right decisions regarding technology investment. If you’d like to dive deeper into the topic, DM me, and we can talk! ✉️ #management #ai #retai #ecommerce #digitaltransformation #RemoteNative Andreas Anding - Technical Leader with 20+ years of experience in large-scale digital transformation projects. Image credit: Benjamin Sywulka.

Why do 92% of tech investments fail to deliver ROI? It’s not because COOs aren’t strategic or that the tools don’t work. It’s because too often, the investment happens before the problem is clearly defined. I’ve seen this cycle repeat itself in aviation, travel tech, and logistics again and again. A COO gets pressure from the board or CEO to “digitally transform” operations. After months of demos and pitches, the team invests millions in a platform promising to boost efficiency by 40%. Six months later, the dashboards look impressive... but revenue performance hasn’t moved an inch. According to Gartner, 92% of COOs say their tech investments haven’t delivered expected results, despite spending an average of 2.1 million dollars each year. Think about that. Almost every operations leader is carrying some form of tech regret on their books. The 8% who do see results? They approach technology like a living system, not a shiny object. They don’t start with features. They start with outcomes. In this week’s RevOps Executive Brief, I shared the real story behind one of those leaders. Michael, a COO I recently met, realized his team was stuck in what I call the “Technology Investment Trap.” They had great tools but no measurable outcome tied to adoption, integration, or impact. When his team paused to design an Outcome-Driven Technology Framework before their next investment, the difference was staggering. Within nine months, that same $200K investment saved the company more than $800K annually and improved revenue predictability by 40%. What changed? They stopped buying systems and started designing measurable impact. If you’ve ever felt the sting of a “transformational” system that delivered more friction than results, this one’s for you. >> https://hubs.li/Q03PS4m_0 #RevOps #RevenueOperations #COO #OperationalExcellence #MaximizeROI

My experience with private equity technology due diligence revealed gaps in how most companies evaluate tech investments Working with PE firms on technology assessments exposed a fundamental difference in evaluation approaches. If there’s a gap I see, PE firms often don’t see technology as a part of driving their growth plan. Many miss opportunities for new growth with technology because they focus on tuning the existing system which often only has limited impact. Here are the questions I would recommend PE firms ask: → What specific metrics will this technology improve? → How will success be measured after implementation? → What organizational changes are required? → What are the risks if the vendor relationship changes? → What new ideas could be powered by new technology? This approach treats technology as a business investment requiring clear performance expectations, not just an operational tool. After 25 years implementing technology solutions, I've observed that companies applying similar rigor to technology decisions achieve more consistent results from their investments. The companies that succeed with technology typically define success criteria before implementation rather than hoping for positive outcomes. *** Found this post insightful? Follow Michael LaVista for more.

Investment Analysis for 5G Network Rollout Project Conducting an investment analysis for a 5G network rollout involves several steps. These steps include estimating initial investment, calculating financial metrics, and evaluating the investment's profitability. Below is a structured approach to perform this analysis: 1. Estimate the Investment a. Spectrum expenses Based on the spectrum bands to be used and with what bandwidths b. Radio Access Network (RAN) expenses Base Stations expenses Antennas and other RAN components expenses Infrastructure, Power, Maintenance and Installation expenses c. Transport Network Expense Backhaul Infrastructure: Expenses for fiber optic cables and microwave links Equipment Expenses: Routers, switches, and other transport network equipment. Installation expenses d. Core Network Expense Core Network Equipment: Expenses for deploying 5G core network elements Integration and Testing: Expenses for integrating the core network with existing systems and conducting extensive testing. 2. Calculate Financial Metrics a. Net Present Value (NPV) Difference between present value of cash inflows (from 5G services) and present value of cash outflows (investment) over period of time.  b. Profitability Index (PI) Determine the attractiveness of an 5G investment. It is the ratio to cash inflow to cash outflow. c. Internal Rate of Return IRR is the discount rate at which the present value of future cash inflows equals the cash outflow (initial investment). d. Payback Period Time it takes for an 5G investment to generate cash flows sufficient to recover its initial cost (time value of money not considered here) 3. Analyze the Investment a. Interpret Financial Metrics NPV: Positive NPV indicates 5G project is expected to generate value over its lifespan. PI: A PI greater than 1 suggests 5G project will generate more value than its cost. IRR: If IRR exceeds the cost of capital, the 5G project is financially viable. Payback Period: Shorter payback periods reduce risk and improve liquidity. b. Sensitivity Analysis Assess how changes in key assumptions (e.g., revenue growth rates, cost estimates, discount rates) impact NPV, IRR, and other metrics. c. Scenario Analysis Evaluate different scenarios (e.g., optimistic, pessimistic, and most likely) to understand potential risks and returns under various conditions. Conclusion: Based on NPV, PI, IRR, and payback period, project can be considered financially viable or not. Further analysis, adjustments in cost estimates, revenue projections, or alternative scenarios might be necessary to improve the project's attractiveness. Note: Investment shown is a high level expenses To learn about Investment analysis in detail, visit our course at - https://lnkd.in/eHqpCzNP #telecom #investmentdecisions #investment #analysis #finance #5g #network

$2.7 Trillion Space Economy: Infrastructure-Constrained, Not Demand-Constrained Where Smart Capital Finds Monopoly-Rent Opportunities in Critical Bottlenecks While most analysts focus on rocket launches and satellite counts, the real investment alpha lies in the infrastructure gaps strangling a $2.7 trillion market’s growth potential. The Constraint That Matters: → Only 400 ground stations serve 8,000+ satellites today → By 2030: 60,000+ satellites need connectivity → X-band/Ka-band oversubscribed by 300% → Result: €2-4B market opportunity in optical ground networks Setcoin Group Global Market Analysis Reveals: 📡 $12-18B in critical infrastructure bottlenecks creating monopoly-rent investment opportunities across: • Ground station saturation (€500M-1B required investment) • Orbital debris removal (€1-2B, regulatory mandates by 2027-28) • Electric propulsion supply chains (xenon shortage: 30 tons/year vs. 200+ needed) • Rad-hard semiconductor fabs (24-36 month lead times, 2-3 global suppliers) • Orbital refueling infrastructure (zero capacity exists, €5-8B market by 2030) Six Subsectors Analyzed: ✓ Next-Gen Satellites & Space Infrastructure (60,000+ satellites by 2030) ✓ Space-Based Defense & Security (€67B procurement 2025-32) ✓ Hypersonic & Advanced Aerospace (NY-Tokyo in 2.5 hours by 2038-42) ✓ Launch Systems & Propulsion (90% cost reduction since 2010) ✓ Commercial Space & Lunar Economy ($300T+ lunar water ice value) ✓ Autonomous & AI-Driven Aerospace (70-85% operations cost reduction) Proprietary Methodologies Include: • Orbital altitude economics framework (LEO vs. MEO vs. GEO lifecycle TCO) • Geopolitical resilience scoring for supply chain risk • Dual-use technology valuation (defense→commercial spillover timing) • Technology convergence mapping (AI × quantum × advanced materials) This isn’t about picking the next SpaceX. It’s about identifying the picks-and-shovels infrastructure plays that capture value as the entire industry scales. Access the Full analysis for you own evaluation & assessments: Complimentary for all Setcoin Group LPs Available to institutions, VCs, and family offices via one-time access or annual analytics subscription → Submit your interest: https://lnkd.in/euruX_3y

🔍 Techno-Economic Assessment vs. Life-Cycle Analysis: What is the difference? I’m frequently struck by how often techno-economic assessment (TEA) and life-cycle analysis (LCA) are mistaken for one another, even in academic discussions. While many people grasp the benefits and fundamental principles of LCA, the purpose and value of TEA often remain less understood. Let's clear things up: Techno-economic assessment (TEA): - Focuses on the economic feasibility of a technology. - Estimates capital investment and operating costs, and evaluates the market potential and economic viability of a new process (e.g. biofuel production facility). - Helps in understanding the financial aspects and commercial potential of technological innovations when scaled up. - Key metrics include cost of production, return on investment, and payback period. - Answers the question: Is this technology financially viable? Life-cycle analysis (LCA): - Examines the environmental impacts of a product or process. - Typically considers all stages from raw material extraction, production, use, and disposal. - Aims to quantify impacts like carbon footprint, energy use, and waste generation. - Key metrics include global warming potential, energy consumption, and resource depletion. - Answers the question: What are the environmental consequences of this technology? Both tools are used to inform decision-making, although from different angles. TEA supports financial investment decisions, while LCA aids in environmental strategy development. Both provide critical insights for process optimisation. For example, an LCA may identify hotspots of environmental impact that coincide with cost drivers highlighted by TEA, enabling simultaneous improvements in cost and sustainability. Ideally, both should be used when evaluating a new promising technology. For instance, an environmentally sustainable solution identified by LCA might not be financially feasible when examined by TEA, and vice versa. Combining both tools ensures that we address economic and environmental trade-offs, fostering truly sustainable innovations. Let's ensure we are using these technology evaluation tools appropriately to drive both economic and environmental progress towards net zero. #TechnoEconomicAssessment #LifeCycleAnalysis #Research #Sustainability #EconomicFeasibility #EnvironmentalImpact

Tech investments go wrong when companies chase trends instead of solutions. I’ve seen businesses throw money at AI, blockchain, or whatever buzzword is trending, only to realize later they didn’t have the infrastructure, talent, or strategy to make it work. It’s easy to get caught up in the hype. But the real question is: Is it solving a problem or just adding complexity? Smart investments aren’t about following trends, they’re about aligning technology with business goals. If a company wants to scale, they need solutions that grow with them. If they need efficiency, they should focus on integration and automation, not just buying tools that look good on a pitch deck. And then there’s the talent factor. Even the best tech won’t deliver value if teams can’t leverage it properly. Without the right expertise, it’s just an expensive decoration. At the end of the day, tech investments should move your business forward and not just add to your expenses. So, before jumping on the next big thing, make sure it checks the right boxes.