Cuts in Technology Infrastructure Spending Key Element in World-Class Results

According to business process advisory firm The Hackett Group, world-class IT executives achieve superior results in part by shifting their spending and staffing priorities away from technology infrastructure and towards application management, software, and other areas. Hackett’s Book of Numbers research, produced as part of its IT Executive Advisory Program, shows world-class IT executives spend $1,686 in total technology infrastructure process costs (labor and outsourcing) per end-user–23% less than their peers, who spend $2,183 per end user. The lion’s share of the reduction in staffing that world-class organizations see is also concentrated in technology infrastructure, with only 9.2 full-time equivalent staff per 1000 end-users, compared to 21.7 for peer companies–a 58% difference.

World-class IT executives allocate staff very differently as a result, dedicating 53% of their internal staff to application management (compared to 38% for peers). Peer companies, on the other hand, dedicate nearly half their staff (49%) to technology infrastructure, an area where world-class companies dedicate only 33% of their staff.

Overall, Hackett found that world-class IT executives:
— Spend 18% less than their typical peers
— Operate with 36% fewer staff
— Bring in projects on time and under budget more than 30% more often
— Dramatically increase the automation of a wide array of routine business transactions

Reductions in technology infrastructure spending and staffing play a key role in helping world-class executives achieve these results. According to Hackett, world-class executives
— Spend 23% less than typical companies on process costs in technology infrastructure
— Dedicate 58% fewer staff to it

These reductions, which are driven in part by increased use of outsourcing and an improved focus on standardization and complexity reduction, contribute to world-class executives’ flexibility to focus resources in more strategic, value-added areas, including application management, where world-class organizations dedicate more than half their internal staff.

Two other major areas where world-class IT executives spend differently:
— Spend 20% more than peers on software licenses
— Spend 31% less than peers on voice and data.

Although world-class executives spend less overall on technology through greater standardization and better governance, they are able to spend substantially more on more software solutions for the business.

A key part of how world-class IT executives show an increased focus on standardization and simplification; per 1000 end-users they rely on:
— 29% fewer applications
— 29% fewer data centers

By automating routine tasks, world-class IT executives free up staff time throughout the organization which can be focused on more value-added activities. For example, companies with world-class IT organizations are:
— 102% more likely than their peers to receive customer orders electronically
— 236% more likely to send customer billing invoices electronically
— 220% more likely to accept expense submissions online

The Hackett Group is an Answerthink company. For more information visit http://www.thehackettgroup.com.

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