Study Shows Best IT Does More with Less

The best corporate IT departments are successfully completing far more projects, while spending less money and employing fewer workers, according to a new study.
The best corporate IT departments are successfully completing far more projects, while spending less money and employing fewer workers, according to a new study.

This is the information coming out of a new report from The Hackett Group, a business advisory firm that benchmarked 200 companies over the last two years. The report finds that 'world-class' IT organizations spend 18 percent less than median companies and run with 36 percent less staff.

Beth Hayes, an IT practice leader with the Atlanta-based Hackett Group, says companies with 10,000 end users generally save $18.5 million a year compared to companies with median-performing IT departments. She calculates that savings based on numbers that show that great IT shops spend $1,850 less per end user.

And none of this success is based on the size of the company.

''Size doesn't matter when you're talking about a world-class IT organization,'' says Hayes. ''Our data shows that the best practices almost universally apply regardless of the size of the organization. In many cases, large companies are spending too much or they're delivering too little. It's not about size at all.''

Hayes says they categorize an IT organization as 'world class' based on several criteria, including productivity, cycle times, cost per end user, organization and the effectiveness of partnering. An organization must score in the top 25 percent to be deemed world class.

Hayes says that it comes down to the fact that the best IT organizations aren't working harder. They're simply working better.

''In a time of limited resources and funding, organizations cannot afford to be fat and happy,'' says Hayes. ''World-class performers are able to achieve an 18 percent savings. And applying those best practices are not limited to the very large or the very prosperous organizations... They're spending less and they're succeeding more.''

Actually, they seem to be succeeding a lot more.

The Hackett Group reports that the companies they categorize as world class deliver 91 percent of all projects to spec on time and on budget. In sharp comparison, median-performing companies are only successfully delivering projects 68 percent of the time.

The report also finds:

  • World-class IT organizations dedicate 23 percent more to outsourcing, and they also outsource very differently than median companies. Leading IT shops tend to outsource technology infrastructure, while others tend to outsource application development;
  • World-class shops run their operations with 36 percent less staff than average companies. It's a comparison of 28 IT staffers per thousand end users, versus 44 for average IT organizations;
  • The best IT shops also allocate their staffs different, putting more people on application management issues, and fewer to addressing technology infrastructure issues:
  • CIOs at the top companies also are more likely to report directly to the CEO, while 100 percent have made their senior IT executive a member of the company's overall senior management committee. That's compared to 69 percent of average companies;
  • World-class companies annually spend 23 percent more per end user on outsourcing than median companies;
  • The top IT organizations focus more on standardization and simplification. They rely on 50 percent fewer ERP systems and 29 percent fewer applications per end user.

    The Hackett Group also notes in its report that world-class companies are more disciplined overall in their management of IT projects. Half of all world-class companies manage IT projects through a formal, permanent Program Management Office, while only 25 percent of median organizations do the same. The top IT shops also adhere to a common methodology 90 percent of the time, compared to 56 percent for average companies.

    ''What we believe is that world-class companies are focusing more on what's core to their business and what's strategic to that business,'' says Hayes. ''They have a well-orchestrated plan and a simplified environment.''

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