World-class IT departments spend 20% less on tech

Research shows the very best IT departments get by with fewer staff

World-class IT organisations are spending 21% less per end user than companies that don't perform so well, research by the Hackett Group has revealed.

Additionally, those with the most effective IT strategies have 8% fewer staff and make savings of as much as $41 million (33 million) because they allocate much less of their budget to processes compared to companies with less effective strategies.

The Hackett Group, a best practice consultancy, explained that the very best IT organisations spend 53% of their budget to maintain and run their infrastructure, compared to less effective organisations, who spend 60% of their budget on this.

That leaves a larger chunk of budget to allocate to innovation, with world-class IT departments spending 43% of their budgets to build better systems, compared to 32% of less effective companies' budgets.

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"IT organisations are under immense pressure to deliver new, often client-facing systems of strategic importance to the enterprise," the report said. "To respond to these demands, they must divert resources from basic 'run-the-business' activities."

Legacy maintenance and support should be kept in-house rather than being outsourced, the research suggested. World-class companies spent 2% less on outsourcing and although nominal in proportion to the total amount of budgets, Hackett Group said that saving budget on outsourcing can represent significant savings in the long run.

"Although achieving world-class performance is a long journey, IT organisations can see marked improvements fast," the Hackett Group said. "Early wins can free up resources enabling IT to better support digital transformation, including improvement of analytics capabilities, supporting development of client-facing systems and mobile initiatives."

The company identified four key focuses for organisations to improve IT performance, including reallocating resources from transactional to value-adds, embracing digital transformation, leading the organisation via analytics and adopting a customer-centric approach in both design and delivery.

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