Cuts in Technology Infrastructure Spending Key to Achieving World-class IT Results

World-class companies spend 23 percent less on tech infrastructure and outsource more in this area than invest in application management and software


The strategic benefits generated by world-class IT executives extend far beyond the IT department. By automating routine tasks, world-class IT executives free up staff time throughout the organization, which can then be focused on more value-added activities. For example, companies with world-class IT organizations are 102 percent more likely than their peers to receive customer orders electronically, 236 percent more likely to send customer billing invoices electronically and 220 percent more likely to accept expense submissions online.

"A key strategy for world-class executives is to drive costs out of commodity IT services like desktop management and network administration through a combination of greater process discipline, higher compliance levels and successful outsourcing relationships," said Beth Hayes, senior director, IT Transformation and Hackett Fellow. "This enables them to reinvest resources in higher-value application management and strategy and planning activities, and spend even more on software solutions to support key strategic business initiatives."

According to Hackett IT Practice Leader David Hebert, "When you look at peer companies, you see a tremendous contrast with world-class in key areas. Often they have highly-dispersed, poorly managed architectures that drive greater complexity and increased costs throughout the organization. Some of these companies are struggling just to keep up, and may find it difficult, if not impossible, to make IT investments that reduce their overall costs or improve effectiveness."

To achieve Hackett's world-class designation, an organization must score in the top 25 percent of Hackett's current database in both efficiency (cost and productivity) and effectiveness (quality and business value) output metrics in a given functional area. For comparison purposes, Hackett also calculates the median results for all non-world-class companies, which are identified as "typical" or "peers." In this way, Hackett defines "world-class" with empirical data, isolating the characteristics shared by today's world-class organizations.

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