IT organisations should strip costs out of their
day-to-day operations by investing in better IT project management,
and through greater standardisation of their infrastructure,
according to a study published today by the London School of
Economics and Political Science (LSE).
The study, part of a multi-year research programme run jointly
by the LSE and Dell, suggested that cutting waste and driving
greater efficiencies within IT is the main way businesses can free
up funds for technological innovation. CIOs and IT directors should
worry less about the overall size of their budgets, but how the
funds they do have are being spent.
The LSE survey was carried out among CIOs and business leaders
in the UK, US, Japan, India, China, France and Germany. It found
half of executives believed they could save more than five per cent
of their annual budgets by improving IT efficiency and reducing
waste.
One in three believed technology standardisation would help
their organisations become more effective. Forty per cent felt
better IT project management would lead to more efficient
technology use. However, 30 per cent admitted they were not able to
quantify the business value delivered by IT.
Better application integration, better IT training and a closer
alignment between IT and business objectives were all cited by more
than a quarter of respondents as other factors that made IT less
effective than it could be.
Money freed up through efficiency measures would, in the main,
be used to improve the products and services provided to customers
and the resources available to staff, rather than simply leading to
budget cuts, respondents said.
IT departments are less likely to focus on cutting staff
headcounts. Instead, they are looking to divert resources from
routine IT tasks to more strategic work.
This should help companies reduce the percentage of IT spending
devoted to day-to-day operations - considered by most analysts to
be between 70 and 80 per cent of IT spending - and to increase the
funds available for innovation.
"The challenge for businesses is how to spend the money they do
have," said
Patrik Karrberg, a researcher at the London School of Economics
and joint author of the research. "IT waste is something CIOs can
do something about, and using that money to invest in innovation
was a clear trend from the survey."
"CIOs should stop worrying about the overall size of their
budget, and make sure they are delivering efficiencies," said
Steve Schuckenbrock, president of large enterprise at Dell.
"Taking 30 to 40 per cent out of operating costs is the table stake
for getting investment money."