Centralised departments shown to spend less and use fewer staff

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Centralised departments shown to spend less and use fewer staff

Cliff Saran

Global survey reveals strategies of best-performing IT departments

Centralised IT organisations offer substantial cost and efficiency savings over their decentralised counterparts, according to the latest research from benchmarking company Hackett Group.

The group's quarterly Book of Numbers report, which has assessed business' use of IT over the past 12 years, found that the most successful IT departments spent 23% less and dedicated 58% fewer staff to managing technology infrastructure than typical companies.

Hackett Group has collected metrics derived from 3,300 benchmark studies over 12 years at more than 1,865 of the world's leading companies, including 93% of the Dow Jones Industrials average index.

Its latest figures show that the best-performing 25% of the 300 companies it benchmarked spent £892 on average per end-user in labour and outsourcing costs relating to technology infrastructure. This worked out at 23% less than similar organisations, which spent £1,155 per end-user

The research showed that inefficiencies in IT operations resulted from inconsistency in the IT strategy across divisions of a company.

Dave Herbert, IT practice leader at Hackett Group, said, "There were dramatic differences in use of best practices," such as standardising on a few key suppliers and core technologies.

"Organisations that drove centralised IT delivered world-class performance," he said.

Companies that attained the highest scores in the benchmark tests outsourced 10% of their IT function, compared to 7% among those that scored less well.

Hackett found successful businesses achieved results by shifting their spending and staffing priorities away from technology infrastructure and towards application management and software.

The survey found that the best-performing IT departments outsourced 60% more of their IT infrastructure costs, but 34% less of their application management costs.

Outsourcing commoditised IT functions, while keeping the IT link with the business in-house, was a common feature of the more successful organisations, Herbert noted.

Herbert said Hackett's research found that more sophisticated service level agreements were emerging for outsourcing which tied in performance metrics, such as a goal to drive down the number of applications used by the company over a five-year period.

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