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."