The role of IT is changing at most companies as a result of successful implementations of enterprise resource planning (ERP) systems, Y2K initiatives and Web-based tools. It's changing from a peripheral player at the executive table to a central function for those organizations that are aggressively readying for the e-business age. Recognizing the changes afoot, it's time to investigate the latest IT best practices unearthed by Hackett Benchmarking and Research, the best-practices research arm of answerthink.
Research shows that many CIOs are repositioning their organizations to support the new requirements of an e-business vision, and they're creating organizations that will draw top performers. However, a wide variability in performance still exists between the best and the rest. The average company spends $9,167 annually to support each end user, while the range from high to low stretches from $22,700 to $1,900. Yet when we look at the characteristics of best- practices companies, a clear profile is emerging. The management of IT at leading companies typically:
- Aligns IT priorities with the company's strategic direction.
- Simplifies and standardizes operations to reduce IT complexity.
- Operates with broader spans of managerial control.
- Establishes project management as a core competence.
- Delivers higher levels of customer service.
- Manages supplier relationships proactively.
- Establishes clear accountability through performance measurements.
- Prioritizes IT initiatives into the overall business planning process.
Despite the advances, a startling gap still exists between the lowest- and the highest-cost IT organizations. This is evident in the large number of companies that have yet to realign their IT organizations to the new realities.
Expanding on the best practices, data shows that many are seizing opportunities to simplify their systems infrastructure. Research findings also indicate that uniformity in operating systems, use of data standards and process automation are meaningful gauges of costs and productivity. Systems simplification also facilitates the use of best practices, explaining why top-performing companies are almost twice as likely to have both defined and implemented technology standards across their operations.
Similarly, leading companies consistently outperform in the area of project management. They're able to deliver 13 percent more projects on time and on budget. In the area of end-user support, the gap is more pronounced. Resolving end-user queries on the first call is 30 percent higher in the top performers than at the average company.
One expected benefit that has yet to be realized is the translation of efficiency gains from reengineering projects and systems investments into increased investment in higher value-added tasks that support business decision making. The typical IT professional dedicates only 30 minutes of each eight-hour day to thinking about how to leverage technology for strategic advantage. This staff time allocation represents a decline in recent years, keeping greater efficiency gains at bay.
The correlation between the use of best practices and success at organizational change remains strong. If deployed properly, these practices can promote marked gains in cost efficiency and staff effectiveness, provide a better flow of information and bring about an increase in value-added support to business decision making.
A large part of the problem has been the bolt-on mentality or the slamming-in of programs such as ERP without proper integration or optimization. These systems, designed to reduce costs through data standardization and automation of routine activities, are too often poorly integrated across the business, resulting in lower-than-expected gains. The automation of an inefficient process unfortunately only results in the faster delivery of bad data.
Likewise, shared-services centers and outsourcing, seen by too many managers as standalone panaceas to problems, are ineffectual unless implemented as part of a larger, more comprehensive business transformation agenda. When properly combined, these initiatives present formidable weaponry for forward-looking companies considering meaningful change. The competitive gap is closing around the world. While costs for foreign companies generally remain higher, European and Latin American firms have more aggressively embraced process transformation in the last few years than their American peers. The result has been a significant narrowing of costs and productivity, a trend likely to continue.
One result of IT's emergence as a business-critical activity that pervades almost every part of business operations is the increased competition for those individuals with experience and competency within the field. The average tenure of IT staff with their present employer is seven years, down 36 percent from three years ago. Clearly, opportunities abound for highly qualified IT professionals. IT also remains the most highly skilled of all the knowledge-worker functions, with about 93 percent of staff considered managers and salaried employees.
The benchmark results show a clear path to excellence. The top-performing IT organizations support more people at lower cost, provide consistently higher levels of service to end users, deliver more projects on time, manage a much simpler technical architecture, and directly link IT investments to business results. Best-practices IT organizations are now clearly a competitive imperative.
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