In these economic times, it is critical for all business functions to do more with less. However, recent reviews of Information Technology functions have been less then favorable. Some of those reviews include:
- A recent study by Forrester found that 20 percent of technology spending is wasted.
- The Gartner Group identified that 40 percent of all IT initiatives fail.
- An IBM survey found that CIOs believe 40 percent of IT spending brings no return.
- Forrester revealed that less than half of executives have confidence in IT as a contributor to business success.
There are numerous reasons why confidence in a company's IT has diminished:
- Many organizations do not have an Information Technology plan that is actively followed. The IT strategy is often disconnected from the overall business strategy.
- IT organizations spend far too much time performing maintenance activities and far too little time on new business initiatives. On average, more than 80 percent of IT time is spent on maintaining existing systems. High performing organizations spend 60 percent of IT time on maintenance activities.
- Many IT organizations lack personnel with a clear understanding of business operational issues and processes. In addition, IT personnel may not be comfortable in asserting themselves as "thought leaders" and providing solutions to business problems.
There are no simple solutions to any of the problems we have identified. However, companies are realizing extraordinary results by applying a strict discipline that focuses IT activities on business value. This includes:
- Conducting a "Value Analysis" on the company's IT organization to assess spending and the business value that is generated from that cost.
- Developing a clear definition of value—increasing revenue, reducing expenses, managing risk.
- Establishing IT priorities that are aligned with the overall business strategy.
- Requiring clear measures that demonstrate how IT-related spending contributes to improved business performance.
- Implementing initiatives focused on reducing IT time spent on maintenance activities.
- Recognizing that this is not just an IT issue, but a company issue. Business leaders from across the organization must take ownership of IT initiatives to ensure the expected benefits are delivered.
By focusing on these items, your Information Technology function can become a source of true business value and a significant competitive advantage.