New Benchmark Research from The Hackett
Group Identifies Four Key IT Strategy Elements That Top Orgs Use to
Improve Effectiveness and Efficiency
World-class IT organizations achieve dramatically higher levels
of effectiveness, meeting ROI expectations nearly twice as often,
and support up to 80 percent higher levels of business process
automation, all at 15 percent less cost than typical companies,
according to new research from The Hackett Group, Inc.
(NASDAQ:HCKT).
The Hackett Group's research details how top-performing IT
organizations focus on automation and complexity reduction as
essential IT strategy elements. They are significantly more
effective at providing IT enablement for key business operations,
and operate with up to 80 percent less complexity. The research
also spotlights four fundamental practices that differentiate
world-class IT organizations from typical companies: alignment of
IT metrics and formalized communication with the business;
standardization of applications and IT processes; integration of
end-to-end business processes; and the monitoring of business and
IT outcomes.
The Hackett Group's research is based on an analysis of
comprehensive benchmark studies performed at over 100 Global 1000
companies over the past few years. World-class IT organizations are
those that achieve top-quartile performance across an array of more
than 60 weighted efficiency and effectiveness metrics in The
Hackett Group's IT benchmark.
"As companies grow, execute mergers and acquisitions, move into
new markets, and expand their product portfolios, many naturally
see increased complexity that can negatively impact performance.
But this doesn't have to be the case," said John Reeves, Global IT
Advisory Practice Leader for The Hackett Group. "The performance of
world-class IT organizations demonstrates that it truly is possible
to 'do more with less,' minimize cost, and deliver higher qualities
of service."
The Hackett Group's research found that world-class IT
organizations spend 15 percent less than typical companies per
end-user, including 25 percent less on labor, 9 percent less on
technology, and 8 percent less on outsourcing. Reduced complexity
is a key element of how world-class IT organizations eliminate
nonessential spending yet maximize staff productivity to drive down
IT costs. Hackett Group's research found evidence of this across a
wide array of IT metrics. World-class IT organizations carry 70
percent less complexity in their technology platforms. In addition,
they rely on 40 percent fewer applications per 1,000 end-users. So
as a result, hardware and software complexity levels are
significantly reduced, with 30 percent lower software complexity
and 60 percent lower hardware complexity.
At the same time, world-class IT organizations demonstrate
dramatically higher levels of effectiveness. They meet ROI
expectations nearly twice as often as typical, deliver against
anticipated benefits nearly 80 percent more often, automate up to
80 percent more business processes, and deliver dramatically higher
levels of self-service enablement.
Four Fundamental Practices of World-Class Companies
The analysis of The Hackett Group's 2013 benchmark data isolated
four practices that are fundamental to world-class organizations'
performance, but not widely adopted by typical companies.
Align IT Metrics and Formalize Communication with the
Business - While most IT organizations track performance
metrics, few typical companies have formal IT scorecards which
provide a holistic view of IT performance and link metrics to IT
strategy. This is standard practice at world-class IT
organizations. World-class IT organizations use these scorecards to
engage business leaders, demonstrate IT's contribution to the
business, and spotlight where they need additional support or
investment. This fosters a culture of continuous improvement. They
also take a formal, structured approach to communication designed
to foster quality interaction. Typical companies take a much more
informal approach.
Standardize Applications and IT Processes - While most
typical companies attempt to minimize customization through the use
of a portfolio of "plain vanilla apps," world-class IT
organizations focus on driving down the number of enterprise-wide
solutions, creating a common enterprise platform that can then be
customized to address the needs of different business units. Fewer
applications result in a less complex IT environment, enabling
world-class IT organizations to deliver new capabilities more
quickly. An underlying set of common data definitions must also be
in place before customization takes place.
In terms of IT methodology, The Hackett Group's research shows
that limiting IT to a small number of project delivery
methodologies is the most effective approach. Some projects may be
sub-optimized, but adhering to fewer methodologies and setting
clear process standards increases the consistency of project
execution overall.
Integrate End-to-End Business Processes - From the
earliest stages of project delivery, world-class IT organizations
make integration considerations a high priority. This contrasts
with typical companies, where the focus on application
functionality takes precedence. But the higher levels of
integration seen by world-class companies strengthens both IT and
business performance. The importance of integration will only grow
as companies look to improve the management and analysis of their
data, and as IT organizations make greater use of cloud-based
service providers.
Monitor Business and IT Outcomes - For the IT function to
be successful, it has to work with the business to monitor IT and
business outcomes. On the IT side, one of the most critical
outcomes to monitor is attainment of architecture goals. To prevent
IT architecture from becoming too complex, world-class
organizations monitor portfolio-level architecture goals and
metrics at a much higher rate than typical companies (75 percent of
the time compared to 47 percent). World-class IT organizations also
do a better job at holding IT staff and business owners
accountable. While typical companies focus on establishing the
right Key Performance Indicators (KPIs), world-class IT
organizations also ensure that process owners are responsible for
making certain that promised benefits are realized.
"The four practices we've identified in our research are truly
things that any IT organization can address," said Erik Dorr,
Senior Research Director, The Hackett Group."These are the
fundamentals in the world-class IT playbook -- alignment,
standardization, integration, and monitoring. Collectively, they
allow IT functions to have much greater control over an expanding
IT asset portfolio. Each practice is essential to efficient and
effective IT performance. Together they function as a springboard
to world-class execution."
The Hackett Group's Research Insights, "The World-Class IT
Advantage Part 1: The Benefits of Pursuing IT Operational
Excellence" and "The World-Class IT Advantage, Part 2: The Four
Fundamental Practices of Top-Performing IT Organizations" are
available to members of The Hackett Group Group's advisory
programs. A public excerpt of part one of the research is available
on a complimentary basis, with registration, at this link:
http://insights.thehackettgroup.com/2013wcpa-it-press-register
About The Hackett Group
The Hackett Group (NASDAQ:HCKT), a global strategic business
advisory and operations improvement consulting firm, is a leader in
best practice advisory, business benchmarking, and transformation
consulting services including strategy and operations, working
capital management, and globalization advice.
Utilizing best practices and implementation insights from more
than 8,500 benchmarking studies, executives use The Hackett Group's
empirically-based approach to quickly define and implement
initiatives that enable world-class performance. Through its REL
group, The Hackett Group offers working capital solutions focused
on delivering significant cash flow improvements. Through its
Archstone Consulting group, The Hackett Group offers Strategy &
Operations consulting services in the Consumer and Industrial
Products, Pharmaceutical, Manufacturing, and Financial Services
industry sectors. Through its Hackett Technology Solutions group,
The Hackett Group offers business application consulting services
that help maximize returns on IT investments. The Hackett Group has
completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials,
84% of the Fortune 100, 87% of the DAX 30 and 48% of the FTSE
100.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com.
The Hackett GroupGary Baker, 917-796-2391Global
Communications Directorgbaker@thehackettgroup.com
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